First 5G Single-Device Law Violation Sanctions Delayed Beyond This Month

First Sanction for DanTongBeop Violation After 5G Commercialization Raises Concerns
Maximum Business Suspension and Heavy Fines Expected
Originally Scheduled for Late March, but Extensive Fact-Finding Likely to Delay Beyond This Month

[Asia Economy Reporter Koo Chae-eun] The first penalty review for violations of the Device Distribution Improvement Act (DanTongBeop) since the commercialization of 5G is expected to be delayed beyond this month. With high-level sanctions anticipated, including maximum business suspension or fines up to 3% of sales, the three major telecom companies are on high alert due to the symbolic significance of this being the first penalty since 5G.

According to industry sources on the 11th, the Korea Communications Commission (KCC) postponed the review of the three major telecom companies’ DanTongBeop violation penalties, originally scheduled for this month’s plenary session, to next month. Previously, the KCC completed an investigation into DanTongBeop violations targeting the three telecom companies for distributing illegal subsidies after the commercialization of 5G. A KCC official explained, "We are analyzing the collected data," adding, "The content is extensive, making it difficult to bring it to the plenary session within March." Typically, once sanctions are decided at the plenary session, enforcement occurs within a week.

This penalty stems from the overheating of illegal subsidies at the level of 'free phones' for 5G devices such as Samsung Electronics’ Galaxy S10 and LG Electronics’ V50 ThinQ, following the commercialization of 5G in April last year. The KCC is known to have investigated excessive device subsidies, posting of prior approval forms at sales outlets, and illegal retention of IDs by distributors.

The three telecom companies have offered various interpretations regarding the delay in the plenary session referral. Since this is the first DanTongBeop violation penalty after 5G commercialization, it is expected to set a precedent. An industry insider said, "Many aspects of the 5G subsidy issue qualify as 'serious violations,' so determining the standard fine amount and additional increases or reductions will not be easy." Another insider noted, "The scale of the fine this time could be the largest since the enactment of DanTongBeop, and because it reflects Chairman Han Sang-hyuk’s policies and regulatory direction for the device distribution market, interest is particularly high. However, it is expected that the penalty level will be decided by considering the Galaxy S20 gentlemen’s agreement and recent efforts to curb subsidy competition."

The KCC has previously imposed business suspension measures on the three telecom companies for causing subsidy chaos. In 2012, the KCC decided to ban subscriber recruitment for 20 to 24 days and imposed a total fine of 11.89 billion KRW. In 2014, due to overheated subsidy competition, the KCC suspended operations of the three telecom companies for one week each and imposed fines totaling 29.8 billion KRW. In 2018, a total fine of 50.6 billion KRW was imposed for violations of DanTongBeop.

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