'5G Free Phones' 51.2 Billion Won Penalty... Top 3 Telecoms Say "Worst Avoided" (Comprehensive Report 2)

5G Illegal Subsidies Fined 51.2 Billion KRW
Maximum Reduction Rate at 45%
Telecom Industry: "Consideration Reflected... Worst Avoided"

[Asia Economy Reporter Koo Chae-eun] As the three major telecom companies were fined a total of 51.2 billion KRW by the Korea Communications Commission (KCC) for illegal 5G subsidy marketing, the industry responded by saying they "avoided the worst." The initial base amount reached approximately 93.3 billion KRW, but a reduction rate of 45%, close to the legal maximum reduction of 50%, was applied, resulting in a penalty level lower than the market's initial expectation of 70 to 80 billion KRW.

On the 8th, a telecom industry official stated, "Although the scale of 50 billion KRW is not insignificant, the maximum reduction the government could offer was applied, so it seems the worst was avoided," adding, "It is evaluated that the early 5G market activation and the COVID-19 pandemic were taken into consideration." Another industry insider commented, "The base amount was very high, so there were many concerns, but we positively evaluate the fact that the commissioners exercised discretion to increase the reduction rate."

On the same day, the KCC held a plenary meeting at the Government Complex Gwacheon and imposed a total fine of 51.2 billion KRW on the three mobile carriers?SK Telecom, KT, and LG Uplus?for violations related to illegal subsidies under the "Act on the Improvement of Distribution Structure of Mobile Communication Terminals" (the Mobile Device Distribution Act). The fines by company were: SK Telecom 22.3 billion KRW, KT 15.4 billion KRW, and LG Uplus 13.5 billion KRW.

An SK Telecom representative said, "We humbly accept this decision and plan to make every effort to stabilize the market and prevent recurrence." A KT representative stated, "We respect the KCC's resolution and will strive to comply with the Mobile Device Distribution Act and prevent repeated violations. We will continue to support distribution networks and small and medium-sized partner companies that are struggling due to the spread of COVID-19." LG Uplus also said, "We respect the KCC's decision and will do our best to foster a healthy distribution environment and enhance consumer benefits."

The KCC Secretariat proposed reduction options of 30% and 40% during the plenary meeting, but the commissioners finalized a 45% reduction. This reflects a high level of reduction at the discretion of the commissioners. In response, the three telecom companies pledged support worth 710 billion KRW for operating funds for distribution points, survival funds, management funds for small and medium-sized partner companies, and early investment in network equipment.

Commissioner Kim Chang-ryong said, "Last year, the government promoted the world's first commercialization of 5G, and with the cooperation of the three telecom companies, global competitiveness in equipment and terminals has been secured." Commissioner Ahn Hyung-hwan added, "We must consider the need for continuous investment and the difficulties faced by small distribution points to activate the world's first 5G service early."

KCC Chairman Han Sang-hyuk stated, "Despite repeated administrative guidance from the KCC, violations continued, leading to an investigation. However, considering that the three telecom companies have since operated the market stably, actively cooperated with the investigation, and voluntarily taken measures to prevent recurrence, the reduction rate for the fine was determined." Chairman Han also noted, "The fact that the three telecom companies promised large-scale financial support such as mutual growth funds, operating funds, and management funds for small distribution points and merchants during the national disaster situation of COVID-19 was also taken into account in determining the penalty level."

This content was produced with the assistance of AI translation services.