The Korea Communications Commission is facing a public backlash over the new regulations governing mobile operators' smartphone subsidies and the impact it is having on prices.
At a press conference, KCC chairman Choi Sung-joon urged the public to be patient until the law change has its intended effect of normalizing smartphone prices and leading to lower monthly fees, the Korea JoongAng Dailyreported.
Consumers have complained that the new rules are allowing operators to force consumers onto higher-cost monthly plans – the direct opposite of its intended effect.
But Choi said the main purpose of the law is to eliminate irregular subsidies that benefit only a few customers, and encouraged operators to reduce the prices of their monthly plans.
If subsidies on domestic high-end devices are reduced by too much, it will lead to the public buying more low-cost imports, which will in turn force higher subsidies on the high-end models, Choi added.
The regulations, which came into effect at the start of the month, include a monthly adjustment to the maximum subsidy cap mobile operators and handset makers can offer, and limitations preventing operators from offering heavily-discounted devices to only a portion of the population.
The maximum subsidy cap has thus been increased from 270,000 won before October 1 to 300,000 won this month.
But while Korean cellcos regularly breached the previous cap and were repeatedly punished for it, the penalties for exceeding the cap are now more severe – allowing for fines of up to 3% of an operator's and sales agent's annual revenue.