By Cho Jin-seo
Staff Reporter
KT, the largest fixed-line telephone operator, was hit with a partial one-month ban on its mobile phone resales business for goading its employees to sell handsets.
The Korea Communications Commission Tuesday said that KT forced some of its employees to sell KTF mobile phones to their friends and relatives between January 2006 and February 2007, which is against the government's policy. As punishment, KT's branches will be suspended for one month from mobile phone sales, while its subcontractor outlets will continue sales.
A petition was requested in February by LG Telecom, KTF's rival. But Tuesday's light punishment is considered symbolic, as such practices have been widespread at not only KT but also other mobile firms including LG Telecom itself.
KT disparaged the ruling, saying it is against the market principle of free competition.
``It is very natural that employees sell their company's products. It is this market that is abnormal,'' said a KT spokesman. ``The ruling is apparently inhibiting our right to do proper business.''
He also said that only 4 percent of the phone sales was made that way, which is ``less than one hundredth of what other mobile companies have done.''
KT is the parent company of KTF with a 52.19 percent stake. It has helped KTF by utilizing its massive organization and sales network _ more than 37,000 regular employees and many more part-time workers and telephone branches virtually in every town in the nation.
As a result of this and a fee discount, KT drew about 2.9 million subscribers until August, accounting more than one fifth of total KTF users.
The commission's policy stipulates that only designated salespersons of KT are allowed to sell mobile phones. But the company often disobeyed the rule by encouraging all employees to join ``special promotion events,'' though such cases have become rare over the past two years.
Whether they are mobile service providers or fixed-line operators, none of the telecommunication service providers in South Korea are free from such criticism. The markets of mobile, telephone and broadband Internet have become so saturated that firms urged employees to lure customers by exploiting their personal relationship.
LG Telecom was once notorious among workers of LG Group affiliates for the sales drive. Unable to fill the ``allotment,'' many put the phones on Internet auction offering heavy discounts out of their own purse. Some desperate employees even subscribed multiple phones to themselves.
The communications commission said that the ruling will be a stepping stone in abolishing such malpractices, while not hampering KT's phone resale business.
``We believe that the firms are agreeing with us that we should drive out bad practices from the market,'' said Hyung Tae-geun, a member of the commission in a press briefing.