Marketing 5G performance unachievable in the real world prompts the regulator to levy one of the highest fines on record
Regulator imposes the second biggest fine to date: On 24 May 2023, the Korea Fair Trade Commission (KFTC) imposed a corrective order and a provisional fine of KRW33.6bn (£20.4m) on domestic operators SK Telecom, KT and LG Uplus for running misleading 5G adverts. This is the second-largest overall fine imposed for a breach of the Fair Labelling and Advertising Act. As per the regulator’s decision, it intends to fine SKT KRW16.8bn (£10.2m), while KT and LG Uplus face penalties of KRW13.9bn (£8.4bn) and KRW2.8bn (£1.7m), respectively. According to the KFTC, the three telcos “falsely exaggerated or deceptively advertised” the performance of their 5G services, with their adverts highlighting speeds that can only be delivered in certain environments.
Operators made 5G claims without supplying verifiable evidence: The KFTC stated that while the adverts gave the impression that users could expect to experience maximum throughput of up to 20Gbps, the three mobile operators failed to demonstrate that their services can reach that level in real-world conditions. SK Telecom considered the ruling "regrettable", arguing that its promotion clearly acknowledged the use of a theoretical speed. However, when the adverts were aired, the operators’ average 5G download speeds ranged between 656-801Mbps – equivalent to just 3-4% of the 20Gbps peak used in their marketing content. The operators also all claimed to provide the fastest 5G service in South Korea, without offering verified test results. In particular, SK Telecom was found to have compared its services favourably to those of its rivals. Given the oligopolistic structure of the mobile market, the KFTC concluded that the operators’ misleading adverts could have a significant impact on fair competition.
Download speeds have often been subject to misleading statements: Like SK Telecom, KT and LG Uplus plan to review the KFTC’s decision, although it is currently unclear whether they will lodge an appeal. It is not new for the industry to receive a correction order, with KT previously found to have used false advertising when promoting its ‘GIGA LTE’ technology. The latest ruling also indicates – even in one of the world’s most advanced mobile markets – the competitive pressure to market 5G services and attract or upgrade consumers. In other countries, including Australia and Italy, operators have been hit with fines for misleading marketing – especially regarding the speeds users could enjoy. The response from some regulators (e.g. the FCC) has been to introduce broadband labelling schemes to help consumers better compare telecoms services, although Germany has arguably taken the most significant action. BNetzA’s proposed ‘right of reduction’ rules would enable consumers to lower their mobile bills or terminate their contract without notice in the event of poor service.
