SEOUL, Jan.6 (Korea Bizwire) – Competition in the ‘budget phone’ market has been fierce from the start of the year, with the affordable phones rapidly gaining popularity. By the end of last year, one out of ten people was using a budget phone.
As budget phones provided by Korea Post saw their basic fees eliminated, SK Telink, in hot pursuit, abolished its basic charges as well.
Media Log, an affiliate of LG U+, launched the Huawei’s Y6, which is the cheapest smartphone in Korea.
According to industry representatives, lines stretched out into the streets as Korea Post launched two new plans for budget phones. One allows the customer to use unlimited data and text messages for only 43,890 won a month, and the other provides 50 minutes of voice communication for free.
Post office officials revealed that the number of people who signed up for the ‘A Zero’ plan, which offers 50 voice minutes for free, reached 4,800 on January 4. Considering that on average 550 people signed up for a budget phone every day last year, eight times more people signed up for that one particular plan.
The plan provides 50 minutes of voice calling per month with basic charges waived, which is essentially 50 minutes for free each month.
Officials from Korea Post comment that people seem to be responding to the surprisingly affordable plans. “The plan is popular among the elderly, elementary school students, and those who want to use it as a ‘second phone’.”
The number of people who signed up for a budget phone with Korea Post that day reached 8,713. That tripled last year’s record, in which the largest number of people who signed up for a budget phone was 2,976.
As the Korea Post budget phone drew consumers with cheap plans, SK Telink, the second largest provider of budget phones, eliminated its basic fees (16,500 won).
Operators that use the LG U+ network already abolished basic fees when LG U+ did, and among those using the KT network, some businesses including ENEX Telecom do not charge basic fees when new customers sign up.
Industry watchers say that since the budget phone market has already reached a critical mass, it is difficult to lure consumers without strong incentives. “If the service providers eliminate basic fees, at first they will have difficulties managing the loss in revenue, but in the long run it will encourage more people to sign up, bringing profits in the end.”
Since SK Telink, the second largest provider in the industry, abolished its basic costs, and the budget phones offered by Korea Post show signs of great popularity, other providers including CJ Hellovision, the No.1 provider in the budget phone industry, are expected to eliminate basic fees for budget phones to match the competition.
By Francine Jung (email@example.com)