New policy aims to benefit all phone plan users

In October, subscribers to all three mobile carriers can decide whether they want to purchase a new smartphone or use their old device, and will still receive a subsidy or a monthly discount for the duration of their contract.

The change is part of an amendment to the mobile phone retail act made by the Ministry of Science, ICT and Future Planning that will take effect in October.

The ministry yesterday laid out the policy as a follow-up measure to the Korea Communications Commission’s (KCC) decision on Wednesday to adjust the subsidy ceiling for mobile devices every six months between 250,000 won ($246) and 350,000 won.

As of now, the telecom companies only give large subsidies to users who are on an expensive monthly plan, paying about 80,000 won to 120,000 won per month, in the form of a one-time discount on a newly purchased device. The telecom giants use the program to attract customers to expensive monthly plans and buy new smartphones.

Under the current mobile phone act, subscribers to cheap monthly plans of about 20,000 won to 30,000 won receive almost no subsidy, and those who bring their own phone get no benefits.

But starting in October, people who choose a cheap monthly plan or bring their own smartphone will still get a discount, which will be proportional to the price of the plan. The government hopes the policy will even out benefits given to mobile users.

“Suppose that the KCC fixed the subsidy ceiling at 300,000 won,” said Ryu Je-myung, director of the telecommunications service policy division at the Science Ministry. “In the past, only those smartphone buyers who also subscribe to a super expensive monthly plan could receive the full amount. Starting in October, people who choose plans of 30,000 won to 40,000 won will be subsidized about 100,000 won.

“The amount of subsidy expands in proportion to the size of the monthly plan, but we estimate that all subscribers to high-end plans of more than 80,000 won will receive a subsidy near the ceiling,” Ryu added.

The ministry’s amendment also orders mobile carriers to give discounts to subscribers who didn’t receive a subsidy when they initially signed up and to users of smartphones older than two years.

The ministry said it wants to stop the telecom market from profiting by luring customers into expensive monthly plans and buy new phones.

“Telecom operators have made it difficult for people to resist buying a new phone with the subsidy,” Ryu said. “But there are so many people who still want to use their existing phones after their contract ends.”

BY KIM JI-YOON [jiyoon.kim@joongang.co.kr]