South Korean carriers banned from gaining new customers in January. The reason? Device subsidies
The Korea Communications Commission (KCC) really, really hates subsidies. The telecoms regulator in South Korea has fined all of the country’s three carriers for having the nerve to subsidize mobile devices for their prospective customers.
But that’s not the best part. See, the KCC has also banned those three companies from gaining any new customers for up to 24 days in January. Yes, you read that right. LG Uplus, SK Telecom, and KT will not be allowed to sign any contracts with new customers. This is the first time we’ve heard about such a measure being taken against carriers anywhere in the world, and it provides a stark contrast to the environment in the US and all major European economies, where device subsidies are pretty much a given.
LG Uplus will have to stop taking new customers for 24 days starting on January 7, while SK Telecom’s ban will be for only 22 days, and KT’s will span 20 days.
Additionally, the three carriers have been fined a combined total of KRW 11.89 billion (that’s $11.09 million for you and me). The fines are also differentiated, with SK Telecom taking the ‘crown’ this time with its KRW 6.89 billion fine ($6.42 million), followed by KT with KRW 2.85 billion ($2.65 million), and LG Uplus with KRW 2.15 billion ($2 million).
The three carriers have one month to submit a plan to the KCC detailing how they will correct their sales systems in order for this not to happen again. An additional report about how those changes were executed will also have to be forwarded to the watchdog.
This move from the KCC comes after, in September, it launched a probe into the carriers’ subsidy practices. Of the three, LG Uplus was found to have most frequently offered subsidies, followed by SK Telecom and KT.
Obviously, the carriers in question are anything but happy about this. They have all voiced concerns over the measures ordered by the KCC, qualifying them as ‘harsh’ because of the simultaneous issuing of bans and fines.
That said, a precedent has been set. Now all that remains to be seen is whether Europe and North America will continue their love affair with subsidies or will slowly consider taking a more radical stance towards the practice, like the South Koreans have.