(LEAD) S. Korean mobile carriers set to cut fees

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SEOUL, Sept. 27 (Yonhap) -- South Korea's mobile phone carriers will lower their
fee rates in an effort to help local households cut their communications costs,
the national telecom regulator said Sunday.

The move comes as South Korea's three mobile operators have been under fire for
charging higher rates than carriers in other member nations of the Paris-based
Organization for Economic Cooperation and Development.
The Korea Communications Commission (KCC) said the three carriers -- SK Telecom
Co., KT Corp. and LG Telecom Inc. -- have accepted its proposal to reduce their
rates, a move expected to help households cut communications costs by up to 8
percent.
"Mobile carriers will voluntarily lower their charges through increased
competition and cuts in their excessive marketing expenses," the regulator said
in a statement.
According to the KCC, industry leader SK Telecom will change the way call charges
are calculated, starting in March next year. Instead of billing for every 10
seconds of usage, the company will start charging per second.
For the first time since 2000, SK and No. 2 carrier KT will also cut activation
fees for their mobile services, paid in the first month of the mobile service, by
as much as 20 percent.
Starting in November, all three companies will bring down charges for long-term
customers and promote the use of pay-as-you-go mobile services. They will lower
the prepaid rate by 15 to 25 percent.
As the recent rise of smartphones drives demand for cheap data plans, the mobile
providers will also cut mobile data fees by the maximum 88 percent, the
commission said.
The commission forecast that the expected fee cuts would enable mobile phone
customers to reduce their communications costs 7,730 won (US$6.52) per month.
Industry watchers expressed concerns that the move could eat into the mobile
carriers' earnings down the road.
But the KCC played down such worries. "Fee cuts are expected to cut carriers'
annual sales by about 10 percent, which they will be able to withstand by cutting
down on marketing costs," it said.
South Korean mobile carriers are known to spend a hefty amount of money on
marketing efforts as they engage in cut-throat competition to attract more
customers.
ygkim@yna.co.kr
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