Korea’s Communications Commission (KCC) was forced to call an emergency press conference on Tuesday after receiving complaints from the public over a bill aimed at increasing the transparency of handset subsidies went into effect on 1 October.
Consumers have complained that the bill allows operators to pressure them into moving to more expensive monthly plans, the Joong Ang Daily said. Many feel the regulation benefits only the mobile operators.
Fitch Ratings said the bill, which significantly reduces the subsidies operators can offer, will help keep operators’ marketing expenses in check and allow them to concentrate more on customer retention.
The new regulation — the Mobile Device Distribution Improvement Act — allows larger subsidies for more costly monthly plans and sets the subsidy ceiling at KRW300,000 ($280).
The Joong Ang Daily reported KCC Chairman Choi Sung-joon as saying: “The main purpose is to eradicate irregular and guerrilla subsidy benefits that only some consumers have enjoyed.”
Choi called on consumers and retailers “to be patient until the law achieves its goal of normalising” smartphone prices and returning monthly fees.
He said the goal of the regulation is to lower operators’ marketing expenses so they can pass on the savings to their customers or offer larger monthly data bundles. “If they don’t, the government will have to encourage them to do so,” he told the Joong Ang Daily.
He suggested that local handset makers reduce their prices to match the level they are sold at in foreign markets.
In August South Korean operators were fined and given sales bans for once again breaking government rules around handset subsidies.
The KCC has imposed a total of KRW58.41 billion ($57.15 million) in fines, with SK Telecom required to pay the largest fine of KRW37.1 billion, with KT Corp fined KRW10.76 billion and LG Uplus KRW10.55 billion.