New Rules to Breathe Down SKT Neck   [코리아타임스   2006-04-18 17:35:20] By Kim Tae-gyuStaff Reporter SK Telecom, Korea’s biggest mobile operator, may face fines up to $210 million under strengthened standards for violation of cell phone subsidy regulations. The Korea Communications Commission on Tuesday unveiled new criteria to punish wireless carriers for providing more discounts than permitted for new handset buyers. ``Under this new rule, telecom companies can face heavier fines. For instance, SK Telecom may be slapped with up to 200 billion won ($210 million) in fines,’’ Chung Jong-ki, secretary general at the commission said. ``Plus, we will resort to sign-up suspensions more frequently as a viable option to check illegal activities, if mobile carriers continue to stage malpractices despite fines,’’ Chung added. Late last month, the government partially lifted a three-year ban on handset subsidies which had been strictly outlawed since March 2003 to curb open-wallet marketing competition. The country’s three carriers _ SK Telecom, KTF and LG Telecom _ can now offer subsidies at pre-set rates between 60,000 and 250,000 won depending on the subscription period and average fees of their customers. The iron-fisted communications commission plans to decide the basic amount of fines based on how much wireless carriers earn via signing up customers leveraged by illegal subsidies. ``Basically, our new system does not fix a ceiling in the amount of fines. Should a carrier violate the rule severely, fines can soar without a limit,’’ Chung said. Nightmarish Fines There is a boundary set by a legally superior rule _ a one-time fine cannot exceed two percent of any telecom firm’s annual sales averaged over the past three years. The two percent stipulation applies to SK Telecom, the dominant mobile telephone service provider, while the standard would be halved to one percent for other mobile carriers. The median turnover of SK Telecom during 2003-2005 is 9.73 trillion won while the figures are 4.58 trillion won for KTF and 2.24 trillion won for LG Telecom. This means SK Telecom can be charged 194.6 billion won in fines each time while the maximum would be 45.8 billion won for KTF and 22.4 billion won for LG Telecom. The staggering amount of fines can be levied whenever the communications commission launches an investigation into the market. Such toughened regulations seem to resonate with recent remarks by new Information-Communication Minister Roh Jun-hyong, who vowed to stop illegal subsidies at any cost. Understandably, however, the strong measure angers the three mobile carriers, especially the business leader SK Telecom which believes the market currently shows clear signs of stabilization. ``Mobile operators cannot completely control handset subsidies as sales outlets themselves provide discounts sometimes with rebates coming from handset makers,’’ an SK Telecom spokesperson said. ``In this climate, it is unreasonable for the government to set up an ultra-strong regulatory framework of passing all the responsibility on to mobile carriers,’’ he said. voc200@koreatimes.co.kr