Foreign handset  makers eye Korea’s low-end market


A cell phone blacklist system takes effect from Tuesday, allowing consumers to buy a handset through any distribution channel and activate network service just by inserting a universal subscriber identity module chip.

Only blacklisted phones that are reported stolen or lost by their original owners would have limitations in accessing a mobile network, said the Korea Communications Commission.

With the distribution channel for handsets getting more diversified, the state-run Internet watchdog predicts that consumers would have more choices while the overall phone prices are lowered gradually.

“Even though the domestic phone market is largely dominated by premium smartphones, that doesn’t necessarily indicate there is no demand for cheaper, low-end phones,” said a KCC official.

Industry watchers say that people who prefer to use high-end smartphones such as Samsung’s Galaxy phones or Apple’s iPhone would see no apparent benefit from the new system.

They say, however, it will be a lot easier to purchase cheaper phones worth about 300,000-400,000 won ($270-350) at new venues such as discount store chains, convenience stores and online shopping malls. The average price of smartphones newly launched for the past year hovers at around 1 million won or greater.

With local handset makers Samsung and LG having no immediate plan to launch low-end models, global companies like China’s Huawei and ZTE are preparing to enter Korea in partnership with major retailers.

“Considering that it would take months for them to complete preparations, the sale of foreign brand cheaper phones is expected to start as early as July,” said the official.

Individual consumers are also allowed to bring one phone from abroad and use it here if they submit an application to the KCC.

The agency, however, said that the use of import phones can be limited when they are made only for domestic use, advising to check details such as technical specifications and frequency spectrum.

Another problem is the after-sales service issue.

Telecom companies say they cannot guarantee the network quality of the phones that are not purchased through their distribution channel, especially those from abroad.

Before launching a new handset model, manufacturers, including foreign brands, carry out a network test together with mobile carriers that would distribute their products.

“Under the new system, we have no responsibility for the phones sold by other retailers,” said an official from a local telecom carrier.

Companies have also yet to reach an agreement with the KCC on possible discount of monthly fee plans for USIM only customers even though they offer some 20 percent cheaper deals for long-term subscribers who purchase phones through them.

The KCC official said that related discussions were still ongoing, adding that “The cooperation of local telecom firms and handset makers is essential for the soft-landing of the blacklist system.”

By Lee Ji-yoon (jylee@heraldcorp.com)