Price, marketing and quality of service are priorities for the regulator as it seeks to inject greater competition into the telecoms sector
Lower cancellation fees in the second half of contracts: On 26 July 2023, South Korea’s Ministry of Science and ICT (MSIT) announced that the fees faced by consumers for cancelling a fixed broadband service are set to be lowered, reducing the cost involved in exiting a contract from halfway through its minimum term. In a press release, the regulator states that the market for ‘high-speed internet’ revolves around three-year contracts. Previously, early termination charges only began to fall after two-thirds into the contract period (i.e. 24 months) had been reached. The MSIT considers that this has led to consumers incurring a significant level of penalties. Under its new rules, cancellation fees will decrease from 18 months onwards, dropping to zero by the end of the contract.
The average cost faced by consumers will fall by 40%: According to Lee Jong-ho, the Minister of Science and ICT, the regulator has developed its plan to reduce broadband cancellation fees in consultation with the country’s four largest operators (KT, LG Uplus, SKB and SKT), as well as with a ‘Communications Service System Improvement Advisory Committee’ – a steering group of consumer bodies, industry experts and other organisations that discuss and suggest measures to resolve challenges faced by consumers in their use of telecoms services. As a result, early termination charges for cancelling at the 18-month point will fall immediately by between 8-14%, with this discount increasing as the contract remains in place. Based on a standard three-year plan, the MSIT states that exit charges will fall by an average of 40% over the second half. The four operators have updated their terms and conditions to reflect the new rules, which are scheduled to come into effect in September 2023 for KT, SKB and SKT, and from this November for LG Uplus once the necessary systems are in place.
South Korea is not the only country to tackle barriers to switching: Reducing early termination charges represents an initial measure to stimulate competition in the telecoms sector following the MSIT’s announcement of a three-point strategy just weeks ago. In the Advisory Committee’s opinion, lowering the burden of cancelling broadband services will serve that purpose by making users more active in switching between operators. South Korea is not the only country to take action in this area recently, with operators in France now required to provide consumers with a free online tool to enable the termination of a contract once it expires. The MSIT looks set to identify and tackle further ‘user inconveniences’, signalling a focus on prices, marketing and quality of service across the industry.
