No. 1 supermarket chain seeks to launch telecom service to compete with major mobile firms


Korea’s No. 1 supermarket chain E-Mart plans to launch “half-priced” cellphones on Friday ― a move following the retail giant’s recent marketing of ultra-cheap TVs and coffee beans.

The leading retailer will start selling the first batch of 1,000 handsets at its 130 outlets nationwide in a partnership with FreeC, a mobile virtual network operator, or MVNO. 

FreeC, which leases the wireless network capacity of KT Corp. at wholesale prices, would charge a monthly fixed-rate of 4,500 won ($4), less than half the 12,000 won package offered by KT.

“Under the FreeC payment system, customers can reduce their mobile fees by 30-50 percent,” said a FreeC official, adding that there is no subscription fee or contract period as well.

Even though E-Mart said it has no plan to enter the MVNO services directly for now, industry sources expect that the company could do so depending on the sales of FreeC phones.

There are some overseas cases in which retailers such as the U.K.-based Tesco have bought airwaves from telecom carriers and sell mobile phones under their own brand.

In Korea, where the full-fledged MVNO operations started in July, major retailers also were considering it, but gave up their plans citing the immature market and the powerful dominance of the top three telecom operators.

Despite cheaper price deals, local consumers have thus far showed little interest in MVNO services, complaining about inconveniences.

Existing users of the top three telecom operators ― SK Telecom, KT Corp. and LG Uplus ― are required to change their cellphone numbers to transfer to MVNO services, with no benefits offered.

Moreover, most of the phones available for the services are used ones with simple functions, not to mention the latest fancy smartphones.

Sources said, however, the situation could change as the government is recently promoting the MVNO services to encourage competitions in the telecom market and offer a variety of customer choices.

The Korea Communication Commission last month introduced measures to encourage deferred payment systems and plans to make it possible to transfer telecom companies without changing numbers in early next year.

Especially when the “blacklist system” is introduced in the first half of next year, retailer chains that have nationwide sales channels could become the major seller of mobile phones.

The system allows consumers to buy gadgets directly from manufacturers and insert a universal subscriber identity module belonging to any telecom to activate the service.

“With the introduction of the blacklist system, virtual wireless carriers would seek partnerships with major retailers for synergy effects.”

The nation’s No. 2 and No. 3 retailers, Homeplus and Lotte Mart, on Wednesday denied the growing speculations about their potential entry into the MVNO market any time soon.

By Lee Ji-yoon (jylee@heraldcorp.com)