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Korean telcos allegedly overcharge customers

South Korean politician claims a report he has from regulator suggests customers have been charged for more text messages than they send, as telcos have not updated costing method.
Written by Ellyne Phneah, Contributor

A report by Korea Communications Commission (KCC) has suggested telcos in the country have been charging consumers for more text messages than they actually send.

The report, sent to Kim Gi-hyeon, Saenuri Party member and national assemblyman on Wednesday, stated the total number of text messages provided to consumers through a fixed-rate contract by SK Telecom, KT and LG Uplus was 49.4 billion in the first half of this year, The Korea Times reported Wednesday.

However, customers only sent 22.5 billion texts, with the monetary value of unused text messages calculated to be around 360 billion won (US$323 million).

At the moment, all three Korean telcos offer a fixed rate which includes text messages, voice calls and data usage but customers have no choice in how they want to use on each form of communication.

"There must be a new rate that transfers leftover text messages to voice calls or data," Kim said. According to him, since 3G wide-band code division multiple access (WCDMA) had been implemented in 2003, the international standard for text message memory has increased from 80 to 140 bytes.

Telcos have not followed this standard and kept text messages at 80 bytes to gain more profits, and have reaped an underserved 100 billion won (US$89.7 million) since 2007, Kim added.

Doubts over allegations
However, SK Telecom has denied the allegation.

Text messages, voice calls and data are offered in a package at a fixed rate in order to give consumers a total discount, an SK Telecom spokeserson told the Korean news site. Fixed rates actually have an average discount of 30 percent compared with per-use contacts, the spokesperson added.

An industry official who requested anonymity also said the data's credibility was "ridiculous" and a mechanical calculation of the numbers were "unreasonable".

"This is part of politicians’ strategy to gain attention because the presidential election is approaching, which is to be expected and there will be more moves to come. I truly wonder whether any of them have an understanding of the telecommunications industry or consulted an expert before releasing these rash statements and allegations," he added.

Mobile rate details of the three Korean telcos, too have been under close scrutiny in South Korea. In September, the Seoul Administrative Court ordered KCC to release data on how mobile carriers set their rates for 2G and 3G services between 2005 to 2011.

The court had ruled in favor of a civic group, People's Solidarity for Participatory Democracy, which filed a suit against the KCC in July last year when the regulator rejected their petition to publish the data last year.

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