KCC orders operators to cut promotions now
May 14, 2010
The Korea Communications Commission (KCC) wants the country’s mobile operators to limit spending on promotions to 22% of total revenues by the end of the month.
The commission made the ruling in March, but gave no firm introduction date, only saying the measure was to be introduced by year-end.
It announced yesterday that the 22% rule was to be implemented from May, WSJ reported.
“Marketing costs have continued to increase in the past despite telecom firms promising to ease fierce marketing rivalry,” KCC said in a statement.
The regulator estimates the 22% rule will reduce marketing costs at SK Telecom, KTF and LG Telecom by 1 trillion won ($881.7 million) from 8.02 trillion won in 2009 to 7.03 trillion won this year.
KCC plans to investigate that operators are abiding by the new rule in June and says it will take strict action against violations.
The country’s mobile operators have seen their marketing costs spiral due to heavy subsidies on smartphones.
With the new policy, the Korean government is hoping telcos will make higher investments in IT and the content industry in order to help create additional jobs as well as boost overall domestic economy.
Phil Marshall / Tolaga Research
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