Competition overheated mainly online for early results ahead of Lunar New Year
Taking advantage of Phoneparazzi’s absence… Worries are mounting for the Galaxy S22 unboxing next month
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Foldable smartphone from Samsung Electronics, the Galaxy Z Flip 3 has become a “free phone”. This is the first time since its launch in August last year that the price of cash payment with illegal subsidy has changed to “KRW 0”. Analysts say ahead of the Lunar New Year holiday, online stores are showing signs of overheating competition to secure revenue.
According to the mobile phone distribution industry, on the 17th, the Galaxy Z Flip 3 “free phone” sales policy was first lifted in shrines such as Daegu and Gyeongbuk last weekend, then is extended sequentially to Seoul and the metropolitan area. This is a condition for subscribing to a 90,000 KRW tariff plan after porting the number to a specific operator.
The regular factory price of the Galaxy Z Flip 3 is 1,254,000 KRW and based on the 90,000 KRW price plan, the 500,000 KRW subsidy announced publicly by the carrier. This means that more than 700,000 KRW of excess subsidy has been fixed in order to price the cash payment at “0 KRW”. Additionally, there are places where you can buy the Galaxy S21 for “KRW 0” and the Galaxy Z Fold 3 for KRW 560,000, which is just opened, never used.
The reason online sanctuaries and the like have been operating illegally aggressively since the start of the year is to get results early in light of the holiday trading vacancy at the end of this month. While the unveiling of Samsung Electronics’ new flagship smartphone, the Galaxy S22 series, is expected early next month, it’s also interpreted to get rid of inventory of older models.
The incentive payment transparency system introduced last year by the three mobile operators to prevent repeat violations of the law on the distribution of mobile terminals is still not having much effect. The computer is linked to the official dealer and is ineffective in detecting or blocking illegal subsidy inducements (discounts) in other stores.
The “reward for reporting unfair action on mobile phones” (Phoneparazzi) also ceased operations in November last year, leaving a considerable vacuum in the management and supervision of the market. The Korean Communications Commission’s mobile terminal distribution investigation team, which is responsible for managing the distribution network, is physically difficult to crack down on illegal business activities that occur nationwide, as the organization is reduced to the size of a team.
The industry fears that after the global unboxing of the Galaxy S22 series, the overheated competition with high-level illegal subsidies of the pre-order period will intensify. As manufacturing costs are expected to increase due to a shortage of parts supply, consumption is expected to increase, depending on illegal subsidies.
The Korea Communications Commission first asked mobile operators to plan an implementation plan to expand and apply the incentive payment transparency system to retail stores. In the future, if not properly implemented, increased penalties will be considered. In addition, they plan to set up a regular survey system to fill in the gaps in the functioning of Phoneparazzi.
An official from the Korea Communications Commission said, “The management and supervision function is partially weakened in the process of system change due to changes in the market environment. Demand responsible actions from mobile operators and prepare additional measures such as a regular survey system so that the market order can be maintained.
By staff reporter Jeong-eun Park (jepark@etnews.com)