Korea Times Article
05/20(¸ñ) 17:27
By Yang Sung-jin
Staff Reporter
As the Ministry of Information and Communication gave a green light to the installment
financing for handset procurement, retailers welcomed the measure, expecting a
turnaround of the sluggish sales despite the lingering skepticism.
Bowing to the mounting pressure from mobile phone carriers, the ministry said it would
allow the installment financing beginning from June 1 after establishing a set of
measures to curb side effects.
As the news spread, those who ventured out to adopt the installment financing, defying
the ministry's opposition, saw a growth in sales, albeit slowly.
In mid-May, Shinsegi Telecomm, a mobile carrier, said it would push for the
installment financing to lower the initial cost of purchasing handsets and boost sales,
which was followed by Hansol PCS, another service provider.
Vendors in major electronics distribution centers such as Yongsan Electronics Market
said that Shinsegi Telecomm and Hansol PCS were favored by new subscribers after
the adoption of the installment financing.
A sales agent marketing all the five mobile services at Yongsan said Shinsegi and
Hansol outpaced other services in terms of new subscription rate in recent days.
According to Shinsegi Telecomm, since the non-interest bearing installment financing
was introduced on May 10, the average number of new accounts opening a day
surged to 3,000-5,000, up from 1,000.
Hansol PCS said the figure tripled since its adoption of the installment financing
program.
Analysts said the impact of the installment financing on sales is remarkable given that
full-fledged marketing has yet to be introduced by other carriers.
But the road ahead is still bumpy for carriers getting ready to jump on the installment
bandwagon.
Those who hold skepticism about the installment financing said that the new payment
system will indeed boost sales, but not dramatically enough to turn around the
situation.
The installment financing cannot rescue the cash-strapped sales agents hit hard by the
plunging subscription rate in the wake of the hike in handset prices from April, they
claimed.
Another negative view is that if other carriers also join the fray, the saluta y effect of
the installment financing showcased in Shinsegi and Hansol will disappear.
In addition, the installment financing is likely to attract mainly cash-strapp d users, who
are desperate to have mobile phone service yet may have trouble paying the bill on
time, which does not help to improve the financing structure of carriers in he long run,
analysts said.
Meantime, the Ministry of Information and Communication and mobile carriers seem
to be headed for another showdown concerning the installment financing.
In allowing carriers to introduce the system, the ministry set a specific restriction that
sparked opposition from service providers.
Under the ministry guideline, subscribers should at least pay a third of the t tal
subscription fee and handset price when signing up for the service and the installment
financing cannot be prolonged beyond 10 months.
Service providers said such restrictions are excessive interference, while the ministry
countered the measure is designed to ensure consumers have a right to cancel the
subscription whenever they want.
sjy@koreatimes.co.kr |
