Korea’s three mobile service providers are being probed for illegal price fixing after a local civic group filed complaints with the state anti-trust regulator, business sources said.
Sources said Fair Trade Commission inspectors carried out on-site inspections at SK Telecom, KT Corp. and LG Uplus on Wednesday, with emphasis placed on checking factory prices of smartphones and the possibility that there was collusion among companies in the setting of user fees.
The investigation was started after the People’s Solidarity for Participatory Democracy accused mobile service companies of price fixing that maximized their profits at the expense of consumers.
It said in a complaint filed with the FTC said that unless illegal collusion took place it was hard for all three firms to ask for the same fees for using smart phone services.
SK Telecom, KT Corp. and LG Uplus have “fixed” monthly charges ranging from 35,000 won to 65,000 won ($32.20 to 59.80) for users that receive such services as text messages, data downloads and for making regular calls.
The civic group claimed that there is no way that all three companies can ask for similar fees unless they were engaged in price rigging.
Mobile phone service companies said they could not discuss details related to the ongoing FTC probe.
However, they stressed that allegations raised were unfounded and that while fees charged were similar, this did not mean there was illegal collusion.
Meanwhile, the country’s communications regulator said a plan to lower telecommunication-related rates will be announced in May that can help stem hikes in consumer prices.
Choi See-joong, chairman of the Korea Communications Commission told reporters Wednesday that the taskforce made up of the Finance Ministry and other related agencies are in the process of formulating a master plan.
The taskforce aims to see if there is room for lowering rates that have soared to more than 100,000 won per average household with the wide spread use of smartphones. Smartphone users download more data compared to conventional phones, thus spiking the fees.
“A definitive plan is expected in May,” the official said, adding that there is a need to re-define what constitutes telecommunications fees.
“Most consumers use various services liberally, but balk at the amount they have to pay at the end of the month, believing the cost they are charged is for placing calls,” he said. Choi said that because of such widely held misconceptions there is a need to look at overall communications costs from a different angle.
This view reflects complaints raised by many telecommunication service providers such as SK Telecom and LG Uplus Corp. These companies have complained that actual telecommunication charges have effectively remained unchanged in recent years, with the rise in charges due to extra services that consumers use like downloading movies, games and music.