[Reporter’s Notebook] With the Repeal of the Dantong Act, We Must Also Consider Ways to Reduce 'Hogaeng'

The Act on Improvement of Distribution Structure of Mobile Communication Devices (commonly known as the "Dantong Act") was abolished as of July 22. Upon checking the price of Samsung Electronics' Galaxy Z Flip7, which is set to launch on July 25, it was found that the official online stores of mobile carriers were selling the device for 800,000 won, while some phone retail stores were offering it for as low as 100,000 won. Even though the purchase conditions were identical?number portability, the same rate plan, and a two-year contract?the price difference depending on where it was purchased reached a staggering 700,000 won.

The price gap between the official online stores of mobile carriers and so-called "Seongji" phone retail stores has also widened. The online stores, which are easily accessible and openly disclose subsidy information, offer relatively small additional subsidies. In contrast, the Seongji stores, which require consumers to put in effort to seek out information, provide much larger additional subsidies. The key change is that the additional subsidies at Seongji stores, which were once illegal, have now become legal. As a result, consumers who invest time and effort into gathering information can now purchase mobile phones at much lower prices.

Looking back, the main purpose of the Dantong Act was to prevent price discrimination arising from differences in consumers' ability to obtain information. However, by imposing a uniform cap on subsidies, the act resulted in all consumers having to pay the so-called "full price," which increased the financial burden as phone prices rose. Furthermore, the original legislative intent of eliminating price discrimination was not achieved, as some stores continued to openly provide illegal subsidies.

With the abolition of the Dantong Act, a new issue has arisen: the possibility that digitally vulnerable groups, who have limited access to information, may once again face discrimination. For older adults who are not digitally savvy, checking price information in online communities or verifying the terms and conditions at retail stores can be a significant barrier.

The Korea Communications Commission has stated that, as a follow-up measure to the abolition of the Dantong Act, it will review effective ways to ensure that all consumers can access information about additional subsidies. However, as of the third day since the act was repealed, there is still no place?other than the official online stores of mobile carriers?where additional subsidy information is openly available to everyone. As a result, the situation in which mobile phone prices vary widely depending on one's ability to obtain information continues.

With SK Telecom's decision to waive penalty fees following its hacking incident and the abolition of the Dantong Act, competition in the mobile telecommunications market has become fiercer than ever. However, if the benefits of this competition are limited only to consumers who are well-informed, the very meaning of competition may be undermined. The government must quickly introduce effective measures to ensure that the benefits of transparent disclosure of subsidy information are shared by all consumers.