[Edaily Reporter Yun Junghoon ] Critics point out that the welfare system in South Korea’s telecommunications industry remains stuck in the “voice-call-based landline network” paradigm of 30 years ago. Analysts argue that in an era where virtually everyone uses smartphones, the funds wasted to cover losses from landline local calls have become an institutional barrier hindering investment in future infrastructure. Consequently, the telecommunications industry is calling for local landline services to be excluded from the scope of universal service or to be completely overhauled to keep pace with the changing times.

No One Uses Local Landline Calls... Yet the Landline Network, a Massive Deficit of Hundreds of Billions Annually, Is Being Maintained

According to the Korea Information Society Development Institute (KISDI) and the telecommunications industry on the 26th ( KTCorporation(030200)), the operating loss from the local telephone service alone reached 8200억 won in 2023 and surged to 1조 2781억 won in 2024. This is due to structural limitations: while revenue has dried up due to declining subscriber numbers and call volumes, fixed costs for maintaining aging infrastructure across 143 local calling areas nationwide continue to accrue.

The “universal service loss compensation” paid to KTCorporation by major telecommunications carriers—including SK Broadband and LG Uplus(032640) —amounted to 63.8 billion won as of 2022. Of this amount, more than half—35.5 billion won—is used to cover losses from landline local telephone services.

Although this system was introduced in 2000 to ensure that all citizens could enjoy equitable telecommunications services, critics point out that the sharp decline in landline demand is causing serious resource misallocation.

In fact, the volume of outgoing landline calls (local, long-distance, and internet calls) has plummeted from 69.4 billion minutes in 2007 to 10.4 billion minutes in 2024. Looking at local calls alone, the volume stands at a mere 5.8 billion minutes. During the same period, mobile call volume nearly doubled, rising from 92.7 billion minutes to 177.3 billion minutes. This indicates that the shift from landline to mobile voice calls has been proceeding at a rapid pace.

KTCorporation, the designated provider, is complaining about the burden of maintaining infrastructure amid losses amounting to hundreds of billions of won, while conflicts are arising as other telecom companies demand transparency regarding clear criteria for cost-sharing.

A telecommunications industry official criticized the situation, stating, “This is the result of clinging to outdated regulations from the era of voice-centric communication in the data-driven AI age,” and added, “It is time to change this structure where everyone suffers.”

Advanced nations made the transition 10 years ago… Infrastructure innovation based on ‘technology neutrality’

Major countries overseas have excluded legacy services—whose usage rates have plummeted—from universal service obligations and have implemented “technology-neutral innovation” to guarantee access to high-speed internet infrastructure and data networks.

The United States has frozen and reduced funding for fixed-line voice services since 2011, completely shifting those funds to support the construction of fixed and mobile data networks.

The European Union, following the enactment of the European Electronic Communications Code (EECC) in 2018, excluded low-usage services such as public payphones and directory assistance from the scope of universal service. Currently, more than half of the member states have completely removed landline telephony from their universal service obligations.

Japan maintains the obligation to provide landline telephone service but fully permits alternative technologies—including fiber-optic IP telephony and wireless fixed-line telephony—in addition to the copper wire (PSTN) system, seeking cost efficiency through technology neutrality.

“A 30-Year-Old System… Needs to Be Reformed for the AI Era”

The government’s recent designation, through the regulatory sandbox, of a pilot program to provide local telephone service via LTE wireless networks instead of copper lines in remote and mountainous areas is viewed as a positive step toward greater efficiency. However, since such measures cannot serve as a fundamental solution, there is a growing consensus that the concept of universal service needs to be redefined.

Professor Kwak Jeong-ho of the Department of Big Data and AI at Hoseo University emphasized, “The framework of the current universal service system, legislated in 1998, has remained virtually unchanged for nearly 30 years,” adding, “The system must be updated to align with the AI era and meet consumer choices and demands.”

Professor Kwak pointed out the limitations of the current “virtual fund” settlement method. He explained, “Under the current system, the government determines the amount to be paid by the operator that bore the costs, and the remaining operators share the burden retroactively, making it difficult to resolve complex conflicts of interest,” and added, “Experts are proposing the creation of a new fund in the form of a ‘substantive fund’ where the government directly manages the resources.”

Professor Kwak went on to suggest, “To achieve this, legislative decision-making is needed to comprehensively review relevant laws and regulations, including the Telecommunications Business Act.”

However, there are also views that hastily phasing out local telephone service—which is currently excluded from universal service—is risky. This is because landline telephones can serve as the last resort for communication when mobile networks are disrupted by large-scale disasters or emergencies, and they hold significant symbolic value as a minimal social safety net for information-vulnerable groups, such as the elderly.

Accordingly, experts unanimously agree that an approach is needed to first streamline maintenance costs by actively adopting flexible technologies—such as wireless or Voice over Internet Protocol (VoIP)—to replace traditional copper-wire landlines. Furthermore, they urge that the funds secured by scaling back obsolete legacy services be reallocated to a “Digital Welfare Fund (voucher)” system designed to bridge the digital divide for vulnerable groups and guarantee access to AI and ultra-high-speed networks.

Professor Kwak added, “In the past, people wanted to use voice calls, but now even socially vulnerable groups want to enjoy online content such as Netflix and YouTube and receive training on how to use smartphones,” noting, “We must move toward discussions on new forms of digital welfare.”

The government maintains that it will proceed cautiously with the policy, given the issue of cost-sharing. An official from the Ministry of Science and ICT said, “The proposal to expand from voice-centric services to digital services is ultimately directly linked to the question of ‘who will pay,’ so it is difficult to change easily.”