Preventing Consumer Exploitation and Debbang Law, A Closer Look at the Telecom Fee Pledges

Public Wi-Fi Communication Expense Tax Deduction
Both Ruling and Opposition Focus on Reducing Communication Costs
No Consideration for Mobile Industry Development

[Asia Economy Reporter Koo Chae-eun] "Data communication fees at 'ppangwon (0 won)', we will open the 'Debbang era'." (The Democratic Party of Korea)

"We will reduce the burden of communication fees with the National Consumer Protection Act." (Liberty Korea Party)

As the April 15 general election approaches, the perennial election campaign promise of 'lowering communication fees' has appeared once again. The Democratic Party of Korea opened the front with a policy to expand public Wi-Fi, and the Liberty Korea Party also brought up income deductions for communication fees. However, these promises are being criticized as 'populist pledges' aimed only at voters' sentiments without serious consideration of the development of the mobile communication industry.

ICT experts criticized the focus solely on communication fee policies that stimulate voter sentiment, while there are many B2B issues such as AI and big data content for revitalizing the 5G industry.

Professor Shin Min-soo of Hanyang University’s Business Administration Department pointed out, "It is important to balance between cost and revenue in communication fee policies," adding, "Lowering consumer costs is important, but telecom companies also need to earn enough to invest in 5G and activate the industry. If it is one-sided, a virtuous cycle cannot be formed."

Professor Kim Hyun-kyung of Seoul National University of Science and Technology’s Graduate School of IT Policy said, "It is problematic that promises focus only on household communication fees without expertise, just looking at voter sentiment," and added, "Sharp but important ICT industry issues such as mobility and startup development are always missing from election pledges, which also needs to be corrected."

◆ Public Wi-Fi, 5G Macro Policy Clash = The policy to expand public Wi-Fi has the problem of conflicting with the cost burden on operators and the 5G popularization policy. This policy aims to reduce the burden of data communication fees by installing additional public Wi-Fi in about 53,000 places such as city buses, schools, and transportation facilities to increase free Wi-Fi spaces. However, the pledge to expand free Wi-Fi areas is criticized for conflicting with the trend of '5G commercialization.' This is because the government and companies have set a plan to invest 30 trillion won in 5G by 2022.

An industry insider said, "Telecom companies are pouring trillions of won into 5G network investments such as building the 28GHz band and striving to attract subscribers, so allowing free data use mainly in public places is inconsistent," adding, "There are already many public Wi-Fi locations, and most users actually use unlimited data plans, so the effectiveness is also low."

The cost burden is also an issue. The cost of the public Wi-Fi construction pledge is 578 billion won over three years. The government and telecom companies plan to form a fund and share the cost equally. Professor Shin said, "There will be an issue of how telecom companies or the government recover the amount invested in public Wi-Fi." It also violates current laws. According to the Telecommunications Business Act, except for exceptions related to national safety, it is prohibited for public or private institutions without licenses to interconnect or mediate communication networks or provide services to the general public. Professor Kim pointed out, "The public Wi-Fi policy requires local governments to use their own networks, and according to the 'principle of prohibition of mediation of other communication,' there may be conflicts with current laws."

◆ Income Deduction, Validity Questioned = There are many voices questioning the justification and effectiveness of the communication fee income deduction pledge. With the generation shift to 5G, communication fees are difficult to be seen as essential goods that citizens must spend on even if they do not want to, like education and medical expenses which are tax-deductible. This is because the use of communication fees has expanded from essential services such as calls and texts to the concept of 'cultural leisure expenses' including virtual reality (VR), augmented reality (AR), artificial intelligence (AI), and cloud gaming. Due to these issues, communication fee income deductions were attempted in 2011 and 2014 but failed due to lack of justification.

Professor Shin pointed out, "The approach that communication fees should be seen as 'digital cultural consumption expenses' is emerging overseas in the UN, the US, Australia, and others." In fact, household communication fees in Korea are mainly composed of communication services (mobile phone, internet, landline) according to the 'Classification of Individual Consumption According to Purpose' (COICOP) recommended by the UN as a standard in 1999. However, in the 2017 COICOP revision, the UN changed 'communication' to 'information and communication' and moved audio, video reception, and playback, which were classified under entertainment/culture, to a subcategory.

Criticism is also raised that election pledges focus only on communication fee issues rather than 5G industry activation. An ICT industry insider said, "The policy direction should change with the communication generation shift, but since they need to win votes, only communication fee pledges flood every election," adding, "Parliamentary pledges still remain stuck in the mindset of 2G and 3G times."

This content was produced with the assistance of AI translation services.