KCC scolds phone firms about discounts again

The Korea Communications Commission warned telecommunication companies from offering illegal subsidies to mobile phone customers ahead of the graduation and school admission season.

The KCC called together Tuesday sales executives of the three mobile carriers, SK Telecom, KT and LG U+, and verbally warned them not to subsidize handsets any more than is allowed by regulations.

The KCC has dictated that the ceiling for subsidies for a handset is 270,000 won ($248).

“Starting from this week, excessive subsidies are expected to be rampant, as sales of mobile phones for graduation and admission gifts will increase,” said a KCC official.

Graduation and admissions season is a peak season for the highly competitive telecommunications market. The telecoms routinely ignore the ceiling on subsidies and then get punished by the government watchdog.

According to the KCC, the number of mobile phone users who jumped from one carrier to another to purchase a new phone at a cheaper price reached approximately 30,000, as of Feb. 8, just before the Lunar New Year holiday.

The figure declined from 33,000 a week earlier but it was still well above 24,000, the KCC’s criterion for an overheated market.

According to the industry analysts, KT and LG U+ offered 600,000 won to 700,000 won in subsidies in exclusive deals for the Lunar New Year holiday.

SK Telecom, which was banned from signing up new subscribers until Feb. 22 as punishment for offering excessive subsidies, increased benefits for subscribers in order to prevent them from defecting.

“Earlier this month, the KCC called the vice presidents of mobile carriers and warned them about the overheated competition and the subsides,” said an industry executive. “But the competition was still intense during the Lunar New Year holiday.”

By Ko Ran [kjy@joongang.co.kr]