South Korean cellcos fined again for breaking subsidy rules

22 Aug 2014

All three of South Korea’s mobile network operators have once again been fined for breaking the rules related to handset subsidies, the Korea Herald reports. The Korea Communications Commission (KCC) is said to have levied a total fine of KRW58.5 billion (USD56.9 million) for the indiscretions, with market leader SK Telecom facing the largest penalty of KRW37.1 billion; KT Corp and LG Uplus are being fined KRW10.8 billion and KRW10.6 billion, respectively. The penalties come after the trio were accused of breaching subsidy limits in both May 2014 and June 2014, immediately after they had all served business suspensions for similar offenses. While there will not be further blocks on new sign-ups in relation to this particular matter, it was noted that the KCC had increased the fines handed to SKT by 30% and to LG Uplus by 20% as they were deemed to have started the renewed competition relating to the subsidies offered during the aforementioned period.

However, it has been confirmed that the KCC will direct SKT and LG Uplus to suspend operations due to their offering illegal subsidies in January and February of this year. As such, one of the operators will be barred from signing up new customers between 27 August and 2 September, while the other will have to halt subscriber acquisitions between 11 September and 17 September. It has not yet been confirmed which of the pair will be suspended first, though KCC chairman Choi Sung-joon was cited as saying: ‘SK Telecom’s business suspension period would be decided based on when it would most likely face a (sales) loss.’

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