Korea Warns Its Carriers To Avoid Excessive iPhone 5 Subsidies
With today’s confirmation that Apple will indeed be bringing the iPhone 5 to South Korea, it didn’t take long for the Korea Communications Commission (KCC) to issue a warning to its carriers. On the surface, the KCC warned carriers to avoid “Excessive Subsidies,” reiterating that they are, in fact, illegal in the country.
A spokesmen for the KCC went on the record to the Korea Times stating:
[quote]“The KCC will start a thorough investigation of the carriers from Dec. 7 ? the date Apple’s latest iPhone comes onto the market ? as we believes chances are high that the carriers will offer illegal subsidies to attract more customers. That’s against the law…” [/quote]
Apparently it’s illegal to subsidize phone costs on a carrier level in order to sway customers to switch cellular providers. The going rate for a pre-ordered, 16GB iPhone 5 is 814,000 won, or about $751.71 USD. Some carriers have begun promising customers the same model for $369.40 with a new commitment on a new network.
It’s pretty much expected that the carriers will ignore the government’s warnings and continue to sell subsidized iPhones through the holiday season and into the new year. Early reports have the iPhone 5 reaching 700,000 pre-orders by the end of this week already. The goal of this is to get as many new customers as possible and get iPhones into their hands as quickly as possible. iPhone users have a large ARPU (average revenue per user) rating, and the fines pale in comparison to the revenue that could be generated by such a large influx of new users to a carrier.