The South Korean authorities have warned mobile carriers about their smartphone subsidy offers surpassing the legal limit to retail shops, officials said Monday, after the promise of great deals spurred midnight queues of ardent buyers scrambling to get the new iPhone 6 over the weekend in Seoul.
The Korea Communications Commission and the Ministry of Science, ICT and Future Planning urgently called in officials of SK Telecom Co., KT Corp. and LG Uplus Inc. on Sunday and gave a stern warning against illegal subsidies, government officials said.
The warning came after some retail shops advertised via Internet community sites that they would sell the 16-gigabyte iPhone 6 at a third of the normal price, prompting hundreds of people to line up in a bustle to get them on the first weekend since the new handset’s Friday launch.
The factory price of the 16-gigabyte iPhone 6 is 789,800 won (US$733). Mobile carriers, under the newly enacted handset distribution law that took effect Oct. 1, are allowed to offer a subsidy of no higher than 300,000 won per handset.
But the retail stores sold them for 100,000-200,000 won, helped by a large sum of incentives mobile carriers promised to pay upon each new subscription.
The watchdog vowed stern actions will be taken against the mobile carriers and retail shops responsible for distorting the market, including bringing criminal charges against them.
The current handset law stipulates mobile carries must pay a fine equivalent to 3 percent of their annual revenue for offering illegal subsidies.
But the cut-throat competition and growing demand for the new iPhone has led the mobile carriers that are chasing after a bigger market share to spurn the law a month after it came into effect.
Data from the three mobile carriers showed that the weekend throng has taken away some 5,284 subscribers from KT, with SK Telecom having lost 1,182 users.
Smaller player LG Uplus, in contrast, trumped the two rivals by logging a net increase of 6,446 new subscribers through iPhone 6 sales.
Since the watchdog’s warning, some new iPhone 6 buyers posted on Internet community sites that they received calls from retail shops Monday and were informed that their subscriptions have been canceled due to piled-up orders. (Yonhap)
