'Controversial Law' DanTong Act Faces Sharp Criticism as 'Josammo-sa' in Amendment Proposal [Cha Min-young's PostIT]

KCC Prepares Amendment to Mobile Subsidy Law
Additional Support Limit Raised from 15% to 30%
Announcement Frequency Expanded to Twice Weekly
Online Communities Call It 'Covering Eyes and Saying Awoong'
Abolition Arguments and Calls for Introduction of Self-Subscription System Raised

[Asia Economy Reporter Minyoung Cha] #. "It's just a deceptive measure; I wish they would just abolish the Device Distribution Structure Improvement Act (Device Distribution Act)." (Online community user A) The Korea Communications Commission (KCC) proposed an amendment to the Device Distribution Act that doubles the limit on additional subsidies given to customers when purchasing mobile phones, but consumers are responding with skepticism, calling it "putting a blindfold on and pretending." Will the amendment truly reduce the burden of communication fees on the public as originally intended?

Legislative Push for Amendment to Device Distribution Act

On the morning of the 26th, the KCC held its 21st plenary meeting and prepared an amendment to the Act on the Improvement of Distribution Structure of Mobile Communication Devices and detailed standards for the announcement and posting of subsidies, focusing on raising the additional subsidy limit and shortening the announcement cycle to twice a week. The government plans to proceed with legislative procedures including review by the Office for Government Policy Coordination, vice ministerial meetings, and Cabinet meetings, aiming for enactment by March next year.

The amendment includes expanding the additional subsidy limit, currently capped at 15% of the announced subsidy, to double that amount at 30%. For example, the average announced subsidy for eight major devices under a 70,000 KRW monthly plan is about 318,000 KRW. Under the current law, the maximum additional subsidy is 47,700 KRW, but with the amendment, it would increase to a maximum of 95,400 KRW. This means consumers' discount benefits would expand by approximately 50,000 KRW.

The KCC also plans to shorten the announcement cycle from the current 7 days to 3-4 days through revisions to the detailed subsidy standards. Currently, telecom operators maintain announced subsidy information for 7 days regardless of the date, but going forward, announcements can be updated twice a week on Mondays and Thursdays. This aims to increase predictability for the public and encourage competition among telecom operators regarding announced subsidies.

Deep-rooted Distrust Since 2014

However, consumer reactions to the amendment are cold. The Device Distribution Act, implemented in October 2014, has been criticized for blocking competition among businesses and infringing on market autonomy and consumer choice, contrary to its original purpose of reducing information asymmetry. High-priced 5G devices costing over one million KRW have also increased household burdens. Following the KCC announcement, a major online community was flooded with criticism such as "The Device Distribution Act fundamentally restricts competition," and "It ignores individuals' efforts to buy cheaply and encourages everyone to buy at high prices; abolition, not amendment, is needed. I really don't understand why it hasn't been abolished yet."

[Image source=Yonhap News]

Opposition voices are also strong within distribution channels. Small and medium-sized retailers, who have consignment sales contracts with dealerships, rely heavily on incentives as their main source of income. Since part of these incentives is used as additional subsidies for customers, the amendment could directly impact their revenue. There are also concerns that subsidies will become more concentrated in so-called "sanctuaries" of large-scale illegal subsidies in major mobile phone stores.

There are worries that the amendment could actually widen customer discrimination. Because additional subsidies are paid as a certain percentage of the announced subsidy, telecom operators or manufacturers might reduce the total principal amount of subsidies from the start. The distribution network's stance is that "According to the amendment, the range of subsidy discrimination will only increase from 0 to 30%. Establishing a minimum subsidy standard to ensure that all customers receive similar subsidies would be a more effective measure."

Growing Calls for Expanded Introduction of the Self-Supply System as a Countermeasure

There are also calls for more fundamental considerations to lower the smartphone device prices themselves, not just tighten distribution channels. The separate announcement system, which was expected to be included in the Device Distribution Act amendment, is currently stalled. This system would separately disclose subsidies from telecom operators and manufacturers, aiming to increase manufacturers' subsidies by revealing them during distribution. However, with LG Electronics, a major competitor to Samsung Electronics in the domestic mobile phone market, exiting the smartphone business, the rationale for its introduction has weakened.

Some argue that abolishing the Device Distribution Act and urgently introducing a 100% self-supply system, where consumers purchase through distribution channels like general consumer goods, is necessary. Discussions are ongoing in the National Assembly as well. The bill to abolish the Device Distribution Act, proposed by Kim Young-sik of the People Power Party in November last year, is still pending in the Assembly. However, the self-supply system could also lead to a rich-get-richer phenomenon in some large stores and trigger other illegal inducements such as cash or in-kind incentives, so improvements are needed. The responsible government agencies need to fundamentally reconsider how to reduce information asymmetry among communication consumers and increase overall utility.

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