Discounts extended to 1-year phone contracts

Due to public criticism over the Mobile Device Distribution Improvement Act’s negative effects on consumers and the smartphone market, the Ministry of Science, ICT and Future Planning on Tuesday introduced an amendment to give a monthly discount on one-year contracts.

The mobile device act previously only required mobile carriers to give the 12 percent monthly discount to customers who signed up for a two-year contract.

The discount will also apply to people who want to renew their contract at any mobile carrier without buying a new phone.

Before, customers would have to sign up for another two-year contract after their current one expired in order to get the discount, but under the new rule they can sign a one-year contract instead.

Because the new mobile law set the subsidy ceiling at 300,000 won ($273), curbing the excessive discounts that mobile carriers were offering on devices, the ministry said it hoped that cutting the cost of one-year contracts would benefit consumers instead.

“Consumers will be able to save not only on monthly communications costs, but also the cost of purchasing a new phone as they can subscribe to a one-year contract without buying a new phone,” said Kim Joo-han, director general of telecommunications policy at the Ministry of Science.

People who purchase smartphones from somewhere other than a local carrier can also get the 12 percent discount when they sign up for a plan.

Consumers who are already getting the 12 percent monthly rate cut on a two-year contract will still get the discount if they change their contract to one year.

The Science Ministry said it will distribute leaflets to smartphone retailers explaining the benefits of the measure to customers.

But according to the amendment, if a customer cancels their existing contract and subscribes to a plan at a different carrier, they will have to pay back the 12 percent discount they received in their previous contract.

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