KCC fines operators for higher-than-allowed subsidies

19 Jul 2013

South Korea’s mobile network operators have been fined once again by the Korea Communications Commission (KCC) as a result of what the watchdog has called unfair competition. According to the Korea Times, the KCC will levy a penalty totalling KRW66.96 billion (USD59 million) on the country’s cellcos – SK Telecom (SKT), KT Corp and LG Uplus – after an investigation begun last month determined that all three had been offering illegal handset subsidies in the first half of 2013 with a view to attracting new subscribers.

As per the regulator’s decision, it will hand down fines of KRW36.46 billion and KRW10.26 billion to SKT and LG Uplus, respectively, while KT, in addition to being fined KRW20.24 billion, will be banned from signing up new customers for a week starting 30 July 2013. The restriction on new customers comes as KT was said to have recruited subscribers during a previous suspension in the first quarter of 2013, while it was also said to have offered the highest subsidies of all three operators.

In a briefing to confirm the development, Oh Nam-seok, director general of the KCC’s consumer policy bureau, noted: ‘The carriers didn’t heed several rounds of warning (from KCC), resulting in hefty fines and operation suspension … Moreover, they were not consistent in subsidy plans, discriminating against customers when they buy a handset.’ Subsidies offered by the carriers averaged KRW303,000 per customer from 22 April 2013 to 7 May 2013, the KCC claimed, exceeding the upper limit of KRW270,000 set by the authorities.