Prices may fall as handsets appear in grocery aisles

Consumers in Korea can now buy a mobile phone from convenience stores, online shopping malls and shops run by handset manufacturers such as Samsung and LG Electronics, the Korea Communications Commission said yesterday.

They can then take the gadget to a service provider like SK Telecom, KT and LG U+ to launch a line, whereas previously, only carrier-operated shops were authorized to perform this service.

The move is expected to pave the way for cheaper prices and a greater wealth of choice.

Under the newly introduced government measures, users can also immediately start using handsets purchased overseas as well as used cell phones by inserting a universal subscriber identity module chip.

Previously, the handset needed to have a serial number called the international mobile equipment identity (IMEI) registered with one of three mobile service operators.

As such, phones lacking an IMEI recorded in the government’s database could not be used. The commission has now scrapped the policy and even registers the IMEIs of lost and stolen handsets. For that reason, the new rule has been nicknamed the “blacklist policy.”

The commission will also have large discount chains such as E-Mart and Homeplus set aside shelves displaying handsets around June or July. These will mostly be lower-cost models or ones that have long remained in their inventories.

Hong Jin-bae, an official from the commission’s communications policy bureau, used the example of Samsung’s Galaxy Y, a budget Android smartphone, to illustrate the benefits.

The model was launched last year exclusively for overseas distribution, but Samsung will now produce the model domestically and put it on sale at various stores in Korea, except for offline stores run by mobile carriers.

“Mobile carriers have only been interested in selling expensive phones that give them large profit margins,” said Hong. “That has hindered the circulation of lower-cost handsets, although we think demand for them remains very high. Whereas Galaxy S smartphones cost around 1 million won ($885), the Y model costs just one-quarter of this. From now on, stores that are not attached to mobile service providers will be selling the [cheaper models].”

Since the government has promised not to interfere with the sellers’ pricing and marketing schemes, shops eligible to sell handsets will compete against each other to offer lower prices to attract more customers, according to the commission’s ambitious projection.

However, the issue of monthly fees remains a potentially contentious one.

For expensive smartphones, mobile carriers provide subsidies dubbed “discounts” to customers who sign contracts with a single carrier for two years or longer. But the carriers have yet to unveil monthly plans for purchasers of the lower-cost cell phones that went into circulation yesterday.

By Seo Ji-eun [spring@joongang.co.kr]