Smartphone subsidy info goes online Oct. 1

Consumers will be able to access information about factory prices of smartphones and subsidies of mobile carriers and manufacturers starting Oct. 1.

The Korea Communications Commission decided on Friday to implement the Act on Improvement of the Terminal Distribution Structure to promote pricing and subsidy transparency.

Subsidies can be offered by both manufacturers and mobile carriers.

The move is intended to prohibit mobile carriers from giving large subsidies only to customers who subscribe to expensive plans.

The government will adjust the subsidy ceiling between 250,000 won ($241) and 350,000 won every six months. The maximum subsidy has been 270,000 won since 2010.

By law, smartphone retailers can add 15 percent to the maximum subsidy.

The government, however, will continue to crack down on illegal subsidies in order to make sure the subsidy ceiling works effectively.

It will also monitor so-called “guerrilla subsidies” offered by mobile carriers on the Internet for certain hours on specific dates.

Manufacturers have opposed the subsidy-disclosure requirement, saying it could aadversely affect their competitiveness by revealing confidential business information.

“For subsidies manufacturers provide, there are differences in the domestic ones and overseas ones,” said Lee Sang-hoon, Samsung Electronics’ chief financial officer. “When the information is disclosed, we could see a serious loss of overseas business.”

“As overseas business accounts for a large portion of smartphone sales, when sale prices and subsidy information are disclosed to foreign mobile carriers, they will demand the same deal,” said a local analyst.

“If foreign manufacturers in the domestic market such as Apple decline to disclose their smartphone factory prices and subsidies, it could also cause a trade conflict that would only victimize Korean companies.”

While acknowledging the potential problems, the KCC decided to push ahead with the law as it puts more emphasis on the right of consumers to compare prices, and promotes transparency and uniformity.

It also is likely to expand choices for consumers because they will no longer need to subscribe to expensive monthly plans to receive subsidies.

Meanwhile, as the market for luring customers from one carrier to another with excessive subsidies has cooled, mobile carriers are competing with different services.

They have introduced discounts for group monthly plans for families or those who bundle mobile phone, Internet and IPTV services.

LG U+, the nation’s third-largest mobile carrier, introduced the U+ family and friend discount, which provides savings when customers recommend LG U+ to friends, families and colleagues.

With the launch of a family discount, SK Telecom, the No. 1 mobile carrier in Korea, says it attracted 1 million subscribers in just two months.

The monthly plans also have been diversified to lure customers with targeted discounts.

KT, the nation’s second-largest mobile carrier, joined with GS Caltex to establish the Olleh LTE GS Caltex monthly plan, which gives mobile refueling coupons worth 10,000 won a month along with 400 minutes of voice calls, 400 text messages and 5G worth of data for 54,000 won.

LG U+ affiliated with Woori Card and launched LG U+ Woori Card to discount monthly plans by as much as 15,000 won according to the amount of money charged using the Woori Card.

By kim jung-yoon [kjy@joongang.co.kr]