Abolition of the Mobile Device Price Stabilization Act Passed in the Plenary Session on the 26th
Expected Effects of Subsidy Expansion and Reduced Communication Costs
Retention of the Selective Discount System with Enhanced Monitoring
With the repeal of the Device Distribution Act (DanTongBeop) passing the National Assembly plenary session on the 26th, competition in subsidies within the mobile telecommunications market is expected to be stimulated. The obligation for telecom operators to disclose device subsidies and the regulation capping additional subsidies by retailers will be abolished, expanding benefits for users.
Previously, the Device Distribution Act was introduced in 2014 to prevent severe discrimination among users and to establish a fair and transparent distribution order. However, it has been criticized for ultimately suppressing subsidy competition among telecom operators, limiting opportunities to purchase mobile phones at lower prices and reducing consumer welfare.
In response, the government decided to repeal the Device Distribution Act to reduce national communication costs and supported discussions in the National Assembly. Through this repeal, regulations that hinder competition among telecom operators will be removed, while necessary provisions for protecting user rights and fostering a healthy distribution environment will be transferred to the Telecommunications Business Act.
The obligation for telecom operators to disclose device subsidies and the regulation limiting additional subsidies by retailers (within 15% of the disclosed subsidy) will be abolished. This creates conditions for revitalizing subsidy competition among telecom operators. The regulation prohibiting unfair subsidy discrimination based on subscription type or rate plans will also disappear, allowing businesses to implement diverse marketing strategies that provide benefits to users.
The selective discount system, which offers rate discounts to users who do not receive subsidies, will be maintained. The government plans to ensure that the current level of rate discounts (25%) continues to be provided to consumers.
Additionally, provisions necessary for market stabilization and user rights protection?such as prohibiting misleading acts regarding device purchase costs, a prior approval system for retailers to ensure a healthy distribution market, prohibitions on unfairly discriminatory subsidy instructions or inducements by telecom operators and manufacturers, certification for safe transactions of used devices, and prevention of export of lost or stolen devices?will be transferred to the Telecommunications Business Act.
To prevent discrimination against vulnerable groups such as the elderly and disabled, regulations prohibiting unfair discrimination based on users’ age, residential area, or physical condition will be maintained. Furthermore, with the establishment of the Korea Communications Commission’s responsibility for market management, including policies to foster a healthy distribution environment, the Commission plans to strengthen monitoring of unfair market practices and prevent user damages.
Minister Yoo Sang-im of the Ministry of Science and ICT stated, "We will promote free subsidy competition among businesses to alleviate the burden of purchasing mobile phone devices for the public, while also making efforts to minimize any side effects that may arise from the repeal of the law." He added, "We will continue to pursue policies to reduce household communication expenses, such as strengthening the competitiveness of MVNO operators who play a crucial role in lowering communication costs and revitalizing the used phone market."
Kim Tae-gyu, Acting Chairman of the Korea Communications Commission, said, "We will faithfully implement necessary follow-up measures to prevent future market confusion and user damages, and carefully monitor related situations to ensure the device distribution market remains healthy."
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