Protecting consumer choice

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Protecting consumer choice

It is widely known that the multifunctional smartphones available in the local market are exorbitant in price and features, limiting consumer choice and resulting in hefty phone bills. The JoongAng Ilbo discovered that the average price of the 21 models released by local cellphone manufacturers this year was 850,000 won ($780). Removing two standard models from the pool, the average price exceeded 900,000 won.

Smartphones have become so common in Korea that they are even owned by elementary school students. They are almost exclusively available with advanced features, huge storage and over-the-top functions.

As a result, a number of consumers who largely use cellphones the old-fashioned way - to call people - have no choice other than to buy highly advanced multifunctional phones that are hard to comprehend. Manufacturers do not offer domestic consumers the simpler, lower-end smartphones they export to other countries. It is difficult to find a cheap local brand, which seriously undermines consumer choice.

Manufacturers have come up with the poor excuse that they cannot release lower-end models at home because local carriers do not want the cheap models to be released in the market.

The reasoning is clear. Mobile operators get higher profits from expensive, multifunctional phones that eat up data.

However, the lack of consumer choice translates into higher prices for handsets. While carriers offer to subsidize the cost of the handsets, consumers have to accept higher fixed monthly fees, longer contracts or both.

They simply cannot get a deal on their phones anywhere.

To solve such a structural problem, distribution and market channels should be broadened by separating the cost of handsets and telecommunication services. More access to the mobile virtual network operator (MVNO) services that borrow radio spectrums from conventional mobile networks is a good option.

The MVNOs can help to widen the marketing mix, satisfy various customer segments and reduce the costs of handsets and service. To make this work, we must have a larger variety of phones and services available in the intermediary wireless service network.

At the same time, handset manufacturers should guarantee consumers the right to choose by churning out more diverse types of mobile phones instead of making unreasonable excuses.

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