On the 17th, the Korea Communications Commission (KCC) held a briefing at the Gwacheon Government Complex to explain key changes regarding the 'Improvement of Distribution Structure for Mobile Communication Devices Act (Device Subsidy Act) repeal follow-up measures.'
During the briefing, questions arose about the KCC's plans for sanctions and penalties for unfair practices following the repeal of the Device Subsidy Act.
The KCC stated it would continuously monitor the market regarding concerns that the variance in subsidies could increase based on information acquisition capabilities. It noted that the ceiling on subsidies is within the realm of the companies, emphasizing that promoting market competition is the main objective of the Device Subsidy Act repeal.
A KCC official remarked, "I think the extent to which subsidies can be provided is an area that telecom operators should decide autonomously. However, there is the aspect of the manufacturer's suggested retail price, so I believe that subsidies, additional subsidies, and discounts will likely move based on that price."
During the briefing, there was a question about whether the so-called 'payback', which has been illegally paid previously, would be allowed if the subsidy ceiling is removed. Payback refers to the method of providing cash as subsidies.
The KCC official responded, "This is within the judgment area of the businesses. While it is not illegal, the terms of the contract must be clearly communicated to users. Below are the Q&A with the KCC official."
- A revision to the enforcement decree has been prepared, but it has not been adopted. Isn't there a lack of legal basis for sanctions on illegal activities?
"Administrative guidance letters were sent to mobile carriers today. Additionally, we plan to hold meetings with the KCC and telecom operators approximately twice a week to monitor market conditions together. We will also implement direct market monitoring."
- If you monitor the market, won't that stifle competition among telecom operators?
"I believe it is desirable for users to receive more subsidies through competition among providers. However, I will focus on ensuring that there is no discrimination or practices that induce discrimination among users and that sufficient information is provided to users, avoiding unfair penalties or misleading advertisements, thereby preventing harm to users."
- Is it possible to receive the latest smartphone devices for free? How much do you expect telecom companies to subsidize?
"With the elimination of the appropriate limit of 15%, you can understand it as there is no longer any repayment for subsidies. Therefore, I believe it is an area in which mobile service providers should autonomously determine how much can be subsidized. However, additional subsidies or discounts may be set according to the manufacturer's suggested retail price."
- If there is no subsidy ceiling, is the previously illegal payback also permissible?
"Until now, the parts being supported tacitly are not seen as illegal. However, clear information must be provided to the user."
- Can different distribution channels set subsidy amounts differently?
"Since there are no restrictions, discrepancies can occur. However, if the difference is excessive, it might be due to varying incentive policies. In that case, it could be seen as an act inducing discrimination against users under the law."
- In the past, there were cases where subsidies varied by time and date from the same distributor. Isn't such an action illegal?
"I believe that the same subsidies should be provided to users purchasing with the same subscription conditions, history, plan, and device. It is undesirable for subsidies to vary by time; however, variations by date cannot be considered discrimination."
- Telecom companies can raise penalties instead.
"When entering into a contract, users agree to penalties based on the subsidized amounts. I do not see the actions carried out in accordance with the terms and conditions as unfair. Therefore, it is essential for users to check information when receiving subsidies."
- What if collusion occurs among telecom companies?
"Looking at the circumstances that occurred a few months before the expected repeal of the Device Subsidy Act, I do not think collusion will happen."