On the 17th, the Korea Communications Commission (KCC) held a briefing at the Gwacheon Government Complex regarding follow-up measures after the repeal of the Mobile Device Distribution Structure Improvement Act (the Device Act) and explained the main changes.
The Device Act, implemented in October 2014, imposed an obligation to disclose subsidies to prevent competition among telecommunications companies and limited additional subsidies payable by distribution networks to 'a maximum of 15% of the disclosed subsidy'. However, it faced criticism for increasing consumer burdens and stifling competition among telecommunications companies, leading to its repeal.
◇ Obligation to disclose subsidies abolished and upper limit for additional subsidies eliminated
On that day, the KCC and the Ministry of Science and ICT noted that the goal of repealing the Device Act is to promote competition in the mobile communication market and alleviate household communication cost burdens, and they explained three main changes.
First, the obligation for mobile telecommunications companies to disclose device subsidies will be abolished, and the upper limit for additional subsidies that were capped at 15% of the disclosed subsidies will also be removed. Additionally, the regulations prohibiting discrimination based on subsidy types such as number portability and new subscriptions will be eliminated.
According to the KCC, mobile telecommunications companies will autonomously disclose subsidies based on plan types and subscription types through their websites, as they have done before. Users can obtain information about device subsidies, including additional subsidies provided by distribution networks, through individual distribution points.
Second, the fee discount system for users who do not receive device subsidies from mobile telecommunications companies will be maintained. Users who do not receive common subsidies from mobile telecommunications companies will still be able to receive a 25% fee discount, as before. In the past, users who chose a fee discount could not receive additional subsidies from distribution points; however, in the future, they will be able to receive both fee discounts and additional subsidies from distribution points.
Third, distribution points must clearly specify the details and conditions for the payment of device subsidies in contracts. Telecommunications companies and distribution points must document the following details in contracts when entering into mobile communication agreements: ▲specifics on who pays the subsidy and how it is paid ▲conditions for using related plans or value-added services regarding subsidy payments ▲conditions for bundles with high-speed internet.
The KCC emphasized that failing to clearly state these subsidy payment details and conditions is a violation of the amended 'Telecommunications Business Act.'
Even after the repeal of the Device Act, telecommunications companies and distribution points must comply with the regulations transferred under the Telecommunications Business Act, including prohibiting discrimination in subsidies based on user residence, age, and physical condition; prohibiting descriptions that could lead to misunderstandings regarding subsidy information; obligating selling points to indicate that they have received sales rights from telecommunications companies; and prohibiting requests or coercion from telecommunications companies or manufacturers to use specific plans or services.
Additionally, no unfair economic discrimination against users and no failure to disclose important matters related to subsidy payments, as stipulated in the existing Telecommunications Business Act, should occur.
◇ KCC: 'Proactive response to prevent user harm until the enforcement decree is amended'
The government stated it will implement comprehensive measures to prevent market confusion and create a sound distribution environment following the repeal of the Device Act.
The KCC and the Ministry of Science and ICT conducted legislative announcements and regulatory reviews to refine subordinate laws such as the 'Telecommunications Business Act Enforcement Decree' until June. The KCC announced plans to swiftly announce and implement amendments to subordinate laws after the resolution.
However, concerns were raised that legal sanctions against illegal activities could be difficult without the enforcement decree being resolved. Currently, there are no remaining standing committee members to resolve the proposed legislation, except for Chairperson Lee Jin-sook. Therefore, it is virtually impossible for follow-up measures to be completed by the scheduled repeal of the Device Act on the 22nd.
The KCC announced on the 17th that, until the enforcement decree is amended, it has issued administrative guidance to mobile telecommunications companies on ▲preventing incomplete sales ▲strengthening information provision to users through the use of new contract forms ▲prohibiting unjust discrimination against users ▲enhancing management and supervision of illegal or improper business practices in distribution networks.
Additionally, to prevent market confusion following the repeal of the Device Act, the KCC explained that it will strengthen market monitoring by operating a response task force (TF) involving telecommunications companies more than twice a week.
The KCC stated it will also enhance monitoring and field inspections regarding violations of prohibited acts, and if violations are confirmed, strict measures will be taken. By the end of this year, the KCC will develop comprehensive measures that include strategies to prevent unfair practices such as discrimination against users by telecommunications companies and manufacturers, coercion or inducement to use specific services, and strengthening information provision to users.
After the law is enacted, the KCC plans to assess illegal or improper business practices and discrimination patterns through market monitoring, as well as review specific measures through a consultative body involving experts, telecommunications companies, manufacturers, and relevant organizations.
In particular, it stated that it will closely monitor the market situation to ensure that no negative consequences arise due to system changes, such as subsidy exclusion for economically vulnerable groups or unfair practices related to low-cost mobile phones.