Government to Push for Abolition of Dantong Law... Eases Subsidy Caps

The government is pushing to repeal the Act on the Improvement of Distribution Structure of Mobile Communication Terminals, known as the 'Dantong Law,' for the first time in 10 years. The plan is to eliminate the disclosure of subsidies and the cap on additional subsidies to reduce the burden on consumers.

On the 22nd, the Office for Government Policy Coordination announced that it discussed such regulatory reform measures at the 'Public Discussion on Livelihood Issues' held at the Hongneung Content Talent Campus in Dongdaemun-gu, Seoul.

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As a result of the discussion, it was decided to completely repeal the Dantong Law to lower the communication costs for the public. By removing the disclosure of subsidies and the cap on additional subsidies, the government aims to promote market competition and reduce the cost of purchasing mobile phones for citizens.

The Dantong Law was enacted by government legislation in October 2014. Its core content was to ensure that consumers receive the same device subsidies when purchasing mobile phone terminals such as smartphones at telecom agency stores, regardless of subscription type or location, so that no one pays more or less than others for the same device.

However, criticism arose that the active subsidy competition among mobile carriers was restrained, limiting opportunities for consumers to purchase devices at lower prices, thereby reducing overall consumer welfare. This is especially relevant as the smartphone market has recently focused on premium models and smartphone prices continue to rise.

The government judged that the Dantong Law is a regulatory law absent in most advanced market economies such as the United States, the United Kingdom, and France, and thus does not meet global regulatory standards. Considering the need to enhance consumer welfare through strengthened market competition, the government decided to proceed with regulatory reforms related to the Dantong Law.

[Image source=Yonhap News]

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However, while encouraging competition through voluntary subsidy competition among mobile carriers to enable the purchase of affordable devices, the government plans to transfer the selective subscription discount system?which provides communication fee reduction benefits even to consumers who do not receive subsidies?to the 'Telecommunications Business Act' to ensure that consumers receiving fee discounts continue to benefit.

The government will discuss the repeal of the Dantong Law and amendments to the Telecommunications Business Act with the National Assembly and gather opinions from various stakeholders including consumers, industry, and experts to proceed.

Alongside this, the principle of designating mandatory closure days for large supermarkets as public holidays will also be abolished. This will allow large supermarkets to close on weekdays. To activate early morning delivery services in regions outside major cities and the metropolitan area, restrictions on operating hours for large supermarkets will be relaxed to permit online delivery.

According to the current 'Distribution Industry Development Act (Distribution Act),' large supermarkets are prohibited from operating from midnight to 10 a.m. and must observe two mandatory closure days per month, with public holidays as the default closure days. However, conversion to weekdays is possible through agreement among stakeholders. Additionally, online delivery is not allowed during restricted operating hours and mandatory closure days.

Furthermore, the government decided not to apply the fixed book price system to web content. Web content is a new form of emerging content classified as electronic publications and differs from general books, so there has been ongoing criticism that the fixed book price system should not be uniformly applied. In addition, the government plans to introduce measures to relax the current 15% limit on book price discounts for small bookstores.

The livelihood discussion was held under the chairmanship of Bang Gi-seon, head of the Office for Government Policy Coordination, with President Yoon Suk-yeol absent. Related industry representatives, the general public, and officials from various ministries attended.

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