South Korea’s mobile operators establish surveillance team to tackle subsidies issue

20 Mar 2014

South Korea’s cellcos are to establish a joint surveillance team in order to tackle the thorny issue of subsidies, which have prompted business suspensions for all three network operators. According to the Yonhap News Agency, SK Telecom (SKT), KT Corp and LG Uplus issued a joint statement at the Ministry of Science, ICT and Future Planning (MSIP) admitting that they had distorted the market as a result of the battle to attract new subscribers. With subsidies being the most widely used tactic to entice customers away from rivals, they have been blamed for undermining fair competition and market transparency, amid claims that the cellcos have continued to offer incentives worth more than the legal limit of KRW270,000 (USD251).

‘We will refrain from self-injuring competition and make efforts to lower prices and improve service quality, lending support to the development of the country’s ICT industry,’ the operators noted in their joint statement.

As previously reported by CommsUpdate, earlier this month the MSIP announced that each of the nation’s cellcos is to be barred from signing up new subscribers for 45 days as a result of their continued provision of illegal subsidies, despite numerous warnings to halt such practices. Unlike previous occasions where the ministry banned telcos from registering new customers, the MSIP confirmed that rather than suspending one carrier at a time, it will impose the ban on two firms simultaneously. As per the regulator’s ruling, market leader SKT will be restricted from adding new subscribers between 5 April and 19 May, while the second-largest cellco in terms of customers, KT, will be suspended from new business between 13 March and 26 April. LG Uplus, meanwhile, will not be allowed to accept new customers between 27 April and 18 May.

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