Several South Korean carriers have been issued a sales ban following moves to illegally subsidize smartphone prices. Major telecom carriers like SK Telecom were found guilty of undercutting device prices heavily. Carriers are only allowed to subsidize by about $250 off the cost of a handset, but it was found that several carriers were subsidizing their handsets to a far greater extent. The situation was brought to the fore last year, when LG Uplus announced subsidies of 1.2 million won subsidy ($1,100) for the Galaxy S4, which was more than the actual cost of the handset ($894).The “bargain sale” resulted in over 112,000 users switching over to LG Uplus. SK Telecom was said to instigate the subsidies, which LG Uplus said was the only way the carrier could retain its control over the market share.
The squabble has resulted in the telecom minister dishing out a 45-day ban on local Korean carrier phone sales. The ban will be staggered, which means that different carries will have a 45-day window in which they cannot take in new users. SK Telecom, for instance is banned from selling enrolling new customers from April 5 to May 19. Carriers have also been banned from upgrading phones for users whose service contracts are less than two years old. Another major carrier, KT, will serve a ban that begins on March 13 and extends until April 26. In a strange twist, LG UPlus’ ban starts on March 13 but only goes until April 4. The carrier will be able to enrol new users until April 27, after which the ban takes effect, which finally ends on May 18.
The news of the ban in South Korea is sure to be a major hindrance to sales of the manufacturer’s latest handset, the Galaxy S5. Estimates suggest that the South Korean market is a relatively small one for Samsung, but that the sales ban would hurt the manufacturer when it comes to initial sales figures.
