If the blacklist system is successfully implemented in the market, manufacturers may have to focus more on qualities and price competiveness of their phones, and local network operators may focus less on selling handsets below cost through subsidies, which have been one of their biggest weapons to attract buyers.

Seoul, KOREA ¶ May 04, 2012 -- South Korea has adopted a handset blacklist system from May 1. Under the scheme, customers in Korea are now able to subscribe to mobile phone services with all the phones purchased in retail stores (including convenience stores) and also with phones bought from overseas, unless they are on the blacklist reported as lost or stolen.

The Korea Communications Committee, the media regulatory agency, implemented the blacklist system in order to break the handset sales monopoly by major local operators in the mobile market, and provide more choices for mobile handset buyers.

Before introducing the scheme, South Korea used the so-called white-list system which provided mobile services only to phones registered in network operators and purchased in their stores. Under the newly introduced blacklist system, however, customers can purchase phones through much more outlets including supermarkets, outlet stores, and manufacturers’ stores, online and overseas markets. The KCC expects this system to diversify handset distribution channels and help to lower mobile device prices.

If the blacklist system is successfully implemented in the market, manufacturers may have to focus more on qualities and price competiveness of their phones, and local network operators may focus less on selling handsets below cost through subsidies, which have been one of their biggest weapons to attract buyers. Supporters of the blacklist system argue that it would create a more transparent distribution channel with more competition in the market, and eventually help lower handset prices by getting rid of unnecessary marketing costs.

 On the other hand, opponents of the system counter that there is risk that it may shrink the market if operators remove all its subsidies and discount plans which are closely related to customers’ purchasing power. Manufacturers also may be reluctant to actively participate in the system since it could make them less profitable. The opponents criticize that the blacklist system has little incentives to operators and manufacturers, so likely to be unattractive in the market.

Adrian Han (press@whowired.com)