SKT wants probe into rivals' subsidies

SKT wants probe into rivals' subsidies

Dylan Bushell-Embling  |   June 16, 2011
telecomasia.net
South Korea's SK Telecom has submitted a request for regulators to investigate its rivals, KT and LG U+, over what it claims are excessive handset subsidies.
 
KT and LG U+ have in the last two months started providing “record” subsidies that add up to 700,000 won ($646), and offering other incentives such as gift certificates, Korea Herald quotes SK Telecom officials as claiming.
 
Korean regulators last year banned operators from offering subsidies of more than 270,000 won per handset purchase. Earlier that year, the regulator also ordered operators to limit spending on promotions to 22% of total revenue.
 
Both measures were implemented to dampen the competition that had seen expenses and spending on handset subsidies spiral out of control.
 
SK Telecom claims the size of the incentives its rivals now offer impedes its ability to compete, and as a result the incumbent's user base has fallen by nearly 24,000 since May. KT and LG U+ have meanwhile added over 6,000 and 17,500 customers respectively.
 
But KT reportedly responded to the claims by suggesting SK Telecom is trying to use the allegations to press its rivals to to cut tariffs in line with its own reductions.
 
SK Telecom earlier this month agreed to cut its monthly base fee by 1,000 won, in response to pressure from the government to reduce telecom tariffs. But KT and LG U+ are yet to follow suit. 
Dylan Bushell-Embling

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