By Kim Tae-gyu
Staff Reporter

The basic fees of top mobile operator SK Telecom will be reduced 1,000 won to 13,000 won per month from September, the Ministry of Information and Communication (MIC) said Friday.

During a meeting with the governing Uri Party, the ministry agreed on the price cut to relieve people of the burden associated with the rising communications expense.

Experts point out the measure is also geared toward cushioning inflationary pressures, which are feared to weigh on the already-fragile economy following interest rate cuts.

In a surprise move on Thursday, the Bank of Korea slashed its key rate by 0.25 percentage point to 3.5 percent to spur the slumping economy.

Along with the mobile charges, the MIC plans to trim the land-to-mobile rates from 14.83 won per 10 seconds to 14.50 won, as well as mandate fixed-line firms to offer 5-minute free calls every month from next month to November of next year.

It is estimated the measures will help subscribers save 511 billion won per annum as well as lowering consumer prices 0.083 percentage points.

The impact of the policy is expected to be even bigger as smaller mobile operators vow to follow the path of SK Telecom to sustain price competitiveness.

Runner-up player KTF said it would reduce the basic fees which run from 1,000 won to 13,000 won from next month and the smallest carrier LG Telecom also said it would map out similar steps soon.

The MIC has the right to change the rates of dominant telecom firms like SK Telecom and KT. SK Telecom accounts for more than 50 percent of the nation’s mobile market while former state-monopoly KT controls about 95 percent of 22.8 million landline subscribers.

However, the MIC said it would not continue to lower mobile fees this year since the rates have dropped 33.8 percent since 1997 when the market first began to brace for multiple competitors.

``If we slash mobile fees any more, wireless operators will be unable to afford the investment in next-generation services like WiBro and wideband-CDMA (W-CDMA),’’ MIC director general Kim Dong-soo said.

WiBro and W-CDMA are the up-and-coming technologies, which will enable people to connect to the Internet on the move and other next-generation mobile services.

The ministry expects W-CDMA would need an investment amounting to 2.7 trillion won until 2007, while WiBro would eat up 3.6 trillion won from 2006 to 2011 for a full-fledged takeoff.

voc200@koreatimes.co.kr