More competition vs more cost burden¡¦¡¯complete self supporting system¡¯ communication cut effect in controversy

[ Na Won Jae nwj@ ] | 2017-06-22 10:57:12
The discussion on the introduction of ¡®Complete self-support system for mobile phone`, in which mobile phones are purchased directly from the manufacturer and the service opening only for mobile operators, is getting controversial.

Political sector and consumer groups argue that the telecommunication market is divided into services and terminals, and that promoting competition between mobile carriers in each sector can reduce the telecommunication cost of one trillion won on annual basis. And that the burden of telecommunications costs will increase.

According to the related industry on June 21, the National Planning and Advisory Committee announced a plan to cut household telecommunication charges on June 22, while the voice calling for complete self-support of mobile phones focusing on politicians and consumer groups is increasing.

Kim Seong-tae, a member of the National Assembly`s Future Creation Science Broadcasting Communication Commission, explained on June 19, saying "We need to induce competition among operators by introducing a complete self-supporting mobile phone to reduce household telecommunication costs. It can lower the communication charges of KRW 2 trillion ~ KRW 3 trillion on annual basis, and the price of handsets can be lowered due to the marketing competition between manufacturers. Mr. Kim is expected to initiate an amendment to the Telecommunications Business Act to introduce a complete self-supporting mobile phone.

The Green Consumer Alliance argues that if mobile phone subsidies are introduced, mobile carrier subsidies will be meaningless, but carriers will compete with lower-priced subscription plans to attract subscribers. An alliance representative said, "If complete self-sufficient system is introduced, mobile carriers will not be able to sell mobile phones, so there will be no need for subsidies. Instead, they will offer differentiated payment plans such as prepaid plans to attract subscribers. And it will reduce the burden of household telecommunications costs."

Meanwhile, mobile carriers argue that even if a full-price mobile phone is introduced, there will be no major change in the price system, and that the benefits for consumers will be further reduced because subsidies are reduced. The companies will not compete for a pay-per-use product until it releases a marginal product, and in the case of a user chooses a mobile phone to buy a mobile phone, the subscriber terminal subsidy will disappear.

Meanwhile, mobile carrier representative said, "Although, mobile carriers and dealers have been providing strategic funding to attract mobile phone subscribers, subsidies will disappear in markets where users choose mobile phones and benefit for users will be big.¡±

Another mobile carrier representative argued, "When complete self-support system is introduced, manufacturers will compete for subsidies for retailers with marketing costs. And once it that happens, manufacturers will not be able to lower their handset prices.¡±


By Na Won Jae nwj@


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