KCC looking into unfair subsidies for iPhone 5

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KCC looking into unfair subsidies for iPhone 5

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A poster at the entrance of a KT store in Seoul Friday afternoon shows the release of iPhone 5 is impending. KT and SK Telecom accepted preorders beginning at 10 p.m. that day. [YONHAP]

The Korea Communications Commission (KCC) said yesterday it will launch a probe into mobile carriers’ subsidies to iPhone 5 buyers as pre-orders for the hot new gadget due to be released Friday heat up.

The commission said it hopes to ensure fair play and prevent the market from overheating. It added that the investigation is an extension of a crackdown on unfair subsidies it began in September.

The KCC also issued precautions to marketing representatives of top carriers KT and SK Telecom earlier in the day warning them that strong measures will be imposed if rule-bending subsidies are detected.

The mobile carriers concurred on the need to maintain a stable market and pledged to cooperate, the agency said, adding that it has already spotted “excessive” subsidies among certain distribution channels during pre-sales.

According to industry figures, some Internet sites that sell smartphones were offering to sell the iPhone 5 for between 450,000 won ($415) and 550,000 won by covering 200,000 won of the original retail price in addition to the subsidies given by KT and SKT.

“Some dealers online can sell it way below the average market price by promising excessive subsidies. We will take a close look at the market seven days after the handset goes on sale,” said a KCC official.

The industry expects demand will reach 1.5 million to 2 million units by the end of this month alone.

Mobile carriers see it as an opportunity to win new customers, but the overheating competition could pose a threat to their already low operating profit structure as Apple does not provide subsidies, the KCC said.

By Kim Jung-yoon [kjy@joongang.co.kr]

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