SK Telecom to drop fees for contracts ended early

SK Telecom will eliminate cancellation fees for customers who break their contracts, but customers will still be responsible for the remaining amount of installment payments on their device.

The move comes amid rising consumer complaints about cancellation fees since the Mobile Device Distribution Improvement Act took effect.

Subscribers who fail to complete contracts paid penalties equal to the total of monthly discounts remaining.

Before the Mobile Device Distribution Improvement Act, mobile carriers had been paying some cancellation fees to attract new subscribers. But that practice was banned by the law.

SK Telecom, the No. 1 mobile carrier, says it will stop charging cancellation fees starting Dec. 2.

SKT also will introduce a T Family Point program on Tuesday under which families can save up to 25,000 points every month. Each point will be worth 1 won toward new mobile phones or services.

“We expect T Family Points to save our subscriber households about 330 billion won [$299 million] in communication costs a year,” said Yoon Won-young, head of marketing at SK Telecom.

Both KT and LG U+ say they will introduce similar programs.

KT, the No. 2 mobile carrier, introduced a monthly plan that does not require a contract, but provides monthly rate discounts reflecting those offered on two-year agreements.

In the past, KT subscribers could get 16,000 won as a monthly discount only for a 67,000 won plan on a two-year contract, but the new plan is 51,000 won a month with no contract or cancellation penalty.

LG U+, the nation’s third-largest mobile carrier, is considering ending the cancellation penalty.

“We will soon announce the new measure,” said a spokesman for LG U+.

BY KIM JUNG-YOON [kjy@joongang.co.kr]