“Foreign manufacturing cooperation in question”…Difficulties in subsidy separation expected
Kang Eun Seong | esther@ | 2017-09-13 11:11:12

The announcement of the subsidy by the Korea Communications Commission is likely to walk on the path of the thorn farm until the actual implementation. Samsung Electronics has made a basic stance that it will follow the government`s policy, but it is necessary to participate in all of the foreign manufacturers such as Apple iPhone in order to implement it.

According to the telecommunication industry on September 12, it is analyzed that the separation announcement system being promoted by the KCC will not be easy to carry out due to the participation of foreign manufacturers and the nature of global industries.

Separate disclosure is a separate announcement of the subsidy paid by the carrier and the subsidy paid by the manufacturer. Currently, three mobile communication companies disclose subsidies to users in accordance with the Mobile Distribution Restructuring Improvement Act (hereinafter referred to as the ‘Law to limit phone subsidies’ Act), but manufacturers are not obliged to do so. The Korea Communications Commission (KCC) reports that it is not transparent how much the manufacturer incentive (subsidy) is. It is the purpose of the `separation announcement system` that not only carrier subsidies but also manufacturer subsidies should be disclosed transparently in order to regulate this.

Experts, however, believe that there will be a lot of friction when they implement separation disclosures. There is no legal basis to enforce it, and there may be a reverse discrimination with the foreign handset maker. A mobile phone policy specialist said, "In order to implement disclosure, it is necessary to have a legal basis to disclose to the target company and to punish violations. In draft draft law, a disclosure notices "As a result, there are no legal grounds for enforcing the separation disclosure right now," he said.

The problem is whether the Korean government has the authority to enforce the disclosure of subsidies to foreign manufacturers.

Samsung Electronics, a Korean company, took a position that it could accept the disclosure notice. Kim Jin-hae, managing director of Samsung Electronics Korea, said on the day of the Galaxy Note 8 Media Day, "We will follow if the government has a plan to implement the whole."

However, Mr. Kim`s remarks seem to have hidden the ‘lead’. The whole plan is based on the assumption that the government will have to make arrangements for Apple`s iPhone, foreign makers such as Huawei, Xiaomi and Sony to follow separate disclosure. "I will not officially respond," he said, "basically Apple has no manufacturer rebate."

The mobile phone policy specialist said, "Manufacturers such as Samsung have a small portion of the domestic market and are the main players in the global market. If they disclose the amount of subsidies to Korean mobile phone companies, they will have a very negative impact on negotiating handsets with overseas telecom operators. "As a result, if Samsung does not want to be hit by overseas business, it should eliminate or greatly reduce the subsidy paid to domestic consumers so that it does not affect business with overseas carriers. In this case, "Consumers are going to wear it because of rising prices." Kim said, "The implementation of the split announcement affects the global market," said Kim. "The domestic market accounts for only 5% of the global market."

By Kang Eun Seong esther@

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