Regulator to fine 3 mobile carriers

The Korea Communications Commission (KCC), the nation’s telecom regulator, said Friday that it would impose additional penalties against carriers SK Telecom, KT and LG Uplus for offering excessive subsidies despite a recent sales ban order. / Korea Times file

By Kim Yoo-chul

The nation’s telecommunication regulator plans to fine three major mobile carriers for continuing to offer illegal subsidies.

Officials from the Korea Communications Commission (KCC) told The Korea Times Friday it plans to impose extra penalties on SK Telecom, KT and LG Uplus for continuing to offer excessive handset subsidies despite prior warnings from the KCC.

The agency says it obtained documents needed to prove the illegal action was still taking place.

“We reached a consensus that the market is overheated since February 23. KCC is additionally investigating. Last week, we summoned marketing executives at SK Telecom and LG Uplus and asked them to stop offering handset subsidies,” said Jeon Young-maan, an official at KCC’s telecommunication market research bureau.

The KCC said that it is still working on the terms of upcoming penalties for carriers, which could take effect after Mar. 13. That’s the day KT ends its suspension, which could add stress to an already heated market.

However, according to the agency, the carriers “really don’t care about what will be coming from the government.”

“Let me just say, we really don’t care whether or not the KCC to impose additional penalties on us. The KCC already lost its credibility and it’s really silly to stop offering subsidies because of the KCC warnings,” said a salesclerk working near Samsung Electronics’ headquarters in Gangnam, who asked to be identified only as Hong.

The salesclerk, who sells for SK Telecom at one of the busiest authorized outlets, admitted SK Telecom extended its internal network systems to 11:00 p.m. from 7:00 p.m. to attract more customers.

“Situations are exactly same as LG Uplus. Like us, my friend who works for Uplus’ authorized outlet near in Apgujeong-dong, one of the busiest streets along with Gangnam, was ordered to entice new customers by double-fold by next month from the previous month. Everyone is becoming crazy,” Hong said.

The consumer has many deals to pick from as competition among carriers intensifies.

A salesclerk at an SK Telecom outlet in Gangnam says the company is offering a new Samsung Galaxy S III for 100,000 won if the customer changes carriers.

Customers who switch from KT to LG Uplus can get a 72,000 won monthly plan and the new LG Optimus G Pro for 250,000 won.

While the deals seem endless, the sale statistics show penalties from the KCC do impact business.

Previously, the KCC banned SK Telecom and LG Uplus from signing up new customers for 22 days and 24 days, respectively. During that time, SK Telecom lost about 380,000 customers and LG Uplus lost 180,000 customers, according to company officials.

Those suspensions are now lifted, but KT, the nation’s second biggest carrier, was recently banned from signing up new customers starting on Feb. 22.

During the first five days of the suspension, KT lost 100,000 customers, according to company officials.

“Again, the local telecom market is seeing a major shift to LTE, which is short for Long-Term Evolution. Because this is a growing market, KCC definitely has no options to end,” said sources from SK Telecom.

“Our top mission is to steal customers from KT and LG once we’ve lost. We don’t want to lose our leadership in the growing LTE market,” said one official at SK Telecom.

KCC officials said the agency structure could change under the new government. The nation’s opposition parties and civic groups strongly resist the ideas from the ruling Saenuri Party that highlighted the separation of key functions.

“It’s impossible to investigate over 20,000 local handset distributors and outlets with five officials. To be honest, we don’t know how to calm down the market,” said a senior KCC official asking not to be named, adding the agency delayed to discuss more details about the new LTE spectrum auction plans.