Wireless carriers’ insatiable greed

Korea’s top three wireless carriers offered to give free data for three months to subscribers that had been overcharged or constrained in their data usage despite being subscribed to an “unlimited LTE data plan.” Despite marketing promises of unlimited data, all three have been charging extra or throttling data speeds when a subscriber’s data usage exceeded a certain amount.

When consumer groups reported the unfair practices to the Fair Trade Commission (FTC), the wireless carriers in October voluntarily admitted to having breached consumer trust and promised to come up with a compensation plan. The FTC decided to wait for the industry to take action voluntarily, claiming this would lead to swifter payback for consumers. SK Telecom, KT and LG U+ promised they would quickly and accurately compensate customers for their losses.

Exaggerated and false advertising has long existed and is not limited to wireless carriers. TV home shopping channels were fined for tempting consumers by claiming the bargains were all-time lows or final offers, and Internet portal sites have been rebuked for displaying lists of search trends based on how much they are paid by advertisers. Companies habitually, intentionally and unabashedly deceive consumers and distort the market. But punitive actions have been relatively light when it comes to price fixing and other illicit collaborative practices. The FTC and wireless carriers pledged sweeping damages amounting to 268 billion won ($231 million).

But a close look shows that their actions are less meaningful than they would appear to be. Of the sum promised, the actual cash payout by the three players will amount to just 800 million won. The rest would be in the form of the three months of free data access to the 7.36 million users of LTE data plans and separately to 25.08 million others.

Actual data use would, however, be much smaller. Many won’t actually use all the free data they are given. How fair is it to offer repayment in free coupons after these companies have illegally pocketed 5,400 won to 17,800 won from consumers? The antitrust agency must probe deeper into the issue before it endorses the industry’s voluntary compensation package.

JoongAng Ilbo, March 19, Page 26