Korea’s communications watchdog slaps a combined $59.6m fine on 3 operators for excessive subsidies

Korea’s communications watchdog slaps a combined $59.6m fine on 3 operators for excessive subsidies ...

South Korea’s communications watchdog has slapped a combined $59.6 million fine on three mobile operators for rolling out excessive subsidies to attract more customers, causing an overheated market, Yonhap News reports.

The Korea Communications Commission announced the measures in a statement (in Korean) on its website. SK Telecom, the biggest operator in the country, was fined KRW36.4 billion ($32.5 million), while KT Corp and LG Uplus were fined KRW20.2 billion ($18 million) and KRW10.2 billion ($9.09 million) respectively.

The watchdog also imposed a seven-day suspension on KT Corp, banning it from attracting new customers during the period, as it concluded that the company had led an overheated competition in the telecommunications market.

While competition is seen as positive for consumers in many markets worldwide, since it helps to drive lower pricing and bargains for shoppers, Korea’s stance is rather different. Yonhap notes that the presidential office had called the subsidy policies a “social problem” earlier this year.

Operator subsidies are limited to KRW270,000 (circa $240) per person under a set of measures introduced in 2010. However, amid the stagnant telecommunications market in South Korea, operators and phone manufacturers have been resorting to all sorts of moves, seeking to attract more customers.

In March last year, South Korea’s Fair Trade Commission (FTC) slapped Samsung, LG and the country’s operators with a combined fine of KRW45.3 billion (circa $40.1 million), as they were were found to be working together to raise the prices of mobile devices before advertising that they were offering improved deals.

Early this year, the FTC suspended the country’s carriers from signing up new customers for fixed periods of time.

Headline image via Thinkstock

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