Prices of phones are finally falling

In the fourth week since the Mobile Device Distribution Improvement Act took effect, conditions in the smartphone market are changing as LG Electronics lowered the launch price of its smartphones.

LG Electronics announced yesterday that it is lowering the launch prices of smartphones G3 Beat, G3 A and Gx2. This is the first time that a phone manufacturer has cut the launch price of their product since the anti-subsidy law went into effect this month.

The price of the G3 Beat was lowered to 429,000 won ($407) from 499,400 won at SK Telecom, KT and LG U+.

A consumer can purchase a G3 Beat for 174,000 won at KT, receiving a 255,000 won subsidy for subscribing to a 97,000 won Unlimited LTE Monthly Plan on a two-year contract.

If a consumer subscribes to KT’s monthly plan at 80,000 won a month, the price of the G3 Beat rises to 239,400 won with a 190,000 won subsidy, according to KT.

The G3 Beat is a more affordable version of LG Electronics’ flagship smartphone G3, being smaller and having a lower display resolution and CPU capacity.

The G3 A, which can only be purchased from SK Telecom, has been reduced to 649,000 won from 704,000 won. The Gx2, sold only by LG U+, is now 599,500 won, down from 693,000 won.

In addition, LG Electronics said it is negotiating with mobile carriers asking to cut the price on the G3 from 899,800 won to 840,000 won.

Samsung Electronics, the No. 1 player in the local smartphone market, is also negotiating with mobile carriers to lower phone prices. It is considering cutting the price of the Galaxy S4 by 5 percent to 10 percent from 690,600 won.

Industry analysts said the mobile industry was heavily criticized at a parliament audit, and phone manufacturers and mobile carriers are now reacting to that criticism.

It was expected that the launch of Apple’s iPhone 6 and iPhone 6 Plus on Oct. 31 would trigger bigger subsidies for local phones. But mobile carriers are saying they may raise the subsidies early as local manufacturers lower the prices of phones.

Some mobile carriers are boosting other forms of marketing along with the price drop on phones. KT, the nation’s No. 2 mobile carrier, has begun introducing new monthly plans that expand customer benefits.

KT said it will start taking subscriptions to a monthly plan that does away with penalties for contract cancellations from December.

Customers with existing monthly plans can switch over to the new plan without having to pay a penalty.

Until now, the mobile carriers have maintained the same subsidies since the first week of October. They can adjust the subsidies once a week, according to the Mobile Device Distribution Improvement Act.

“In order to resolve instability in the mobile industry, we restructured some of our monthly plans,” said Nam Kyu-taek, head of KT’s marketing division.

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