Experts Say "Dantong Law Must Be Abolished" in Unison... Industry Cites "Infrastructure Investment Effects"

The perspectives of the mobile telecommunications industry and experts on the Device Price Stabilization Act (DPSA) were distinctly different. Experts judged the policy as a 'failure' in terms of consumer welfare, stating that after 10 years of implementing the DPSA, it did not lead to a reduction in communication costs. The telecommunications industry expressed concerns that if the DPSA were abolished without establishing user protection measures, abnormal overheating competition among companies would recur.

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When Asia Economy asked five experts for their opinions on the DPSA, all of them supported its 'abolition.' The main reasons were that it failed to bring effects perceptible to consumers and that competition among mobile carriers in terms of pricing plans and quality had disappeared. Han Seok-hyun, Director of the Seoul YMCA Citizen Mediation Office, diagnosed, "The main purpose of the DPSA was to reduce device prices by improving the distribution structure, but it failed to achieve this, and consumer harm from side contracts combining carrier services remains significant." He added, "If the law had shown effects perceptible to consumers, it would be necessary, but in its current form, the DPSA is unnecessary."

Lee Seong-yeop, Professor at Korea University Graduate School of Technology Management, said, "The original intent of the DPSA was to encourage competition in pricing plans and quality without spending money on subsidies, but there is almost no difference among the three major carriers in terms of pricing plans and quality." He added, "The mobile telecommunications environment has changed significantly since the early days of implementation, and from the perspective of promoting competition, abolition is appropriate."

Lee Byung-tae, Professor of Business Administration at KAIST, criticized, "The DPSA is a supplier-oriented policy," and said, "It is a law that forces carriers not to compete on device discounts and to collude on prices."

There were also claims that benefits from number portability have decreased, causing consumers to lose opportunities to replace their phones. Lee Kyung-won, Professor of Economics at Dongguk University, analyzed, "Since the DPSA, the device replacement cycle has lengthened," adding, "Replacing a device often involves number portability, but since that opportunity is lacking, the cycle has become longer." Shin Min-soo, Professor of Business Administration at Hanyang University, said, "Even after the DPSA, places like 'Seongji stores' still exist, so it is hard to say the policy goals have been achieved," but added, "Other preventive measures are needed to stop consumer discrimination."

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The mobile telecommunications industry views the DPSA as not the 'best' but the 'least bad' option. They also advocated caution, stating that the abolition of the DPSA should be decided after comprehensive discussions. This is because the DPSA has established market rules over the past 10 years, and communication cost discount programs based on the DPSA, such as the Selective Contract Discount system, are currently in operation. The decrease in number portability figures after the DPSA is also analyzed as a sign of 'market stabilization.'

An industry official said, "Since the implementation of the DPSA, each company has refrained from wasteful subsidy competition and instead invested in infrastructure and actively engaged in quality competition." He added, "The DPSA has both positive and negative functions, and any amendment or abolition of the law should be judged comprehensively."

If the DPSA were abolished immediately, confusion would inevitably arise in the Selective Contract Discount system. According to the DPSA enforcement decree, each carrier has the Selective Contract Discount system. This system provides a monthly discount equivalent to the subsidy amount for 12 or 24 months to subscribers who do not receive the official subsidy benefit. A carrier official said, "Since the Selective Contract Discount system provides discount benefits to customers, claims that carriers have only fattened their profits without spending marketing costs are misleading."

It is also expected that the abolition of the DPSA would negatively impact the budget phone market, which is one of the policies to reduce household communication expenses. A budget phone company official said, "The DPSA is a law to reduce overheated competition among carriers to attract subscribers, and it clearly had a market normalization effect," adding, "If the DPSA is abolished, subsidy competition to lure subscribers by pouring money into distribution channels will occur, negatively affecting the budget phone market."

When users change devices or port their numbers, if one-time subsidies are provided, budget phone companies, which have gained popularity with low-cost plans, will inevitably suffer damage.

Another industry official said, "Due to price increases for devices and improvements in phone performance, people tend to change phones less frequently than before, which may make the market appear rigid." He added, "The perception that the DPSA is a 'bad law' is strong, and it cannot be denied that it is politically exploited ahead of elections."

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