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Mobile carriers fined for subsidies

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Published : 2014-08-21 20:52
Updated : 2014-08-21 21:03

The Korea Communications Commission on Thursday imposed fines of some 58 billion won ($57 million) against the country’s three mobile carriers for offering illegal subsidies to smartphone buyers.

South Korea’s telecommunication regulator held an internal meeting presided over by KCC chairman Choi Sung-joon, and decided to slap SK Telecom with 37.1 billion in penalties, KT with 10.8 billion won and LG Uplus with 10.6 billion won.

The three telecoms were fined for misconduct in giving away subsidies above the regulatory limit in May and June, immediately after they underwent business suspensions between March and May.
A pedestrian walks past an mobile phone shop. (Yonhap)

The communications regulator imposed record fines of 106.4 billion against the three mobile carriers, and ordered them to correct their wrongdoings last December. The KCC ordered each to suspend their operations for 45 days between March and May as they failed to follow through with the corrective measures.

They will not face business suspensions this time. Instead, the KCC upped the fines on SK Telecom by 30 percent, and on LG Uplus by 20 percent as they were found to have started the subsidy competition in the May-June period.

Also, the communications regulator decided to suspend operations of SK Telecom and LG Uplus for offering illegal subsidies in January and February to entice customers to switch carriers.

SK Telecom and LG Uplus will be restricted from launching marketing campaigns to attract new customers for a week before and after the Chuseok holiday.

This means the KCC will order each to halt operations either between Aug. 27 and Sept. 2, or between Sept. 11 and Sept. 17.

Market watchers said SK Telecom, Korea’s biggest telecom company, which is repeatedly slapped with the heaviest penalty, may be restricted from doing business possibly after the holiday.

The shopping season after the Korean Thanksgiving is considered a critical sales period for mobile carriers, as Apple is expected to release the iPhone 6 and Samsung Electronics the Galaxy Note 4.

“SK Telecom’s business suspension period would be decided based on when it would most likely face a (sales) loss,” KCC chairman Choi said.

In March, the KCC slapped penalties on the three mobile carriers, but SK Telecom and LG Uplus were ordered to suspend operations for triggering the subsidy war between January and February.

LG Uplus was initially fined about 8.2 billion won with a 14-day suspension, but the penalty was dropped to 7.6 billion won with a seven-day suspension after the KCC agreed to the smallest carrier’s appeal that it was treated more harshly than SK Telecom.

SK Telecom was then fined about 16.7 billion won with a seven-day suspension.

By Park Hyong-ki (hkp@heraldcorp.com)

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