[Exclusive] Discriminatory Support Only for Foreigners... Korea Communications Commission Sanctions 3 Telecom Companies for Violating the Device Distribution Act

Broadcasting Commission to Discuss at Full Meeting on the 29th

The three major mobile carriers

[Asia Economy Reporter Cha Min-young] The Korea Communications Commission (KCC) has resolved to impose sanctions on the three major telecom companies that provided discriminatory additional subsidies exclusively to foreigners in order to increase subscribers.

According to industry sources on the 28th, the KCC plans to hold a plenary meeting chaired by the chairman on the 29th to discuss the sanctions proposal. The KCC's investigation was conducted over approximately three months from June to August this year.

The three telecom companies implemented special subsidy incentive policies targeting foreigners, focusing on areas with high concentrations of foreigners such as Guro and Yongsan districts in Seoul, and Suwon and Bucheon cities in Gyeonggi Province, starting from the Lunar New Year peak season earlier this year. For example, even if purchasing the same model smartphone with the same plan, only foreign subscribers received an additional 100,000 KRW subsidy. The subsidy funds came from incentives paid by the telecom companies to each retailer, and these circumstances were revealed through media reports and other sources.

The current "Act on the Improvement of Distribution Structure of Terminal Devices (단통법)" prohibits mobile carriers from coercing or inducing dealers to provide unfairly discriminatory subsidies to specific users. Accordingly, providing additional subsidies only to foreign subscribers is illegal.

The telecom industry's encouragement of sales targeting foreigners was mainly due to market saturation in the domestic mobile telecommunications market and the slowdown in new subscriptions caused by marketing competition constraints. In fact, as of the end of October this year, SK Telecom and KT had the same number of subscribers as the previous month (September), while LG Uplus saw a 0.5% increase and MVNOs (Mobile Virtual Network Operators) had a 0.7% increase. Overall, the increase was only 0.2%.

There was also an intention to sustain net subscriber growth by increasing subscribers in the foreigner market, where KCC's monitoring is relatively weaker. According to the Ministry of Justice, the total number of foreigners residing in Korea for long- and short-term stays reached approximately 2.04 million in 2020.

The specific amount of fines and other details will be finalized after the plenary meeting. The KCC previously imposed fines totaling 51.2 billion KRW on the three telecom companies for violating the Act on the Improvement of Distribution Structure of Terminal Devices by providing illegal subsidies to attract subscribers since the commercialization of 5G mobile communications in July 2020. SK Telecom was fined 22.3 billion KRW, KT 15.4 billion KRW, and LG Uplus 13.5 billion KRW.

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