"Preventing Penalty Bombs" Rep. Jeon Hye-sook Pushes for Amendment to the Mobile Phone Distribution Act

Jeon Hye-sook, Democratic Party of Korea Lawmaker, Leads the Proposal of the 'Amendment to the Mobile Phone Distribution Improvement Act'

[Asia Economy Reporter Koo Chae-eun] Jeon Hye-sook, a member of the Democratic Party of Korea and the National Assembly Science, Technology, Broadcasting and Communications Committee, is set to take the lead in proposing a revision bill to the Act on the Improvement of Distribution Structure of Mobile Communication Terminals (DanTongBeop), focusing on reforming the penalty fee system and introducing a separated disclosure system.

With the addition of Jeon Hye-sook’s bill to the two existing bills (proposed by Kim Young-sik and Cho Seung-rae) in the 21st National Assembly, the legislature is expected to enter into a full-fledged legislative competition over the DanTongBeop revision bills.

Key Points: Separated Disclosure System and Penalty Fee Reform

According to the National Assembly on the 18th, Representative Jeon Hye-sook plans to take the lead in proposing the DanTongBeop revision bill on the same day. The core of Jeon’s proposed bill is the separated disclosure system and the announcement of a penalty fee cap. The separated disclosure system aims to promote consumers’ right to know by separately disclosing manufacturers’ incentives and telecom operators’ subsidies, preventing inflated retail prices and enhancing price transparency.

The bill also introduces a 'penalty fee cap system.' This measure is intended to prevent consumers from being tied to a specific service provider due to excessive penalty fees, thereby restricting their freedom of choice.

The bill stipulates that the Korea Communications Commission will announce the penalty fee cap, and if manufacturers have provided incentives, these cannot be charged to consumers as penalty fees. Both measures focus on securing transparency and fairness regarding the source and scale of device subsidies and penalty fee imposition, ultimately enhancing consumer benefits.

Furthermore, to ensure the effectiveness of the separated disclosure system, the bill seeks to reintroduce the obligation for manufacturers and telecom operators to submit data, which was sunsetted in September 2017. It mandates that manufacturers and telecom operators submit to the Ministry of Science and ICT and the Korea Communications Commission information on incentives paid directly to agencies or retailers, as well as the retail prices of devices purchased without going through telecom operators.

The Controversial DanTongBeop... Will It Be Revised in the 21st National Assembly?

Meanwhile, the DanTongBeop, enacted in 2014, was introduced to prevent price discrimination where some consumers buy mobile phones cheaply while others pay more. The fierce subsidy competition has somewhat eased, and the profitability of the three major telecom operators has improved thanks to reduced marketing expenses.

However, the original goals of reducing household communication costs and lowering retail prices were not achieved. Due to the stingy subsidies from the three telecom operators, mobile phone retail prices have been leveled upward, and it is not uncommon to find so-called “XX phone 0 won phone” advertisements, which are considered hotspots for mobile phone sales. Consumers have expressed dissatisfaction, claiming that the DanTongBeop rather encourages price collusion among telecom operators and that from a buyer’s perspective, “buying cheap is illegal, buying expensive is legal.” As a result, discussions on supplementing the DanTongBeop are emerging, centered around the relevant ministries and the National Assembly.

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