Mobile carriers under probe for illegal subsidies
By Kim Yoo-chul
LG Uplus, the nation's smallest mobile carrier, will likely be banned from attracting new subscribers for two weeks by the country's telecom regulator for offering illegal handset subsidies, sources said Wednesday.
The Korea Communications Commission (KCC) may punish other mobile firms for similar violations. LG Uplus showed a higher violation rate than its competitors according to the commission's recent probe, the sources said.
"LG Uplus violated the country's Telecommunications Law for five times, followed by KT with three times and SK Telecom with two times. Additional probes are currently under way," said a KCC official on condition of anonymity.
"We will make a decision soon on whether to impose heavy penalties, including a fine, on the mobile carriers."
With the two-week business suspension, the KCC is mulling the possibility of imposing a penalty of as high as 170 billion won ($165 million) on the carrier, another source said.
The KCC may make a final decision on the details of the punishment sometime within this month.
"We feel sorry about KT as I was told that KT has been cooperative to share confidential data for investigations with us unlike other carriers. Except for KT, it's fair to say that others weren't cooperative," an official said.
Last July, the KCC imposed a total of 66.9 billion in fines on the three local carriers for granting excessive subsidies. KT was ordered to stop enticing new customers for a week.
"The KCC discovered that LG Uplus has a 50 percent violation rate, followed by KT with 30 percent. SK Telecom isn't the carrier that ignited the war on subsidies," he said.
LG Uplus Executive Vice President Yoo Phil-gye is challenging the moves by the agency saying; "You shouldn't do that as Uplus has yet to hand over documents that include data for daily customer changes and sales."
A two-week business suspension probably to be imposed on the LG Group's telecommunication affiliate is expected to offer a short-term momentum for Uplus' biggest rival KT as the latter could lure more customers during the period, said officials.
While the local telecom market is shared by SK Telecom, KT and LG Uplus with 50 percent, 30 percent and 20 percent, respectively, Uplus is hoping to break the decades-long "5:3:2 market axis" in the next-phase battle in telecommunications capitalizing on the long-term evolution (LTE) mobile technology.
As carriers are accelerating efforts to lower inventories ahead of the New Year, the carriers are engaged in the "war of subsidies."
Total daily number changes, October 29, reached 67,419 cases ㅡ the second-highest since the January 3-4 period ㅡ according to data provided by the KCC.
"Illegal subsidies are focused on the latest smartphones such as Samsung Electronics' Galaxy S LTE-A and LG Electronics G2. Customers who want to use the Samsung model with commitment to a contract and a promise to change carriers could be given 1.05 million won in cash. Currently, customers are given between 700,000 won and 800,000 won in cash for subsidies," said Park Young-min, a salesclerk at one of the authorized distributors at SK Telecom.
By Kim Yoo-chul
LG Uplus, the nation's smallest mobile carrier, will likely be banned from attracting new subscribers for two weeks by the country's telecom regulator for offering illegal handset subsidies, sources said Wednesday.
The Korea Communications Commission (KCC) may punish other mobile firms for similar violations. LG Uplus showed a higher violation rate than its competitors according to the commission's recent probe, the sources said.
"LG Uplus violated the country's Telecommunications Law for five times, followed by KT with three times and SK Telecom with two times. Additional probes are currently under way," said a KCC official on condition of anonymity.
"We will make a decision soon on whether to impose heavy penalties, including a fine, on the mobile carriers."
With the two-week business suspension, the KCC is mulling the possibility of imposing a penalty of as high as 170 billion won ($165 million) on the carrier, another source said.
The KCC may make a final decision on the details of the punishment sometime within this month.
"We feel sorry about KT as I was told that KT has been cooperative to share confidential data for investigations with us unlike other carriers. Except for KT, it's fair to say that others weren't cooperative," an official said.
Last July, the KCC imposed a total of 66.9 billion in fines on the three local carriers for granting excessive subsidies. KT was ordered to stop enticing new customers for a week.
"The KCC discovered that LG Uplus has a 50 percent violation rate, followed by KT with 30 percent. SK Telecom isn't the carrier that ignited the war on subsidies," he said.
LG Uplus Executive Vice President Yoo Phil-gye is challenging the moves by the agency saying; "You shouldn't do that as Uplus has yet to hand over documents that include data for daily customer changes and sales."
A two-week business suspension probably to be imposed on the LG Group's telecommunication affiliate is expected to offer a short-term momentum for Uplus' biggest rival KT as the latter could lure more customers during the period, said officials.
While the local telecom market is shared by SK Telecom, KT and LG Uplus with 50 percent, 30 percent and 20 percent, respectively, Uplus is hoping to break the decades-long "5:3:2 market axis" in the next-phase battle in telecommunications capitalizing on the long-term evolution (LTE) mobile technology.
As carriers are accelerating efforts to lower inventories ahead of the New Year, the carriers are engaged in the "war of subsidies."
Total daily number changes, October 29, reached 67,419 cases ㅡ the second-highest since the January 3-4 period ㅡ according to data provided by the KCC.
"Illegal subsidies are focused on the latest smartphones such as Samsung Electronics' Galaxy S LTE-A and LG Electronics G2. Customers who want to use the Samsung model with commitment to a contract and a promise to change carriers could be given 1.05 million won in cash. Currently, customers are given between 700,000 won and 800,000 won in cash for subsidies," said Park Young-min, a salesclerk at one of the authorized distributors at SK Telecom.
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