Government to expand sales network for MVNOs

The government said Tuesday that it will allow so-called mobile virtual network operators (MVNOs) to sell their mobile phone services through the country's state-run postal service provider starting from September, in a bid to help lower mobile rates and households' communication bills. MVNOs borrow networks from existing mobile carriers at wholesale prices, thus offering their services at cheaper rates compared to existing mobile operators. They can offer cheap mobile rates because they do not spend big building their own mobile networks, a huge barrier for new players to enter the market. According to the Ministry of Science, ICT & Future Planning, MVNOs will be able to sell their services through Korea Post at rates 20 to 30 percent cheaper than existing ones. Currently, seven MVNOs sell their services through 408 outlets, about 0.2 percent of some 20,000 retail shops used by the country's three mobile carriers -- SK Telecom Co., KT Corp., and LG Uplus Corp. -- for their service sales. The ministry said subscribers to MVNOs will be able to adopt unlimited voice call pay plans offered by the three mobile operators as well. Last month, the ministry said it plans to prod local mobile operators to phase out sign-up fees for mobile phone services by 2015. The fee currently ranges from 24,000 won to 39,000 won. The ministry expects the abolition of a mobile subscription fee to cut mobile charges by around 500 billion won annually. During the December election campaign, President Park Geun-hye promised to abolish mobile phone subscription fees as part of an effort to ease financial burdens on households. South Korea has witnessed an explosive growth in smartphone users with its smartphone population topping the 30 million mark in August last year. The number of smartphone users who opted to connect their smartphones to the faster mobile network, called long-term evolution (LTE), also topped the 20 million mark early this month, just 20 months after the service was introduced in the country, previous data showed.