Telecommunication Service and Consumer Rights

1. Telecommunication Service and Consumer Rights International Conference on Consumer Protection in the Digital Age April, 2014 Jaiok Kim Consumers Korea (CK)

2. Unfair Practices in Telecommunication Service • Unfair practices in the telecommunication service identified • Insufficient information provided concerning mobile phone contracts • Confusing terminologies in contracts • Unclear notification of contents of mobile phone contract: payment for subsidized cellphone plans, contract period for subsidy March 2014 Consumers Korea 2

3. Unfair Practices in Telecommunication Service • Unclear information on mobile phone contracts • Stipulated time for subsidy: 36 months vs. 24 months (Policy terms of telecommunication service carriers confines subsidized mobile phone plan up to 24 months, yet consumers are likely to be misled by promotion lines…) March 2014 Consumers Korea 3

4. Unclear information • Telecommunication service carriers’ terms apply subsidy for mobile phone for 24 months • Yet, consumers are encouraged to buy the longer stipulated time plan ( 30 or 36 months) misunderstanding that subsidy applies to 30 or 36 months March 2014 Consumers Korea 4

5. Unclear information • Unclear information on payment: • Consumer complaints on subsidized mobile phone: • Unclear and insufficient information on payment consumers should pay monthly March 2014 Consumers Korea 5

6. Stipulated payment plan • Mobile phone payment plans are varying and complicated • Stipulated payments include more talk time than consumers use on average: • Consumers pay more than they use on average • - 54 USD payment plan – consumers use 74.3% of talk time offered • - 62 USD payment plan – consumers use 68% of talk time offered (source: Korea Consumer Agency) March 2014 Consumers Korea 6

7. Telecommunication cost • Monthly average telecommunication cost for household increased 13.7%: $152 (2012) vs. $133 (2008) • Mobile phone cost for household: 77.1% of telecommunication cost for household March 2014 Consumers Korea 7

8. Purchasing mobile phone • Frequent replacement of mobile phone: • Rate of replacement of mobile phone is 67.8% (2012), the 1st place in 88 countries (source: Strategy Analytics) March 2014 Consumers Korea 8

9. Unfair Price Structure • Subsidized mobile phone vs. Not Subsidized mobile phone • Service carriers focus on attracting more customers instead of competition for reducing price • Consumers are offered unfair price depending on mobile phone plans March 2014 Consumers Korea 9

10. Unclear Price Charging • Consumers exposed to advertisements claiming “free phone offer” • In many cases the phone price is being included in the bill without consumers recognizing • Consumers misled by advertisements claiming “phone is free of charge” • Tricky advertisement or indication misleads consumers, esp. vulnerable consumers (senior citizens) March 2014 Consumers Korea 10

11. Personal information leakage • Privacy infringement and personal information leakage • Privacy infringed by leakage of personal info provided for telecommunication service Personal information leakage: 12 millions of KT users (2014) 8.7 millions of KT users (2012) 35 millions of SK Communications, Nate, and Cyworld users (2011) 6 millions of SK Broadband users (2008) March 2014 Consumers Korea 11

12. Suggestions • Fair and transparent contract terms • Fair payment plan • Reducing price of telecommunication service • Information provision for consumers • Regulation on false claims • Privacy and personal information protection March 2014 Consumers Korea 12

13. Thank you www.consumerskorea.org soree@consumerskorea.org March 2014 Consumers Korea 13