KCC Holds Full Meeting on 14th
Activation Delays for Galaxy Note 20 Pre-Orders
Serious Violations of the Telecommunications Business Act
KT Promises Measures to Prevent Recurrence
[Asia Economy Reporter Cha Min-young] KT, which was found to have deliberately delayed the activation of the new device Galaxy Note20 during the pre-order period last August, has been fined approximately 165 million KRW by the Korea Communications Commission (KCC). This came after media reports revealed that some customers who pre-ordered last year suffered damages during the activation process, prompting the KCC to launch an investigation.
On the 14th, the KCC held its 13th plenary meeting and decided to impose a fine of 164.99 million KRW on KT for violating the Telecommunications Business Act by delaying activation for customers who pre-ordered the newly released device. The commission also ordered KT to improve its work processing procedures.
According to the KCC investigation, KT attracted about 72,840 subscribers during the Galaxy Note20 pre-order period from August 7 to 13, 2020, and it was revealed that 19,465 users, accounting for 26.7%, experienced activation delays of up to six days without justifiable reasons.
Specifically, 4,491 cases (6.2%) of delay were due to instructions from KT headquarters' sales policy, and 14,974 cases (20.6%) were due to arbitrary reasons related to the dealer’s sales incentives being disadvantageous.
The commission concluded that KT’s unilateral delay of device activation without detailed explanation or consent from users constitutes an act that significantly harms users’ interests under Article 50, Paragraph 1, Subparagraph 5 of the Telecommunications Business Act, which prohibits unjustified restriction or suspension of subscription or use of telecommunications services.
Go Nak-jun, Head of the Device Distribution Investigation Division, explained, "The violations are classified into three levels depending on severity. Although it occurred over a short period, it is considered a serious violation due to direct consumer harm. The base amount was 203.68 million KRW, but considering no similar cases in the past three years, a reduction was applied, resulting in a final fine of 164.99 million KRW." He added that the case did not meet the criteria for criminal prosecution and was therefore excluded.
Han Sang-hyuk, Chairman of the KCC, urged, "Delaying mobile device activation without justifiable reasons infringes on users’ rights and interests. We ask that thorough measures be taken to prevent such cases from occurring in the future." Kim Hyun, a standing commissioner of the KCC, said, "Last year, the three major mobile carriers were fined about 51.2 billion KRW for violating the Device Distribution Act due to discriminatory device support. We express our regret. Regarding devices closely related to consumers’ daily lives, not only distributors but also regulators must carefully and meticulously monitor the situation."
KT promised measures to prevent recurrence. First, regardless of the timing of new device activation, they will establish work processing procedures to prevent delays caused by policy changes. They will improve the pre-order system for new devices to allow customers to specify their desired activation date at the time of pre-order. Additionally, customers will be notified in advance if delays are unavoidable. A dedicated consultation center will be set up within the customer center, and activation schedules will be sent via SMS.
Lee Young-ho, Executive Director in charge of Fair Competition at KT’s Management Planning Division, said, "There were shortcomings in the process of aggressively promoting sales amid overheated market competition due to the launch of new devices. We will establish recurrence prevention measures at the headquarters level and strengthen management and supervision at the distribution network level to ensure no unjustified delays occur."
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