April 26, 2024

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[THE INVESTOR] Initial talks about cutting retail prices of smartphones and mobile bills are underway under the administration of Moon Jae-in, who pledged to make mobile costs more affordable, industrial sources said on June 6.

LG Electronics said it had submitted its opinion to the Korea Communications Commission late May on regulations for device makers and mobile carriers to help uncover illicit retail practices.

“The company gave the opinion at the request of the KCC that is currently collecting opinions from industry players to submit a report to the National Assembly for legislative proposal,” an LG Electronics spokesperson said. “LG’s stance is that it wants to help stabilize the market in light of the law.”

The National Assembly is set to discuss new regulations on sales of mobile devices and bills in an interim meeting later this month.

LG proposed the disclosure of not only incentives, but also of subsidy payments by phone manufacturers and mobile carriers. 

LG G6

Under the subsidy law for mobile devices, enacted in 2014, phone manufacturers and telecom companies are allowed to subsidize purchase prices by up to 330,000 won ($295.8). But the law does not obligate them to reveal what the value of this subsidy is.

In addition to the legal subsidy, LG called on the authority to require manufacturers and carriers to make public the value of the incentives that are offered unofficially to retailers in order to promote sales of particular products. 

Both subsidies and incentives are part of mobile phone producers’ marketing costs.

Samsung Electronics has opposed the idea of disclosing the costs, citing a possible impact on its price competitiveness in the global market.

Samsung declined to comment on the issue. 

Since President Moon pledged to cut smartphone prices and reduce mobile bills for the working class during the election campaign, the talks are likely to make some progress in the upcoming legislative session.

“Once the incentives are disclosed, both manufacturers and distributors would face limited sales activities,” said an official in the telecom industry.

KCC plans to combine different opinions from the manufacturers and mobile carriers to tell lawmakers this month. The National Assembly will attempt to legislate the regulation on public disclosure of the companies’ payments on the subsidies and incentives and scrap the current upper cap on subsidies slated for earlier than September.

By Song Su-hyun/The Korea Herald (song@heraldcorp.com)