Korean telecom watchdog to allow carriers to pay out higher incentives

South Korea's telecom watchdog said Wednesday it will revise up the ceiling for the incentives used by mobile carriers to attract clients to give them more business leeway and prevent overheated competition.
The Korea Communications Commission (KCC) said it will adjust the legal ceiling for such incentives to between 250,000 won (US$246.9) and 350,000 won, expanded from the current limit of 270,000 won which was fixed in 2010.
The watchdog said it will hold a meeting every six months to adjust the amount by taking market conditions into consideration, adding that the term can be changed depending on the situation at the time.
"There has been criticism that the fixed guideline in the ceiling failed to address various market situations," said Choi Sung-joon, the commission's chief, adding that policy should play a substantial role in protecting the market from any irregularities.
While incentives are the most widely used means to entice subscribers to change their mobile operator, they are blamed for undermining fair competition and market transparency.
Although the watchdog has been warning carriers to refrain from such payouts, all three main telecom companies -- SK Telecom Co., KT Corp. and LG Uplus Corp. -- have been resorting to secretive ways to attract new clients by promoting illegal deals via social networking services or mobile messenger applications.
Telecom authorities cracked down on the practice by slapping the carriers with business stoppages and fines. The local mobile carriers had to suspend their businesses for 45 days taking turns from March as punishment. During their respective suspension periods, they were forbidden from signing on new subscribers.
The KCC said it will exercise its right to suspend carriers from collecting new subscribers if the market is deemed to be overheated. The commission is set to finalize the plan in September.