KCC chief says to stay calm over subsidy act

Choi Sung-joon, chairman of the Korea Communications Commission (KCC), which created the Mobile Device Distribution Improvement Act that was implemented on Oct. 1, held an emergency press meeting yesterday regarding public outrage over the new regulations.

Amid growing backlash to the three mobile carriers’ significantly reduced subsidies, Choi asked consumers and retailers to be patient until the law achieves its goal of normalizing the prices of smartphones and cutting monthly fees.

“We have set the subsidy ceiling at 300,000 won [$280], but it does not mean that the law will provide 300,000 won of subsidies to everyone,” the chairman said at the press conference.

“The main purpose is to eradicate irregular and guerrilla subsidy benefits that only some consumers have enjoyed. What we should do now is find improvements to be made for consumers within the law.”

Consumers have claimed that the Mobile Device Distribution Improvement Act is helping mobile carriers pressure their customers into subscribing to more expensive monthly plans. According to the new regulation, customers who subscribe to more costly plans get a bigger subsidy.

“There are some views that the law only benefits mobile carriers in attracting customers to more expensive monthly plans. Mobile carriers should cut the price of monthly plans or increase the data amount offered to benefit their consumers,” Choi said. “If they don’t, the government will have to encourage them to do so.”

As the mobile carriers have been spending less on marketing thanks to the regulation, the KCC chairman said that their gains should be returned to their subscribers.

Choi also encouraged smartphone manufacturers such as Samsung Electronics and LG Electronics to cut their phone prices to match what they sell for overseas by providing more subsidies.

“If the amount of subsidies [from phone makers] continue to decline, consumers will naturally turn to low- to mid-priced smartphones from foreign manufacturers, which are much cheaper and have similar functions,” Choi said.

“I expect that the Korean smartphone makers will inevitably have to provide more subsidies to attract consumers.”

However, he said that the government cannot get involved in the monthly fees that mobile carriers are charging.

“The government cannot directly intervene to set the price of monthly plans. The mobile carriers will change their strategies if the consumers continue to neglect them, and move toward cheaper Chinese smartphones and thrifty mobile virtual network operators [MVNOs],” he said.

Although the chairman responded to all major issues and questions throughout the conference, he did not provide an obvious solution to the current situation.

BY KIM JUNG-YOON [kjy@joongang.co.kr]