The Korea Communications Commission decided Monday to slap business suspension penalties and fines on the nation’s three telecoms for having offered excessive subsidies to attract customers.

The state telecom regulator agreed on Monday during a general meeting to penalize the three mobile carriers ― SK Telecom, KT and LG Uplus ― which gave out more financial subsidies to the customers than entitled by the law, despite the regulator’s continued warnings.

Starting from Jan. 7, the business ban will first be applied to LG Uplus for 24 days, then to SK Telecom for 22 days, and lastly to KT for 20 days. The KCC’s ban means the three mobile carriers cannot sign new customers, including entirely new users and those who had been using services of different companies.

The fine charged on the three firms totals to about 11.9 billion won ($11 million). SKT was given the largest fine of 6.9 billion won, followed by KT’s 2.9 billion won fine and LG Uplus’ 2.2 billion won.

The current law states that smartphone subsidies cannot exceed 270,000 won, but the price of a 1 million won Samsung Galaxy S3 unit went as low as 170,000 won, after 800,000 won in subsidies.

The overheated subsidy war between the three companies has caused market confusion in the local mobile service industry, as each firm offered illegally cheap rates to lure rival companies’ clients, according to the KCC.

This is the third time for the state-run communications regulator to impose a business suspension penalty, after making similar moves in 2002 and 2004.

It said a heavy penalty was unavoidable, given that the three carriers continued to push for excessive subsidies even after the KCC publicly investigated the case.

The ban, the KCC claimed, will help the nation’s telecommunications market restore a healthy business structure.

On another front, the KCC announced that it will re-allocate the 1.8-gigahertz and the 2.6-gigahertz radio frequency blocks that are optimized for fourth-generation communications Long Term Evolution network services in 2013.

By Chung Joo-won (joowonc@heraldcorp.com)