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SK Telecom Forces Content Provider to Recruit Service Subscribers

SK Telecom Forces Content Provider to Recruit Service Subscribers

Posted July. 17, 2003 21:37,   


A controversy is brewing over findings that SK Telecom forced its provider of wireless Internet content to recruit subscribers for SK Telecom`s wireless Internet service. The content provider used personal information of its employees and their families without consent to recruit them as subscribers of SK Telecom`s wireless Internet service. Some 3,000 subscribers were recruited in this way, with one person being “subscribed” to 10 different services. Since learning of the violation, employees and their families are strongly protesting the case.

∇ Unethical subscriber recruitment tactics

According to SK Telecom and Mobile Welcome, a content developer for PDAs, SK Telecom contracted out the development and supply of content to Mobile Welcome. In return, SK Telecom required Mobile Welcome to recruit more than 3,000 subscribers for its wireless Internet service. Mobile Welcome, which developed a membership information management program for PDAs, used the personal information of 400 employees, families and employees of its business partners without their consent to fulfill SK Telecom`s demand for subscribers and, thus, maintain its relationship with SK Telecom. Over time, some SK Telecom retail branches have increased the maximum number of service one person can sign up for from 4 to 10. Some approved subscribers without requiring proper documentation on the subscribers` personal information.

A source working for a wireless Internet content developer said that program developers are asked to recruit subscribers for services, as a commanding share in the newly emerging PDA market is seen as crucial.

∇ Personal info leaked and used without consent

The president of Mobile Welcome used the personal information of employees from a partner company, New Teaching, and from his father`s firm, Froebel Korea, as well as that of the employees of his own company. In this way, he managed to secured 3,000 “subscribers” by signing each one person up to 10 services. Some employees were subscribed to as many as 100 services in their own name and the names of family members. The head of Mobile Welcome personally handled the billing for the wireless Internet service himself, spending 80 million won every month in fees for basic services. After the scandal broke. he went abroad on business. Froebel Korea insisted that its employees suffered no financial damage, and the company is in the process of canceling its employees` subscriptions for the wireless Internet service.

SK Telecom argues that the entire story is impossible, since developers are chosen through open competition, and it denies requiring Mobile Telecom to deliver subscribers to its services.

Meanwhile, officials at the e-commerce consumer protection division and the competition promotion division of the Fair Trade Commission say that it is illegal for a company to use its “market muscle” to include unrelated operations as part of the terms of business contracts. They claim that the circumstances surrounding the contract between SK Telecom and Mobile Telecom requires closer examination.

∇ PDA (Personal Digital Assistant) service is a “third-generation wireless communication” service, following “2G” services which comprise voice calls and text messages. PDA service enables personal information management, sending and receiving e-mail, and writing documents through smartphones and PDAs. Some 200,000 PDAs were sold in Korea last year, with the figure this year expected to reach 400~500,000. SK Telecom currently leads the market, followed by KT and LG Telecom.