Mobile carriers slapped with 58.4 bln won in fines for illegal subsidies

By 옥현주
  • Published : Aug 21, 2014 - 13:47
  • Updated : Aug 21, 2014 - 13:47

South Korea's top mobile carriers were fined 58.41 billion won (US$57.15 million) by the telecom authority on Thursday for continuing to pay illegal subsidies to win new clients.

The Korea Communications Commission (KCC) said two of the three carriers being punished -- SK Telecom Co. and LG Uplus Corp. -- will also be banned from signing on new customers for one week starting at the end of this month. KT Corp. was excluded from the suspension.

SK Telecom, the biggest carrier, was ordered to pay a fine of 37.1 billion won, while No. 3-ranked LG Uplus was fined 10.55 billion won and KT 10.76 billion won.

The same three carriers had been punished with a 45-day business suspension between March and May. KCC said they continued to give out incentives exceeding the legal limit to induce clients to change their service providers.

While subsidies are the most widely used ploy to entice customers, the carriers are also blamed for undermining fair competition and market transparency.

The KCC's investigation showed that the three carriers' incentives averaged 616,000 won between May 26 and June 13, right after their business suspensions ended. The legal ceiling for subsidies is 270,000 won.

SK and LG were additionally punished with a one-week business suspension for subsidy violations in the January-February period.

LG Uplus will close its doors from Aug. 27 to Sept. 2, while SK Telecom will be banned from collecting new clients from Sept. 11 to 17. (Yonhap)