Citizens want telecoms to offer bigger subsidies

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Citizens want telecoms to offer bigger subsidies

Citizens and consumer organizations held a forum yesterday to share their criticisms of the Mobile Device Distribution Improvement Act and tried to find solutions through discussions.

At the forum at the Franciscan Education Center in Jeong-dong, central Seoul, Cho Dong-geun, an economics professor at Myongji University and chairman of Citizens United for Better Society (CUBS), said the law benefits mobile carriers instead of consumers, and that manufacturers and retailers are suffering from poor sales.

The economics professors, Consumer Watch and CUBS members asked the government to remove the 300,000 won ($282) subsidy ceiling.

“In order to resolve the current situation, enabling price competition between mobile carriers or scrapping the mobile act is necessary,” Cho said.

Cho pointed to a cost approval system that has been in place for years as another major contributor to the high prices. Under the system, the No. 1 mobile carrier SK Telecom sets the price for its monthly plans first, which are approved by the government. The other two mobile carriers then match their listed prices to SK Telecom’s and also receive government approval.

“Under the current law, when the mobile carrier with the highest market share receives approval from the government to set its prices, the other two companies follow.

“If the goal is to lower the household burden of communications costs, the system should be eradicated and competition over monthly plans prices must be encouraged,” he added.

Other participants also criticized the subsidy ceiling, saying it was driving prices up by not allowing free competition in the market.

“Businesses in the mobile communications market were competing freely by rolling out subsidies. However, restricting the competition by limiting subsidies has undermined consumers’ rights,” said Song Jung-seok, an economics professor at Chung-Ang University.

Lee Byung-tae, a professor at the Korea Advanced Institute of Science and Technology’s College of Business, expressed concern over the telecoms’ weekly subsidy announcements.

“In sum, we can call the new law a weekly fixed price system announced to the public. The mobile carriers do not raise the subsidies because they are trying to read each others’ thoughts while walking on eggshells. This eventually leads to undercutting consumers’ benefits,” Lee said.

The minister of science, ICT and future planning and the chairman of the Korea Communications Commission are scheduled to hold an emergency meeting with CEOs of mobile carriers today.


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