SKT, KT, LG fined W51.2 bil. for illegal marketing

By Kim Hyun-bin

The country's top telecom regulator slapped 51.2 billion won ($42.8 million) in total fines on SK Telecom, KT and LG Uplus for engaging in illegal marketing for providing unauthorized subsidies to lure prospective customers into utilizing their fifth-generation (5G) services.

This marks the largest fine imposed for unauthorized subsidies to date, surpassing the previous 50.6 billion won record in 2018. However, the amount falls way short of industry expectations, which many experts predicted to exceed 70 billion won.

People walk past a mobile retail store in Seoul in this file photo. The Korea Communications Commission fined SKT, KT and LGUplus a total 51.2 billion won for providing illegal subsidies to consumers. Yonhap

The Korea Communications Commission (KCC) held a plenary session led by KCC head Han Sang-hyuk, Wednesday, where they decided to fine SKT 22.3 billion won, KT 15.4 billion won and LG 13.5 billion won.

In addition, 125 mobile retailers were fined a total 272.4 million won for providing illegal subsidies to 5G customers.

According to the KCC investigation, 119 retailers gave an average 246,000 won in additional subsidies for customers in the form of cash rebates, covering previous contract cancellation fees as well as credit card and partnership discounts to better attract customers.

This marks the first time since commercializing 5G in April 2019 for telecom companies to be fined for illegal smartphone subsidies provided to customers between April and August last year.

The KCC said the three telecom companies failed to supervise retail stores and induced the stores to provide differentiated incentives to customers, thus violating the country's mobile distribution law.

“Even after several administrative guidances from the KCC, the violations continued which led to an investigation. But by taking into considering the three telecom companies' stable market operations, investigation cooperation and voluntarily setting of preventive measures, we have decided the final total fine amount,” regulator chief Han said. “We also took into consideration the three telecom companies' promises to help their small and mid-size partner companies to overcome the COVID-19 crisis in the form of aid and support funds.”

The three telecom companies promised to provide 710 billion won in the form of early investments in network infrastructure and equipment, and support funds for small and midsize partner firms.

Regarding the regulator's imposition of fines, the carriers said they respect the decision and will work to abide by related mobile distribution laws and prevent recurrences.

“We respect the decision by the KCC and will abide by the law and work to prevent recurrences,” a KT official said. “We will work for 5G vitalization through investment and differentiated services. We will also continue to provide support for our distribution channels and small and mid-size business partners.”

“In the future, we will work to create a wholesome distribution environment, while enhancing consumer benefits and convenience,” an LG official said.

The KCC plans to enhance the monitoring system to better crack down on illegal subsidies offered by telecom companies, as well as conduct thorough investigations and impose stricter sanctions for any illegal acts in the future.