Three of South Korea’s leading telecommunication players have been hit with stinging fines for their role in illegal handset subsidies. The Korea Communications Commission (KCC) publicly announced that it has issued fines to SK Telecom, KT and LG U-plus.
South Korea’s telecommunications incumbent SK Telecom was given a fine of KRW 21.3 billion, whilst its rivals KT and LG U-plus were ordered to pay KRW 12.5 billion and KRW 16.7 billion respectively.
The mobile operators weren’t the only telecommunication firms subject to penalties from the KCC. Samsung, the world’s No.1 smartphone manufacturer, was also fined by the regulatory watchdog.
Its sales unit which oversees around 300 shops across South Korea was given a KRW 7.5 million fine. In addition to this 171 retailers which distribute mobile devices were also issued with penalties which amounted to a total of KRW 10.9 million according to reports circulating in the country.
A controversial handset subsidiary cap was discontinued at the end of September 2017 after first coming into effect in 2014. The cap of KRW 330,000 on the cost of new handsets was introduced in an effort in an attempt to promote fair competition amongst the countries mobile operators.
It was part of South Korea’s new Telecom Act and the primary objective of the initiative was to encourage handset manufacturers to lower their prices. The KCC said in a statement that the three operators were being hit with fines for offering subsidies higher than the limit for new handsets between January and August 2017, before the limit was discontinued the following month.
KCC chairman Lee hyo-sung hopes the decision by the regulatory body can allow the operators to reevaluate their strategy and focus their efforts on improving the services they offer their customers.
He said, “We hope the corrective measures help the telecom firms to shift their focus from wasteful marketing competition to improving service quality.”
In early September 2017, Lee met with the CEOs of KT, SKT and LG U plus and asked them to play fair and stop from engaging in cut-throat aggressive competition after the cap was scrapped. The three operators were fined on multiple occasions between 2014 and 2016 by the KCC for flouting the regulation.