[Column] The Dantong Act Causing Market Failure: Avoiding Its Reduction to a Tool for the General Election

There continues to be heated debate over the Device Distribution Act (DanTongBeop), which is in the process of being repealed. The government plans to abolish the law before the April general election to appease public sentiment, while the three mobile carriers are cautiously maneuvering to turn the situation to their advantage. The Device Distribution Act serves as the basis for the publicly disclosed subsidy system that transparently reveals device price discounts to reduce user discrimination. On one side are those who claim that the entire nation has become "Hogang" (overcharged customers) due to this law and demand its immediate repeal, while on the other side, the telecommunications industry argues that consumer benefits have not diminished, creating a clash like spear and shield.

Although the repeal of the Device Distribution Act is included in the Ministry of Science and ICT’s work plan for this year, debates over its effectiveness continue. Reviewing last year’s performance reports from the three carriers, marketing and sales commissions including public subsidies decreased by approximately 30 billion to 100 billion KRW per company. Last year was a significant year for the smartphone industry. The Galaxy Z Flip5 and Fold5, which held unpacking events in Korea and received great responses, and the record-breaking sales of the iPhone 15 series were launched. It was expected that carriers would spend heavily on marketing to attract customers, but the reality was quite the opposite.

After related articles were published, the carriers expressed some frustration. They explained that "marketing expenses naturally decreased as device replacement cycles lengthened," "it is difficult to make simple comparisons because accounting standards changed in 2018," and "capital investment costs are continuously increasing." However, none showed a willingness to actively compete for customers through vigorous marketing in the future.

The repeal of the Device Distribution Act is a hot topic intertwined with the general election. Unlike ten years ago when the law was enacted, device prices have become burdensome, approaching 2 million KRW. Many believe that repealing the law is an inevitable step to soothe public sentiment. Of course, focusing solely on the election would be problematic. To avoid the repeal becoming merely an election slogan, the government and private sector must accurately analyze the root causes of policy failure. They must also establish safeguards to prevent a repeat of subsidy competition that neglects service and quality competition. Changing policies arbitrarily without accountability, as if "what was right then is wrong now," only confuses both companies and consumers.