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| A retail store selling smartphones in Seoul advertises that it offers subsidies of up to 475,000 won ($400) to customers who buy the Samsung Galaxy S10 5G. / Yonhap |
By Jun Ji-hye
The Korea Communications Commission (KCC) called executives of SK Telecom, KT and LG Uplus before the commission, Monday, to warn them against overheated competition to sign up new customers for their fifth-generation (5G) network services, officials said.
The move comes amid suspicions that mobile carriers have been offering illegal subsidies to new subscribers following the launch of LG Electronics' 5G smartphone, the LG V50 ThinQ 5G, Friday.
The excessive competition for new 5G customers has reappeared after the Korean telecom firms started selling Samsung Galaxy S10 5G, the world's first dedicated 5G smartphone, April 5.
The KCC said it will take disciplinary action including imposition of fines if it finds any violations of laws.
"We are keenly monitoring the market regarding sales of 5G smartphones," a KCC official said. "We will take administrative measures if necessary."
Retail stores selling smartphones have reportedly offered subsidies of more than 600,000 won ($507) to customers who bought the LG V50 ThinQ 5G.
At some stores, customers could reportedly get the new smartphone for free when they received the benefits from the subsidies in addition to rebates, offered by mobile carriers to retailers, which were estimated at around 600,000 won.
The LG V50 ThinQ 5G costs 1.2 million won in the domestic market.
SK Telecom, KT and LG Uplus have advertised extensively that they offer the largest subsidies to new subscribers. Such practices come as the high price of the 5G smartphone is considered a major barrier for the 5G market.
But offering excessive financial benefits to new subscribers could be in violation of the law that restricts phone subsidies.
The practices could also result in undermining sound and fair competition in the market.
Similar situations occurred when the Samsung Galaxy S10 5G hit the market last month.
At the time, LG Uplus said it was going to offer subsidies of up to 475,000 won to new subscribers, which could drive down the price of the 256GB model to 850,000 won.
In response, SK Telecom upgraded its subsidies for the new smartphone to a maximum of 546,000 won, more than double its initial plan, fueling the competition to secure 5G customers.
The mobile carriers also appeared to encourage retail store owners to promote sales by offering incentives in addition to existing rebates, industry sources said, citing internal documents from KT and LG Uplus.
