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SK Telecom business ban, latest in series of sanctions to mobile carriers in Kor

SK Telecom business ban, latest in series of sanctions to mobile carriers in Kor


SK Telecom started its week long business
ban on Thursday, after giving illegal levels of discounts on mobile phone handsets to new
customers. This is the latest in a series of similar
bans on mobile network carriers over the last few years… but how effective are they?
Kwon Jang-Ho takes a closer look. In January SK Telecom, Korea′s biggest
mobile network operator, gave 2050 new customers an average of 228,000 won, or roughly
190 U.S. dollars in cash back, on new mobile handsets.
This resulted in the Korean Communications Commission imposing a fine of nearly 20 million
U.S. dollars and a seven day business ban, which started on Thursday.
The ban restricts SK Telecom from signing up new customers.
Bans and fines for illegal phone subsidies have been a common occurrence in Korea over
the last few years. The biggest came in March 2014, when all
three of the country′s major mobile phone operators, SK Telecoms, KT Mobile and
LG U-Plus, were given 45-day business bans and a collective total of 11 million
dollars in fines. The saturation of the phone market has been
cited as the reason for the continued illegal promotions.
There were over 57 million phone contracts signed last year, more than the total population
of Korea, which is at just over 50 million. With market growth minimal, mobile phone
carriers are left scrapping to win over each other′s customers.
A new law, called the Mobile Distribution Act, went into effect last year to curb
the excessive discounts. Although it cooled competition among the companies
and the number of people switching between telecoms decreased,… sanctions such as
the latest ban on SK are said to lack enough impact to stop illegal subsidies. ″SK Telecom is estimated to lose around
30,000 new customers over the next week. When you have 25 million customers already,
30,000 is not that significant… If it had been before the new telecoms act, the
loss would have been far greater.″ Kwon Jang-Ho, Arirang News.

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