Pricier smartphones in Korea are the problem: lawmaker

The average price of a smartphone sold in South Korea is higher compared to other countries resulting in Koreans suffering from high mobile costs, a lawmaker argued Tuesday, citing a Gartner survey on premium smartphones sold around the world.

Rep. Byun Jae-ill of the ruling Minjoo Party of Korea said installment payments for handsets have taken up a growing portion of households’ monthly mobile costs.

According to a recent survey by Gartner, the average selling price of handsets stood at $514 in Korea as of the second quarter this year, which is 2.6 times higher than that of non-Korean markets at $197. Samsung phones were sold at $223 overseas, which is 2.3 times higher than the domestic average. LG Electronics’ average selling price also came to $176 in non-Korean markets, compared to $361 in Korea.

Between 2015 to June of 2017, the average price of Apple’s iPhones were $758, making it the most expensive brand in the Korean market. Prices of Samsung phones averaged at $508 during the same period, the survey showed. 

The main reasons behind the average price gap is South Koreans’ penchant for premium phones, and fewer occasions of new launches and supplies of budget phones in the country, observers said.

The Gartner report showed Koreans have a stronger preference for pricey phones compared to foreign consumers, considering that the country’s smartphone market is largely comprised of premium phones, which accounted for 87.9 percent of the market as of the fourth quarter of 2016.

In other countries, premium phones took up about 32 percent of each market, it said.

But even when comparing the same models of the premium smartphones, they were being sold, on average, at prices higher than about 92,000 won ($81) than other countries.

“Koreans used to visit Japan to buy Japanese electronics such as Sony products in the past, but no foreigner seems to come to Korea to buy Samsung phones,” Byun said.

“The government’s efforts to help reduce mobile costs by pressing mobile carriers to cut mobile bills are facing a limit,” the lawmaker said, suggesting expanding the supplies and choices of budget phones as one of the alternatives. “The government and political circle need to deal with the price problem.”

In a survey conducted on 1,000 adults from Sept. 12 to 22 by Green Consumer Network in Korea, 56.5 percent of the respondents pay more than 30,000 won for their mobile devices per month.

The Moon Jae-in administration has made it a priority to tackle the issue of mobile phone bills in order to ease economic burdens of working-level households.

The government implemented a package of cost-cutting measures, mostly by forcing telecom firms to lower their service prices, in mid-September.

Due to the policy implementation, the country’s three telcos -- SK Telecom, KT and LG Uplus -- are forecast to see a 0.5 percent drop in their operating profits in the third quarter from a year earlier, according to financial information provider FnGuide.

“The impact of the government regulations was not yet reflected in the Q3 earnings,” said a report by IBK Investment & Securities. “The companies would see greater losses in the fourth quarter as their profits fall while marketing costs continue rising.” 

By Song Su-hyun (song@heraldcorp.com)