Korea Communication Commission to block competition of subsidy despite of ceiling system abolition
Kang Eun Seong | esther@ | 2017-09-07 11:13:49
Lee Hyo-sung, chairman of the broadcasting and communications commission, met with the CEOs of three mobile carriers and is controversial to urge him to refrain from over-heating marketing even after the termination of the terminal subsidy system.
All users are protected so that all users receive the same subsidy in accordance with the Act on Improvement of Distribution Structure of Mobile Terminals (hereinafter referred to as the (Law to restrict phone subsidies). However the fact is that the head of the supervisory authority is saying not to spend a lot of subsidy to the point.
On September 6, Lee Hyo-sung will hold a breakfast meeting with Park Jung-ho, SK Telecom president, Hwang Chang-kyu, KT chairman and Kwon Young-soo, LG U Plus vice chairman, on September 6, asked them to refrain from overheating competition. CEOs of the three mobile carriers said they were willing to participate in competition, saying that exhaustive marketing competition did not benefit each other.
However, Lee`s comments could hurt consumer interest regardless of intention. The Supervisory Authority decided to overheat the expectations of consumers that the subsidy would be higher than the present price of KRW 330,000 due to the abolition of the terminal subsidy system.
Besides, the government may control the natural phenomenon that the price order is formed by the market competition, and it may be pointed out that it is anti - market.
Yoon Moon-yong, Director of Green Consumers` Solidarity Policy Commission, stated, "Since the terminal subsidy ceiling has been abolished, we should not have been competing with illegal subsidies to some subscribers and asking them to raise the level of legitimate disclosure subsidies so that a large number of users can benefit broadly. "But the fact that Chairman Lee spoke to a mobile carrier means that he should refrain from subsidy competition for consumers, so it would be a very grateful statement for the telecom companies."
So far, the government has been steadily adopting policies to prevent subsidies competition of three mobile carriers and to promote tariff reduction and service quality competition. If it gives a subsidy, it is the intent of the law to allow all users to receive the same benefits. If the ceiling system is abolished soon, the three mobile carriers should disclose to all consumers and provide the same high level of subsidy if the subsidy is higher than the current level of KRW 330,000. As a result, users are delaying their purchases, saying that they will purchase the device after October, when the ceiling of the subsidy is abolished. This is evidenced by the 11.3% drop in number portability in August from July.
On the other hand, the price of premium handsets such as the Galaxy Note 8 launched at the end of September will be released at a maximum of KRW 1.2 million, up from KRW 1.2 million, and users expect to receive a level of disclosure subsidies that will offset high terminal prices due to the abolition of the ceiling on subsidies.
As the expectation and pressure of the users has been intensifying, the chief of the supervisory authority directly said, `Do not refrain from over-subsidizing competition.` Therefore, there is no reason to increase the level of subsidies for the telecom companies.
Mr. Yoon also said, "It is difficult to expect the subsidy to increase unconditionally because the subscription discount rate is at 25% level. However, it is difficult for mobile carriers to strategically increase their subsidy for premium phone and high. At this point, the Chairman of the Korea Communications Commission said, not to refrain from subsidy competition.
By Kang Eun Seong esther@
[ copyright ⓒ The Digitaltimes ]
All users are protected so that all users receive the same subsidy in accordance with the Act on Improvement of Distribution Structure of Mobile Terminals (hereinafter referred to as the (Law to restrict phone subsidies). However the fact is that the head of the supervisory authority is saying not to spend a lot of subsidy to the point.
On September 6, Lee Hyo-sung will hold a breakfast meeting with Park Jung-ho, SK Telecom president, Hwang Chang-kyu, KT chairman and Kwon Young-soo, LG U Plus vice chairman, on September 6, asked them to refrain from overheating competition. CEOs of the three mobile carriers said they were willing to participate in competition, saying that exhaustive marketing competition did not benefit each other.
However, Lee`s comments could hurt consumer interest regardless of intention. The Supervisory Authority decided to overheat the expectations of consumers that the subsidy would be higher than the present price of KRW 330,000 due to the abolition of the terminal subsidy system.
Besides, the government may control the natural phenomenon that the price order is formed by the market competition, and it may be pointed out that it is anti - market.
Yoon Moon-yong, Director of Green Consumers` Solidarity Policy Commission, stated, "Since the terminal subsidy ceiling has been abolished, we should not have been competing with illegal subsidies to some subscribers and asking them to raise the level of legitimate disclosure subsidies so that a large number of users can benefit broadly. "But the fact that Chairman Lee spoke to a mobile carrier means that he should refrain from subsidy competition for consumers, so it would be a very grateful statement for the telecom companies."
So far, the government has been steadily adopting policies to prevent subsidies competition of three mobile carriers and to promote tariff reduction and service quality competition. If it gives a subsidy, it is the intent of the law to allow all users to receive the same benefits. If the ceiling system is abolished soon, the three mobile carriers should disclose to all consumers and provide the same high level of subsidy if the subsidy is higher than the current level of KRW 330,000. As a result, users are delaying their purchases, saying that they will purchase the device after October, when the ceiling of the subsidy is abolished. This is evidenced by the 11.3% drop in number portability in August from July.
On the other hand, the price of premium handsets such as the Galaxy Note 8 launched at the end of September will be released at a maximum of KRW 1.2 million, up from KRW 1.2 million, and users expect to receive a level of disclosure subsidies that will offset high terminal prices due to the abolition of the ceiling on subsidies.
As the expectation and pressure of the users has been intensifying, the chief of the supervisory authority directly said, `Do not refrain from over-subsidizing competition.` Therefore, there is no reason to increase the level of subsidies for the telecom companies.
Mr. Yoon also said, "It is difficult to expect the subsidy to increase unconditionally because the subscription discount rate is at 25% level. However, it is difficult for mobile carriers to strategically increase their subsidy for premium phone and high. At this point, the Chairman of the Korea Communications Commission said, not to refrain from subsidy competition.
By Kang Eun Seong esther@