South Korea’s government proposed a number of discounts for mobile subscribers in a move to reduce household telecoms expenses by KRW4.6 trillion ($4.1 billion) a year, but it dropped a controversial plan to scrap the basic mobile subscription fee.
The State Affairs Planning Advisory Committee and the ruling Democratic Party plan to require mobile operators to offer customers a 25 per cent discount when they sign up for a one- or two-year contract, up from the current 20 per cent, or give them a one-off handset subsidy, The Korea Times (KT) reported.
Operators would also be required to give the elderly and low-income groups a discount of KRW11,000 on their monthly bills and provide more free Wi-Fi access points at schools, public buildings and on public transportation.
Newly elected President Moon Jae-in pledged to cut the mobile subscription fee of KRW11,000 per month. The proposal was strongly criticised by operators, but consumer groups said the legislation doesn’t go far enough.
The government opted not to push for the elimination of the basic fee, but sought savings in other areas.
Its plan to raise the discount for customers signing new contracts will be introduced in September, but it is expected to face opposition from mobile operators claiming the policy is an intervention into private companies’ management and could undermine their profitability, KT said.
Lee Gae-ho, chairman of the economic committee under the advisory committee, said operators will be able to withstand the 5 percentage point increase in the discount rate, the newspaper reported.
The proposals are part of a wider bid by the government to cut consumers’ household expenses.
In May, the country’s Constitutional Court approved a law to reduce handset subsidies. The ruling backs a push by the Korea Communications Commission (KCC) to reduce what it considers unhealthy competition by curbing excessive handset discounts, in turn lowering operators’ marketing expenses so they can pass on the savings to customers.