Plan to let firms subsidize handset sales spooks SK

The government plans to revise a ban that blocks mobile service providers from subsidizing handset sales to subscribers; the new rules would allow them to do so for customers who have subscribed to their service for at least three years, and only for the period from March next year to March 2009. The bill would also revise a temporary ban on giving subsidies to new subscribers. The ban is to expire in March next year, but would be extended until March 2009. It also promises to allow subsidies of up to 40 percent for purchases of handsets that use WiBro, a high-speed mobile Internet service, and the wideband code division multiple access services, even to new subscribers. However, buyers of phones that use digital media broadcasting will not qualify for financial assistance. The ministry plans to fine-tune the bill and present it to the National Assembly by the end of the year. "By offering subsidies to long-term users, we hope we can make things fairer for customers," a ministry official said. The ministry said that nearly 53 percent of the subscribers to SK Telecom Co., the country's largest mobile carrier, have used the service for more than three years. The figures for KTF Co. and LG Telecom, the second and third-largest mobile carriers, respectively, are reported to be around 31 percent and 29 percent. SK Telecom Co. demanded that the ban be abolished, saying that up to 40 percent of the country's mobile phone subscribers have used the service for more than three years. The decision is expected to work against SK Telecom's interests because the company has a large number of long-term customers compared to its competitors. The company’s smaller rivals are demanding that the bill include the ban. If put into effect, SK Telecom’s rivals could offer subsidies, forcing the company to follow suit and help pay for millions of new handsets for that 40 percent share of subscribers. "We ask that the revised bill permit subsidies in all situations," a spokesman from SK Telecom said. “The issue of fairness should be about the selective nature of which customers can have subsidies,” a KTF official said. He added, however, that the bill should help to promote new technologies such as WiBro and W-CDMA services