South Korean mobile operators plan to introduce a usage-based fee system for their upcoming 5G network service in a bid to help increase sales, writes Yonhap news agency, citing a report from Hana Financial Investment. The Korean Ministry of Science and ICT and SK Telecom, KT and LG Uplus plan to start commercial operations of the 5G mobile network in 2019. According to the same source, mobile operators are expected to choose a fee plan that charges subscribers based on their usage of services, instead of flat-rate pricing, in an attempt to increase sales and cover high initial investments.
Usage-based pricing is expected to boost mobile operators’ ARPU, due to the increased use of high-volume content, such as UHD and holograms. “There is a high possibility that mobile carriers may change their current high definition content into UHD or virtual reality, which will inevitably lead to an increase in traffic and jack up their sales sharply,” said Kim Hong-sik, an analyst at Hana Financial Investment.
In a separate report, Hana Financial claims mobile operates will bask in improved profitability after 2020 thanks to the introduction of the 5G network. The combined operating income of the carriers is estimated to reach KRW 6.2 trillion in 2021, up 70 percent from KRW 3.7 trillion in 2018. The report also predicts that mobile operators’ sales will increase at an annual rate of 20 percent in the period.