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Telecom Firms Rip off 800 Bil. Won Every Year

Posted June. 13, 2008 07:57,   


How much difference will there be in charges between talking over the phone for 11 seconds and for 10 seconds?

The answer is “twice.” This is because communications firms calculate the charges by units of 10 seconds, which means that if you exceed just one second after 10 seconds, you are supposed to pay for 20 seconds.

According to an estimate, unused phone charges stemming from the time and fee unit policy account for about 800 billion won each year.

The Board of Audit and Inspection announced yesterday that after inspecting communications service providers last October and November, it notified the Broadcasting and Communications Commission to correct the excess charge system after finding their unfair trade activities.

The audit agency revealed that the three mobile service providers measure a phone charge by 0.1 second unit when calculating access costs among service providers. But they impose much more on subscribers by calculating each conversation by units of 10 seconds.

Given this estimate, mobile phone users pay the additional charges equivalent to an average five seconds each call.

The audit agency said that, “The three mobile carriers’ revenues originating from unused minutes were estimated to reach 870 billion won in 2006. Given that their ability for cost compensations amount to 103 to 123 percent, we believe they can afford to provide reduction of the charge.”

Data communications charges also came under fire. The audit agency found that the three mobile service providers have ripped off up to as much as 91 times of the due charges by shifting to a system, in which charges are calculated based on the size of used data, when introducing faster broadband connections in 2001.

“When we converted the charges from time-based to volume-based by downloading music files online, we estimated the appropriate charge was 0.05 won per packet. In contrast, the text message in the new charge system (4.55 won for one packet) was about 91 times higher than the proper rate,” said the office.

The charge for the video phone service was 17 won per every 10 seconds in 2001, but it rose to 400 won or 23.5 times when the system was changed in 2003. In November 2007, the fee declined to 30 won per each 10 seconds, but it still is 1.76 times higher compared to 2001.

Meanwhile, the three mobile service providers released a joint statement arguing, “A host of advanced countries adopt a pricing system that imposes phone charges by units of a minute or 30 seconds. Even one second is charged as ‘Call Set Up Charge.’ If the current pricing system is changed, it will incur inconvenience and confusion among consumers.”

They also retorted to the agency’s criticism of imposing high data charges, saying, “The augment seems to have flaws in its logic. It is nothing short of an argument that customers should pay the train fare half the price because the train takes about half the time compared to the past.”