Updated April. 08, 2014 02:36
Flat fee for unlimited use, is it a medicine or poison for mobile telecom operators and subscribers?
Flat fee for unlimited use has been the hottest topic among mobile telecom operators these days. This tariff system features an 80,000 won (75.4 U.S. dollars) flat fee, and for users who are subscribed for 24 months, the payment comes down to 61,000-62,000 won (57.8-68.8 dollars), with an unlimited use of phone calls, text messages and data use.
LG UPlus launched this tariff first, and on the same day SK Telecom and KT followed suit with similar prices, reflecting fierce competition. Now, users of all three mobile telecom service providers in Korea can choose this flat fee payment.
At first glance, flat fee payment appears to be very profitable for consumers. This is because of the word "unlimited." Subscribers who were paying more than 100,000 won (94.8 dollars) due to high data use can now pay about 60,000 won (56.9 dollars) to use all services without restriction. According to LG UPlus, call center questions have increased six-fold on this product compared with other products. Due to investor concerns that mobile operators will suffer falling margins, the stock prices of three operators plunged as they released the tariff system last Wednesday.
However, this tariff system is not beneficial to all consumers. For previously high-paying users, the fee will come down to 60,000 (56.9 dollars), but those paying less than 50,000 won (47.4 dollars), may have chosen it attracted by the "unlimited" feature. Analysis of 81,000 new subscribers to this unlimited fee system between April 3 and 4 showed more than 60 percent selecting unlimited use from lower payment.
Another trap is the possibility of recklessly using premium contents and ultimately paying sharply higher rates. People can choose flat fee for unlimited use but can encounter a situation where they have to pay more than the initial cost.
A source from the mobile telecom sector said, "The tariff system offers benefits to some paying large amount of money in the first place, but not good to all users," adding, "The key to this system is to raise average revenue per user by attracting more high-paying customers and encouraging their content use."
From a common sense perspective, companies won`t put out products that can be a loss to them. To enjoy the benefits of the flat fee for unlimited use, users should identify accurately their data use and pick what`s best for them.