It has been confirmed that LG Uplus recently instructed in employee training materials to guide sales of the mobile-internet bundled product "All-in-One" as if business sites internet were provided for free. Because the Korea Communications Commission (now the Korea Media and Communications Commission) a decade ago banned so-called "free marketing," which labels a specific component of a bundle as "free," "gratis," or "0 won," or concentrates discounts on a particular product, some note this could fall under the Korea Media and Communications Commission (KMCC) review.
According to LG Uplus employee training materials obtained by ChosunBiz on the 29th, the All-in-One product was described as "mobile, internet, and bundle all at once" and "All-in-One, which allows easy sign-up as a single product." The materials identified small business owners who use LG Uplus internet at home and are preparing to open a store as the primary sales target.
The issue lies in the sales points. In the materials, LG Uplus instructed staff to tell customers preparing to open a store to "emphasize free use of 500M internet at the business sites" and to "propose it as an expansion of communications benefits at the establishment, not as an additional internet subscription." On another page, while explaining the All-in-One operating standards, the internet payment amount item labeled the fee for 500M internet as "free" if IPTV is not selected.
The All-in-One product gives mobile and internet bundle benefits if certain conditions are met. According to the internal training materials, a subscriber must sign up for one line of the Mobile Plus Pack 95+ plan and one line of the All-in-One dedicated internet plan, and complete U+Together bundling and Daily Plus All-in-One discount registration. The internet item applies an "All-in-One discount of 27,500 won," and the materials also included the note "internet basic 500M standard free."
Use of "free" to describe broadcasting-telecom bundles has already been subject to regulation since 2015. At that time, the Korea Communications Commission (KCC) prepared guidelines on false and exaggerated advertising of broadcasting-telecom bundled sales and identified as a false advertising type the act of advertising the usage fee of a specific component as "free," "gratis," or "0 won." The issue was the practice of concentrating the total discount of a bundle on a specific component, such as internet or broadcasting, to make it appear free.
In 2016, the Korea Communications Commission (KCC) also revised the notice on detailed types of prohibited acts and review standards for bundled sales. The revised notice defined as a prohibited act the application, at the bundle sign-up stage, of an unjustifiably and markedly discriminatory discount rate to a specific component in a way that could exclude competitors and harm users' interests. A markedly discriminatory discount rate was defined as arising when the fee for a specific component is set lower than the manufacturing cost, purchase cost, or an expense of a similar nature.
Those regulations at the time led to the overhaul of telecom bundle products. In 2015, SK Telecom halted sales of the bundle product "TB Family Free" and considered removing the word "free" from the product name. KT's "If Internet Bundles, Olleh," and LG Uplus' "All at Once Home" also became targets for adjustment, because the government took issue with sales methods that concentrate discounts on specific products such as internet or TV to make them appear free.
At the core of the latest LG Uplus All-in-One controversy is how the "free" phrasing in the internal training materials was used in actual sales settings. Regulatory judgments may differ depending on whether it was merely internal explanatory material, or whether the language was used at agencies and retailers to induce customers to sign up for free internet. Whether the terms and bills clearly distinguish discount amounts and discount types by component is also at issue.
However, because the training materials explicitly included the phrase "emphasize free use of 500M internet at the business sites," it will be difficult to avoid criticism that this runs counter to the intent of the free marketing ban previously imposed by the Korea Communications Commission (KCC). If the overall discount benefit of a bundle is described as the free provision of a specific component, consumers could mistake the internet product itself as being free.
A telecom industry official said, "Bundle discounts are fee reductions based on the overall service combination, but if a specific component is emphasized as free, consumers may take it as a product with no inherent internet fee," adding, "The reason the free marketing regulation emerged 10 years ago was also to prevent such misunderstandings."
An LG Uplus official said, "The materials in question were internal documents produced for training before the product launch," adding, "We will review various aspects later and take action where necessary."