Rep. Yang Jeong-suk “Three mobile carriers transfer up to 5.2 trillion won in terminal installment fees to consumers”

It has been argued that the three mobile telecommunications companies have unjustly passed the terminal installment fee of up to 5.2 trillion won to the public over the past 10 years.

On the 11th, Congressman Yang Jeong-suk of the National Assembly Science and Technology Information Broadcasting and Communication Commission said that the three mobile operators included a total of 5 trillion won, including a warranty insurance premium of 2.6 trillion won and a terminal installment management fee of about 2.6 trillion won included in the terminal fee for 10 years from 2011 to 2020. It claimed that more than 200 billion won was unilaterally left to the people.

The terminal installment fee was first introduced by SK Telecom in February 2009, followed by LGU+ (January 2012) and KT (October 2017). Currently, the commission rate is the same for the three telecom companies at 5.9%.

If you look at the 5.9% commission rate revealed by the three telecommunications companies, it largely consists of guarantee insurance premiums, capital raising costs, and terminal installment management costs. The fee rates for these items range from 1.59% to 3.17%, 1.89% to 5.81%, and 2%, respectively, ranging from a minimum of 5.48% to a maximum of 10.98%.

According to the Seoul Guarantee Insurance data obtained by Congressman Yang Jeong-suk, the three telecommunications companies have been confirmed to have paid over 2.5 trillion won in guarantee insurance premiums over the last 10 years from 2011 to 2020.

Terminal installment guarantee insurance premium is an insurance product that telecommunications companies subscribe to according to their needs, such as customer satisfaction and management of outstanding receivables. It is not an insurance that consumers are obligated to purchase, and there is no basis for consumers to pay the full premium, Yang explained.

Rep. Yang pointed out, “Even though it is an insurance product that is subscribed to by the needs of a telecommunication company, the current method of unilaterally passing the entire premium to consumers is very inappropriate, and it is correct that the business operator has to share or bear the entire amount.”

The management cost of terminal installment, such as billing, payment, and non-payment management, installment counseling, and IT system operation, was also a problem. It is argued that it is common sense to handle the general customer service area as part of the company’s overall cost, and that it is inappropriate to double pass it to a specific customer (terminal installment customer).

Representative Yang said, “Telecommunications companies have introduced a terminal installment system pretending to be for consumers, and have incurred enormous expenses in the future, increasing the burden of household communication expenses.” “We need to reduce the cost of household communication,” he said.

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