105 Billion KRW Fine Imposed on Broadcasters and Telecom Companies for Discriminatory Prize Offers in Bundled Products

Fines for the Four Major Telecom Companies Total 10.3 Billion Won

[Asia Economy Reporter Minyoung Cha] Seven broadcasting and telecommunications companies that sold bundled broadcasting and telecommunications products combining mobile communication, internet, and Internet Protocol TV (IPTV), and provided differentiated prizes to users, have been fined a total of 10.5 billion KRW in penalties.

The Korea Communications Commission held a plenary meeting at the Gwacheon Government Complex on the 15th and decided to impose corrective orders and fines totaling 1,056,470,000 KRW on seven broadcasting and telecommunications operators who provided differentiated 'prizes and fee discounts outside the terms and conditions' to users while selling bundled products.

By telecommunications operator, KT was fined 4,968,000,000 KRW, LG Uplus 3,635,000,000 KRW, SK Broadband 1,093,000,000 KRW, and SK Telecom 632,000,000 KRW. Broadcasting operators LG HelloVision was fined 108,000,000 KRW, KT Skylife 79,300,000 KRW, and D'Live 49,400,000 KRW respectively.

The Commission pointed out that operators providing differentiated prizes to users while bundling internet and paid broadcasting services distort fundamental competition based on service fees and quality, undermine fair competition order, and may shift cost burdens to other users.

Accordingly, the Commission judged prize differentiation as an act harmful to users' interests and conducted fact-finding investigations under the Telecommunications Business Act and the "Detailed Standards on Unfair User Discrimination in Providing Economic Benefits, etc." (Prize Notification), ordering corrective measures including imposing fines, stopping prohibited acts, and improving work procedures.

The investigation results showed that the rate of violations of the Prize Notification, such as providing prizes beyond the upper and lower limits of 15% of the average prize amount per operator, was 47.5% on average overall.

By telecommunications operator, LG Uplus was 53.6%, KT 51%, SK Broadband 45.8%, and SK Telecom 40%. By broadcasting operator, LG HelloVision was 53%, D'Live 51.1%, and KT Skylife 20.3%.

Broadcasting and telecommunications operators provided the most prizes when selling bundled products combining internet, paid broadcasting, and mobile services to subscribers, and the least prizes when selling internet-only products. Also, they actively provided prizes to attract new subscribers but were reluctant to provide prizes to re-contracting subscribers.

Kang Sang-hyuk, Chairman of the Korea Communications Commission, said, "This investigation is significant as it is the first to investigate user discrimination based on the average prize amount," adding, "We will promote active policies to resolve user discrimination by strengthening monitoring to minimize user discrimination and ensure benefits are evenly distributed to all users."