The bill to abolish the Act on the Distribution Structure Improvement of Mobile Communication Devices (hereinafter referred to as the distribution law) passed the National Assembly's plenary session. Consequently, the distribution law will disappear from history after 10 years since its introduction in 2014.
According to the Ministry of Science and ICT and the Korea Communications Commission on the 26th, the government has decided to fully abolish the device distribution law. Introduced in 2014, the distribution law was established to prevent extreme user discrimination, such as a subsidy crisis, and to establish a fair and transparent distribution order. However, it has been pointed out that the competition for subsidies among operators has been stifled, limiting the opportunities for users to purchase devices at more affordable prices and generally reducing consumer welfare.
A close examination of the bill reveals that the obligation for mobile carriers to publicly disclose device subsidies and the upper limit on additional subsidies at retail points (within 15% of publicly disclosed subsidies) are abolished. This creates conditions for enhanced competition in subsidies among operators. At the same time, the regulations prohibiting unfair subsidy discrimination based on subscription types and rate plans are removed, allowing operators to implement various marketing strategies to benefit users.
The selective discount system, which provides rate discounts for users not receiving subsidies, will be maintained, and the government aims to ensure that the current level of rate discount (25%) is offered to consumers. Furthermore, provisions necessary for market revitalization and user rights protection, such as prohibition of misleading practices regarding device purchase costs, prior consent system for retail points to ensure market health, prohibition of unfairly discriminatory subsidy payment directives or inducements by mobile carriers and manufacturers, certification system for safe transactions of used devices, and prevention of export of lost or stolen devices, will be transferred and maintained under the Telecommunications Business Act.
In particular, to prevent discrimination against vulnerable groups such as the elderly and individuals with disabilities, regulations prohibiting unfair discrimination based on users' age, residence, and physical conditions will be transferred to and maintained under the Telecommunications Business Act even after the abolition of the device distribution law. Additionally, as a new provision has been established for the Korea Communications Commission’s responsibility for market management, it plans to strengthen monitoring of unfair practices in the market and prevent user harm.
Minister of Science and ICT Lee Sang-min stated, "We will promote free competition of subsidies among operators to alleviate the burden of mobile phone device purchases for citizens while also making efforts to minimize potential side effects that may arise from the abolition of the law," adding, "Alongside the abolition of the device distribution law, we will continue to pursue policies aimed at reducing household communication expenses, such as strengthening the competitiveness of budget mobile operators and revitalizing used phone transactions."
Kim Tae-kyu, acting Chairperson of the Korea Communications Commission, said, "I expect to see positive effects such as revitalized competition in the mobile communication market and reduced household communication expenses for citizens due to the abolition of the device distribution law." He added that he would diligently carry out necessary follow-up measures to prevent future market disruption and user harm and promised to monitor the relevant situation to ensure the sound maintenance of the device distribution market.