Cellular phone makers lament restrictions on SK

SK Telecom is banned from new business for 40 days because of illegal marketing practices. As a result, cell phone manufacturers that produce phones solely for SK Telecom are concerned. Starting yesterday, SK Telecom will not be able to sign up any new subscribers for the 40-day period. This restriction was set by the government after it discovered in June that the three major mobile service providers ― SK Telecom, KTF and LG Telecom ― were secretly providing funds to dealers so that they could lower the price of cellular phone handsets. KTF was banned from recruiting new customers for 30 days in June and LG Telecom was banned for 30 days in July. As the largest wireless service provider in Korea with over 50 percent of the market, SK Telecom will lose about 600,000 subscriptions over the next month, analysts estimate. In the last month, SK Telecom has received an average of 15,000 new service subscriptions every day. The government restriction not only prevents SK from accepting new customers, but also forbids subscribers of KTF or LG Telecom from switching service providers to SK. Current SK Telecom service users, however, are allowed to change over to KTF or LG Telecom. This restriction does not affect current SK service users. Subscribers to SK Telecom’s service may change their handset models, and can apply for extra services like caller ID or new ring tones. Users can also change the name of the contract holder. Given this situation, analysts say the actual victims of this restriction are not the consumers, but the companies that make handsets for SK Telecom. Although major mobile phone makers such as Samsung Electronics supply SK Telecom, it is not their sole client. But for such manufacturers as SK Teletech, VK Corp. and Motorola Korea, the situation is very different. In Korea, these companies work exclusively for SK. Moreover, the restricted period for SK Telecom is 10 days longer than for the other two service providers. SK Teletech, an affiliate of SK Telecom, provided 600,000 phones in the first half of the year, its main product brand being SKY. The company, however, will be practically jobless for the next 39 days. VK Corp. provided 52,000 phones last month to SK Telecom, but has not yet received an indication from SK of how many phones it will buy. “We are going to focus more on our exports,” said managing director Kim Young-taik. Motorola Korea said it will have to postpone the release of new models and focus on promoting those already on the market. “Although SK can’t accept new subscribers, existing subscribers can switch their handsets so we’re going to narrow our marketing down to those consumers,” a Motorola official said. by Lee Hee-sung, Wohn Dong-hee