Monetary Penalties
The Korea Fair Trade Commission (KFTC) announced on May 24 that it has given a corrective order to the three major Korean wireless carriers (SK Telecom, KT, and LG Uplus) and imposed a provisional fine of 33.6 billion won (US$25.4 million) on them for falsely and exaggeratedly advertising 5G service speeds.
This is the second-largest fine in the history of violations of the Act on Fair Labeling and Advertising, after a fine of 37.3 billion won (US$28 million) for unfair advertising slapped on Audi and Volkswagen in 2017. By company, SK Telecom was fined 16.83 billion won (US$12.71 million), while KT and LG U+ were fined 13.93 billion won (US$10.52 million) and 2.85 billion won (US$2.15 million), respectively. The fines were calculated based on their relevant revenue.
A KFTC investigation found out that the three carriers advertised their 5G service speeds at 20 gigabits per second (Gbps) on their websites and YouTube channels in 2017 and 2018, respectively.
They made statements such as “20 times faster than LTE services at the time,” and “You can send a 2.5 GB file in just one second, which takes more than 20 seconds via LTE services,” in their advertisements.
However, 20 Gbps was only a target speed by technical standards and was not supported by any empirical evidence. “The speed of 20 Gbps was only theoretically possible,” the KFTC explained.
In fact, the average 5G transmission speed of the three companies in 2021 was 0.8 Gbps, less than 4 percent of the advertised speed. Over the entire advertising period, the average speed remained between 656 and 801 Mbps, about 3 to 4 percent of 20 Gbps.
The three mobile carriers have plugged their 5G data services, saying that their 5G speed peaked at 2.1 to 2.7 Gbps since around April 3, 2019, when their 5G services launched. While 2.1 and 2.7 Gbps is faster than the companies’ average, 20 Gbps is still a vastly inflated number. Their actual 5G speeds ranged from 25 to 34 percent of the starting speed.
On top of that, the three companies advertised that their 5G services were faster than those of other service providers without any objective evidence or data. In particular, SK Telecom deceived consumers by favorably comparing its 5G speed to other carriers’ LTE speeds.
The KFTC concluded that the three mobile carriers advertised the target speed of 20 Gbps by 5G technology standards that cannot be realized in an actual use environment, misleading consumers so that they thought that they could actually enjoy such fast 5G services. The regulator has arrived at the conclusion that their advertisements were false, exaggerated, and deceptive.