By Kim Yoo-chul
Samsung Electronics said Monday that it doesn't apply "discriminatory pricing policies" to its handset prices as these are subject to changes based on hardware specifications and network availability.
"Samsung wants to make sure that we aren't applying different pricing guidelines according to markets. That means customers in Korea don't pay more than those in other countries to purchase Samsung's latest smartphone models," the company said in a statement.
This is the first official company response after Samsung, which is the world's biggest handset manufacturer, was asked to cut its suggested handset retail price after the new subsidy cap regulation by the government went effect on October 1.
"The suggested retail price is the price that mobile carriers charge for local distribution channels. Manufacturers supply products to carriers for separate pricing. If Samsung sets the price of a certain handset model as unreasonably high, then consumers won't buy it," the company said.
The statement continued; "Carriers supply subsidized handsets according to models and other specifications and that makes some difference."
In a National Assembly audit of the Ministry of Science, ICT and Future Planning (MSIP), Rep. Moon Byeong-ho of the New Politics Alliance for Democracy (NPAD) claimed Samsung's latest Note 4 phablet costs 73,000 won more for consumers here than those in the United States.
According to Moon, the suggested price tag of the Note 4 in Korea is set at 957,000 won, while the same model goes for $825.99 in the United States.
"The price range of a basic phone in Korea is about $230.56, the highest among OECD countries. This issue should be addressed," said the NPAD lawmaker.
Samsung Electronics said costs for materials, development and manufacturing are the key factors to decide a handset price. As conditions vary from consumers and countries, its mobile price reflects such factors.
The new subsidy cap is facing a growing public backlash as the Mobile Device Distribution Improvement (MDDI) Act, which sets an upper limit of handset subsidies from mobile carriers at 350,000 won, pushes manufacturers and carriers back to launch promotional campaigns to entice new customers.
Under the new regulation, consumers are reluctant to buy new handsets as the subsidies on offer are less-attractive. Dealerships have also complained that the new cap is bad for business.
As carriers only offer some 130,000 won on the Note 4, consumers pay more than 840,000 won for the device.
When it comes to subsidizing service plans, the discount is proportional to the price of the contract; the costlier the contract, the larger the permissible subsidy.
During the audit, lawmakers from the ruling Saenury Party also joined with the main opposition party in calling for an immediate revision to the controversial subsidy regulation to stabilize the market.
"A consumers who wants to purchase a Samsung Galaxy S5 will have a 60 percent cut in subsidies from carriers before the cap, burdening consumers," said Kwon Eun-hee of the ruling party.
MSIP Minister Choi Yang-hee said the government agency will closely monitor the telecommunications market and added it may update the regulation.