10 years since the enforcement of the Dantong Act… Have consumer benefits really decreased?

by times news cr

KISDI report, the size of terminal subsidies decreased, but rate discounts offset this
“It also plays a positive role in alleviating discrimination in subsidies and revitalizing budget phones.”
“Discussions about abolishing the law should be data-based and user-centered.”

The complete abolition of the Act on the Improvement of Distribution Structure of Mobile Communications Terminal Devices (Dantong Act) enacted in 2014 is being promoted. The government held a public livelihood debate on the 22nd and announced that it would push for the abolition of the Mobile Phone Act to promote free competition for subsidies between telecommunications companies and retailers and provide opportunities to purchase inexpensive mobile phone devices. On the 22nd, logos of three mobile communication companies were displayed at mobile phone stores in Seoul. 2024.01.22. Seoul = Newsis

Analysis has shown that user benefits have not decreased significantly compared to before after the enforcement of the Mobile Communication Terminal Device Distribution Structure Act. Although the size of the terminal subsidy has decreased, it has been replaced by rate discounts.

Accordingly, it is pointed out that user benefits have decreased due to the reduction in the amount of subsidies due to the Single Telecommunications Act, and an approach that claims that the burden of household communication costs will be alleviated if the law is abolished should be cautious.

According to the report ‘Terminal Distribution Act and Changes in the Mobile Communications Market’ published by the Korea Information and Communication Policy Institute (KISDI) on the 6th, user benefits before the enforcement of the law are estimated to be worth 5.6 trillion won.

After the law went into effect, it was calculated that the total amount of terminal subsidies would have decreased by about 3.6 trillion won, or about 2 trillion won per year.

KISDI calculated the amount of support based on the Korea Communications Commission’s deliberation and resolution data and data submitted by business operators. The average amount of support before the enforcement of the law was calculated in 2009, and after the enforcement of the law, the average amount was calculated from 2017 to 2023.

The report estimated that before the enforcement of the law, annual publicly announced subsidies (contractual subsidies) were paid out at about 1.9 trillion won, and additional subsidies (outside the contracted subsidies) were paid at about 3.7 trillion won.

This decreased to 1.7 trillion won and 300 billion won, respectively, after the enforcement of the law.

Instead, a 25% rate discount benefit (selective contract) was introduced for those who do not receive terminal subsidies under the Mobile Communications Act, and new user benefits worth 3.4 trillion won per year were added, offsetting the decrease in user benefits. Consumers can choose between a subsidy or a 25% discount.

The optional contract discount rate started at 12%, but was gradually increased from 20% to 25% as the size increased.

Considering the total benefits for users since the enforcement of the Single Tong Act, it has decreased by about 200 billion won.

In relation to this, the report explained, “Even after the enforcement of the Single Tong Act, illegal subsidies still existed,” and “Considering this, it cannot be ruled out that the actual decrease in user benefits was less than 200 billion won, or that the benefits actually increased.”

It also played a positive role in creating a structure in which benefits that had been concentrated on ‘number portability subscribers’, ‘high rate plan subscribers’, and ‘terminal replacement subscribers’ were also extended to other subscribers.

Regarding the decline in ‘number portability’, which is cited as the basis for the decline in competition between mobile carriers, the report said, “Other variables must also be considered.”

The rise in terminal prices may have reduced the ease of replacing terminals using operator switching (number porting), and the proliferation of bundled products has complicated penalty structures and price comparisons, creating an environment in which number porting is not easy. It was believed that benefits for long-term subscribers, such as rate discounts, may have also served as a factor in lowering the incentive to move numbers.

The report cited the promotion of budget phones that offer low rates as a positive role of the Mobile Communications Act. Through this, it was diagnosed that market concentration has eased.

SK Telecom, No. 1 in the mobile communications industry,’s mobile phone subscriber share decreased by 6.2 percentage points (p) from 47.1% at the end of 2014 to 40.9% at the end of 2023. In contrast, the market share of budget phones increased by 7.8 percentage points from 7.7% to 15.5% during the same period.

The report said, “As a structure has been formed where the ‘reduction in subsidy’ due to the enforcement of the Dantong Act is offset by an increase in ‘fee discounts corresponding to the subsidy,’ it is difficult to claim that the Dantong Act would have had a negative impact on the benefits of all users without rigorous verification. “It is a difficult situation,” he diagnosed.

However, “Apart from the positive impact, it is judged that the ‘principle’ of abolishing the Mobile Communications Act raised in response to changes in the market environment cannot be violated,” he said. “Delivery of terminals has a great impact on the rise and fall of stakeholders and the competitive situation in the mobile communications market. It can go crazy. “(In pushing for the abolition of the law), we need to focus on user-centered discussions based on actual data,” he said.

[서울=뉴시스]

2024-10-06 00:54:02

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