Talks about phone price cuts begin as LG suggests disclosure

Initial talks about cutting the retail prices of smartphones and mobile bills are underway under the administration of Moon Jae-in, who pledged to make mobile costs more affordable, industry sources said Tuesday.

LG Electronics said it had submitted its opinion to the Korea Communications Commission in 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.

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 ($295.80). But the law does not obligate them to reveal the value of this subsidy.

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

The 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.

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

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

The KCC plans to gather different opinions from the manufacturers and mobile carriers, and convey them to 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 before September.

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