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The Terminal Distribution Structure Improvement Act should be enacted to ease consumers’ financial burden. |
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#701 Seoul YWCA 20, Myeong-dong 11-gil, Jung-gu, Seoul, Korea
TEL.: 82-2-774-4050/FAX: 82-2-774-4090
The Terminal Distribution Structure Improvement Act should be enacted to ease consumers’ financial burden.
The non-transparent, discriminatory price discounts given to phone terminal purchasers are cited as the most serious cause of the current problem related to terminal distribution. Phone terminal prices vary depending on the date or even hour when a purchaser buys one or the store or sales clerk from which/whom one is bought. It is hard for consumers to get accurate information on terminal prices.
The way price discounts distort consumers’ view of terminal prices is a serious problem. Domestic smart phone prices are 20 ~ 30% higher than those in foreign countries. Due to the current practice of non-transparent, discriminatory price discounts, consumers wonder whether the prices they pay are reasonable or not. According to a recent survey of smart phone prices in 15 major cities worldwide, the prices of Samsung Electronics’ (Galaxy Note 3) and LG Electronics’ (G2) smart phones were higher in the domestic market than outside the country. In other words, Korean consumers pay higher prices for domestically made goods than those outside the country. In June 2013, the Green Consumer Network conducted a survey among 826 consumers regarding mobile telecom charges. About 35.7% of the respondents said that the installment payment for the phone terminal constituted the highest portion of their communications expenses, a result of the high-priced premium phones dominating the domestic market. The distortion of the distribution structure of the market due to the overheated competition in price discounts makes consumers’ burden of communications expenses heavier. The situation is exacerbated by consumer’s preference for high-priced smart phones, the distorted terminal price structure, and consumers’ frequent replacement of terminals and unnecessary subscription to high-priced programs.
Lawmakers are pushing through with the enactment of the Terminal Distribution Structure Improvement Act in an effort to normalize the terminal distribution market and to reduce damages incurred by consumers due to the overheated competition over non-transparent, discriminatory price discounts. The relevant bill prohibits discriminatory price discounts to ensure equity for all consumers and requires phone businesses to make the structure of price discounts transparent by serving a public notice on the conditions for price discounts.
Some businesses express objection to the enactment of said law, saying that it will adversely affect the country’s global competitiveness and industrial development. We advise them to think about what they have done first instead of complaining about the new law -- they have sold domestically made phone terminals at higher prices to domestic consumers than to foreigners and low- to medium-priced smart phones only outside the country.
In November 2013, we strongly urged that a new law be enacted to normalize phone terminal prices and spread terminals with diverse range of prices by improving the current distribution structure, which had been distorted by the practice of non-transparent, discriminatory price discounts. The matter should be discussed by all means during the extraordinary session of the National Assembly slated for February.
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