Mobile carriers accused of profiteering with overpriced USIM chips

[THE INVESTOR] A consumer group claimed on July 21 that South Korea’s three largest mobile carriers --SK Telecom, KT and LG Uplus -- have made excessive profits by overpricing USIM chips for smartphones.

“Utilizing their monopolistic position in the mobile market, the three firms are alleged to have earned 117.3 billion won (US$103.20 million) of unjust profits over the past two years and three months,” said Green Consumer Network in Korea. 

The figure is based on the data on sale and prices of USIM chips that the group obtained from the Ministry of Science, ICT and Future Planning and other market sources, the group explained.

According to the data, the number of USIM chips the companies sold from 2014 to the first three months of 2016 was 9.1 million units, worth 300 billion won.

The USIM chips are usually sold at mobile phone shops, which are run by individuals or managed by the mobile carriers, and their prices are set respectively by the three companies.

A USIM chip for the Long-Term Evolution network is approximately priced at 8,800 won on average while that for the 3G network is 5,500 won to 6,500 won.

The consumer group argued that USIM chips of the three firms are around 3,000 won more expensive than the LTE and 3G USIM chips of mobile virtual network operators -- 5,500 won for the LTE network service and 2,200 won for the 3G service.

It said the mobile carriers may have enough leeway to reduce the USIM prices.

Mobile carriers, however, countered the civil group’s claims, saying the price comparison is nonsense.

“The network chips which are highly priced have different functionalities such as NFC while those with a low price tag have basic functions for telecom network services,” a spokesperson from SK Telecom said.

By Kim Young-won (wone0102@heraldcorp.com)