A study on the churning intention of the Korean mobile telecommunications service

Abstract

The number of subscriber of the Korean mobile telecommunications service, which has shown a high growth rate every year since it was launched in October 1997 with PCS (Personal Communications Service) currently reaching about 30.88 millions in the first half of 2002, a total of 64.9% of the Korean population. This figure is significant because it represents the potential for a market of 30 millions by acquiring 1.84 millions new subscribers over and above the 29.03 millions subscribers who signed on at the end of last year. However, the growth trend of the domestic mobile telecommunications industry seems to be slowing down to some degree, and it has definitely neared its peak level since 2001. As the churn rate for subscriber increases, a countermeasure for that is urgently required. In the case of the current domestic mobile telecommunications service market, the number of churned/cancelled subscribers ranges between 80,000~300,000, representing an average of 3.3% for last year. A handset subsidy system is a decisive factor in that it could have lowered the churn barrier for mobile telecommunications service subscribers before June 2001. However, the churn for existing customers in addition to new customers is not that easy due to the abolition of the handset subsidy system. Now, the decrease in the customer churn rate as a result of such a system change would not be very satisfactory for service providers. The Korean mobile telecommunications service providers have to ascertain the reasons and determining factors for this churning practice among customers, and adopt a positive marketing strategy to prevent this. Compared to other fields, acquisition costs impose a heavy burden on service providers in the mobile telecommunications service industry sector because new customer acquisition costs are so high. Therefore, as for this change in the domestic mobile telecommunications service market, where has already attained a somewhat premature level of mat...