Phone bill discount ceiling to rise

The Ministry of Science and ICT and the Korea Communications Commission confirmed that they will implement measures to pull down monthly phone bills at a meeting hosted by Prime Minister Lee Nak-yeon at the Seoul Government Complex on Thursday.

The discount ceiling on monthly phone bills will be raised from 20 percent to 25 percent today and socially vulnerable groups will get 11,000 won ($9.72) off their bills as early as the end of the year.

In the local telecom market, customers can either choose to get a lump-sum discount when they buy a new phone or subscribe to a one- or two-year plan and get a discount of up to 25 percent off the monthly bills.

As the discount cap is raised in time with the release of new phones like Samsung Electronics’ Galaxy Note8 and LG Electronics’ V30, industry insiders expect many consumers to subscribe to new phone plans when purchasing new devices.

While about 27 percent of smartphone users are already subscribed to long-term plans, according to estimates from Daishin Securities, the ICT Ministry concluded that those with less than six months left in their contracted period can cancel the original plan and register for a new long-term plan subject to 25 percent monthly discounts.

As for socially vulnerable groups, which include low-income earners and retirees, the ministry said it will revise policies by the end of this year to make 11,000 won cuts available monthly.

Korea Communications Commission is also supporting the ministry to cut household phone bills by lifting the ceiling on the lump-sum discounts offered by mobile carriers on new phone purchases.

The ceiling was set at a maximum 330,000 won for newly released phones, but it will be lifted from the beginning of next month.

The unlimited cap will let mobile carriers use diverse marketing strategies to attract customers, especially when new premium smartphones like the Galaxy Note8 and the recently unveiled iPhone series are priced above 1 million won.

“To prevent excessive competition in the market, we will implement measures to stabilize market competition,” the Korea Communications Commission said in a statement.

The government established a new organization under the Ministry of Interior and Safety to monitor the impact of the new measures in order to inform future policies.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]