SEOUL, South Korea-The Ministry of Information and Communication in South Korea is considering loosening up its strict regulation on handset subsidies to help dispose of outdated mobile-phone models.
The ministry maintains a strict ban on handset subsidies, which formally went into effect in May 2000. Korea is one of few countries where handset subsidies, part of marketing activities by private firms, are formally banned.
But handset sales outlets and manufacturers continued to complain about the unfair aspect of the regulation, particularly in connection with outdated models that are no longer favored by tech-savvy mobile-phone users in Korea.
Korea has more than 32 million mobile-phone users and the trend usually favors chic, high-powered multimedia phones. The upgrade cycle is also short, making new handset models obsolete at a breakneck pace.
The snowballing inventory of old handset models is a vexing problem for sales outlets and mobile carriers, as they are legally blocked from offering any discount whatsoever, thereby losing a chance to dispose of outdated models.
The ministry is projected to flesh out specific exception cases next year. Outdated handsets, PDA (personal digital assistant) and W-CDMA third-generation handsets are reportedly considered for the exceptional cases.
Ministry sources, however, cautioned that top policymakers are divided over which handsets belong to the outdated category. Setting the specific rollout date as a yardstick to define outdated models could be abused by mobile carriers and handset manufacturers.
Korea’s peculiar ban on handset subsidies came after three mobile carriers-SK Telecom, KTF and LG Telecom-had engaged in excessive marketing and offered generous handset subsidies to stay ahead in the race. Ironically, such moves lowered the cost for signing up for a mobile-phone service, which resulted in the exponential growth in the number of subscribers over the past couple of years.
