[2023 National Audit] Flood of Criticism on 'Phone Inflation'..."Launch of 400,000 Won Range and Refurbished Phones"

Need for LTE·5G Integrated Pricing... Initial Charges Should Be Reduced

On the 27th, the National Assembly's Science, Technology, Information and Broadcasting and Communications Committee held a comprehensive audit of the Ministry of Science and ICT, during which executives from Samsung Electronics and SK Telecom appeared as witnesses, and concerns about 'Phoneflation (smartphone + inflation)' were raised. The focus was on the activation of mid-to-low-priced devices and the reduction of household communication expenses.

The audit was held with Samsung Electronics Vice President Kang Bong-gu and SK Telecom Vice President Kim Ji-hyung attending as witnesses.

[Image source=Yonhap News]

Kim Byung-wook, a member of the People Power Party, questioned Samsung Electronics about plans to supply mid-to-low-priced devices. Vice President Kang responded, "We plan to launch mid-to-low-priced devices in the 400,000 KRW range with KT before December," adding, "This year, we released 11 mid-to-low-priced models in Korea. We will strive to expand consumer choice."

There was a claim that the Galaxy M series, which is released overseas in countries such as India, should also be expanded as mid-to-low-priced devices domestically. When Yoon Doo-hyun, a member of the People Power Party, asked why the M series sold in Japan, Hong Kong, Taiwan, India, Vietnam, the UK, and other countries is not released in Korea, Vice President Kang explained, "We release products considering market demand and consumer needs. The M series was launched last year as a carrier-exclusive device, but due to low sales, it was replaced by the A series."

Park Wan-joo, an independent lawmaker, pointed out, "Out of 11 models, 9 are carrier-exclusive devices, and only 2 can be purchased on Samsung Electronics' online mall. In contrast, 21 models are sold on their own malls in France and the UK." He added, "When asked about the reason for non-release, Samsung Electronics replied it was due to differences in income levels, consumer demand, and carrier requests." Park criticized Samsung's written response by citing examples where the US and Canada, with higher per capita GDP than Korea, sell 10 models on their own malls and where devices with market demand have been discontinued. He also asked SK Telecom about their willingness to release mid-to-low-priced devices, mentioning that carriers are requesting such releases. Vice President Kim said he would request Samsung Electronics to release mid-to-low-priced phones, and Vice President Kang responded that they would release them upon SK Telecom's request.

There was also an opinion that used phones and renewed phones (refurbished phones) should be activated. Refurbished phones are inspected and sold products that were returned or used as display models. Heo Eun-ah, a member of the People Power Party, pointed out, "According to market research firms, over 10 million used phones are traded annually in Korea. Samsung Electronics has been selling renewed devices as refurbished phones since 2019," but added, "However, they cannot be purchased domestically. They are only sold in the US, UK, and France." She continued, "When asked why Korea is excluded, they said that infrastructure must be built and capital is required when launching products, so they only sell in some countries as a pilot. But no country has better infrastructure capital than Korea. If immediate launch is difficult, at least conduct a demand survey first." Vice President Kang replied, "Based on the proposed pilot operation, we plan to launch renewed phones in Korea as well."

Byun Jae-il, a member of the Democratic Party of Korea, urged Vice President Kang, "When returning the Galaxy Z Fold4 and purchasing the Z Fold5, compensation in Korea is 1.06 million KRW, but in the US, it is 1.63 million KRW. Koreans should receive at least the same treatment." He also said, "After changing devices, there is anxiety about personal information leakage when selling the previous device as a used phone," and requested, "Minister Lee Jong-ho and Vice Minister Park Yoon-kyu of the Ministry of Science and ICT should consider legislation mandating personal information deletion when buying and selling used phones as a practical alternative."

Vice President Kang Bong-gu of Samsung Electronics (left) and Vice President Kim Ji-hyung of SKT (right)
[Photo by National Assembly Broadcasting System]

Questions about communication plans continued. Park Wan-joo urged the introduction of a policy allowing subscription to LTE plans on 5G devices, as the government announced a communication competition promotion plan to enable this. He also said a starting plan in the 30,000 KRW range should be launched for 5G. Especially, he emphasized launching the new plan within the year as a Christmas gift.

Vice Minister Park said, "We are working to eliminate discrimination by device type and lower the minimum starting plan. However, since the network continues to evolve and there are industrial development factors, we will review comprehensively." Vice President Kim agreed with the direction, saying, "We will prioritize reviewing allowing LTE plans on 5G devices. However, for LTE devices using 5G, we will proceed carefully considering service aspects and network evolution."

Recently, SK Telecom and SK Broadband ended a dispute with Netflix after three years by establishing a cooperative relationship. There are criticisms that the National Assembly has lost legislative momentum. Vice President Kim stated, "The company's position is that network usage fees should be determined according to the scale of traffic used," adding, "We will comply with what is decided by the National Assembly."

Voices demanding responsible attitudes from the witnesses were also raised. Jang Je-won, chairman of the Science, Technology, Information and Broadcasting and Communications Committee, warned, "If answers are not given sincerely, we will summon the CEOs of each company as witnesses and hold a hearing to stabilize communication fees." Cho Seung-rae, a member of the Democratic Party of Korea, said, "The same thing was said at last year's audit, but we are saying the same thing again a year later in the audit," urging, "Please speed up the discussions."