Refer Report

The ‘Mobile Communication Terminal Device Distribution Structure Improvement Act’ (Dantong Act) celebrated its 10th anniversary on the 1st. Since the government and the ruling party sparked discussions on the abolition of the Short-Term Consolidation Act early this year, related discussions are in full swing in the 22nd National Assembly. At a press conference held at SKV1 Tower in Seoul Forest, Seongdong-gu, Seoul on the 30th, the Korea Mobile Communications Association (KMDA) defined the 10 years since the enforcement of the Mobile Communications Act as “10 unfair years” and requested prohibition of discrimination in sales channels and incentives as a priority task. .

After the recent abolition of the Dantong Act, complete self-sufficiency is being discussed as an alternative. Complete self-sufficiency means that telecommunication companies sell only telecommunication products through agencies, and manufacturers are separated to supply only terminals. The idea is that by breaking the current structure of collusion between manufacturers and telecommunications companies, manufacturers can compete by diversifying terminal prices and models, and telecommunications companies can differentiate themselves through rate plans and various services, ultimately reducing the burden on consumers. Since there may be side effects such as consumer inconvenience, a compromise model that allows some combined sales is also emerging.

However, some predict that the market will likely be reorganized around some large retailers, let alone small and medium-sized distribution networks that can only sell communication services. This means that many distribution companies could be at risk of going out of business. For this reason, KMDA’s position is, “We agree with the abolition of the Single Tong Act, but it is more realistic to address the ‘significant’ incentive discrimination between sales channels rather than complete self-sufficiency.” This is because distributors believe that the source of distortion in the telecommunications market lies in the problem of discrimination in sales incentives, represented by ‘holy spots.’

The Dantong Act was created to solve the problem of becoming a ‘hogang’ if you cannot purchase a mobile phone at a low price through ‘bus phones’ etc. The idea is to disclose mobile carrier terminal subsidies transparently and pay them without discrimination so that no one loses money. The problem is that by regulating competition among telecommunication companies, negative online sales channels such as ‘special marketing’ have emerged. These are so-called ‘sacred branches’ because they provide more subsidy for terminals than offline stores.

KMDA’s position is that the bigger problem is the unfair practices of telecommunications companies that encourage expensive rate plans for dealers and stores and provide more incentives to online channels. Consumer groups also point out that if there is no separate mechanism to prevent excessive discrimination in subsidies after the abolition of the Single Tong Act, there is a high possibility that information-vulnerable groups such as the elderly and the disabled will be excluded from benefits.

Hong Ki-seong, director of KMDA, said, “What distributors are constantly talking about is asking for a ‘survival unit price’ to be guaranteed,” adding, “After the Mobile Telecommunications Act, telecommunication companies have been operating ‘special specials’, and now ‘holy stores’ have penetrated even into alley commercial areas, but only some customers can afford them. “We need to ask whether the structure of buying two or three times cheaper is right,” he said. At the same time, he raised his voice, saying, “It can be said that it is good to cover a sacred site, but personal information such as ID images exchanged through KakaoTalk is being leaked, and there is no proper crackdown.”

However, since the standard for ‘significant discrimination’ in incentives claimed by retailers is ambiguous, questions are bound to be raised about how well their claims are consistent with the purpose of abolishing the Dantong Act, which seeks to increase consumer welfare through competition for subsidies. They are of the position that in order to protect existing distributors, direct sales by telecommunications companies, manufacturers, and large distributors who can expect competition in terminal prices should be prohibited.

The fact that Dantongbeop, which was originally a sunset system that was operated temporarily for three years, has lasted 10 years means that the reality has become that complicated. The biggest concern is that if the Mobile Communications Act, which limited competition for subsidies, is abolished, budget phones will die out in favor of telecommunications companies with financial resources. Some say that wasteful competition may occur in the telecommunications market as telecommunication companies shift their focus to artificial intelligence (AI) instead of the telecommunications business, which has reached its growth limit. Some point out that since there are only Samsung Electronics and Apple in the domestic terminal market, it is difficult to reduce terminal prices through competition.

The bill to abolish the current Single Tong Act was proposed by People Power Party lawmaker Park Chung-kwon, a member of the Science, Technology, Information, Broadcasting and Communications Committee, right after the 22nd National Assembly began its term. After Representative Lee Jae-myeong of the Democratic Party of Korea made a statement in the same month calling for the abolition of the short-term communication law, Rep. Lee Hoon-ki of the same party, a member of the National Science and ICT Committee, began related activities, such as holding a debate. It is reported that the ruling and opposition parties are preparing a bill containing follow-up measures such as consumer protection after the abolition of the Single Tong Act.

KMDA Chairman Yeom Gyu-ho said, “The biggest concern after the abolition of the Dantong Act is that the problem of consumer discrimination that the Dantong Act was originally intended to prevent is returning,” adding, “Consumers will also be protected only when all stakeholders work to establish a transparent distribution order.” .

Source: Korean