Services Utilization
Mobile Device Distribution Improvement Act
| Mobile Device Distribution Improvement Act |
|---|
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Current status of Republic of Korea mobile device distribution market
| Payment of excessive and discriminatory support fund | Payment of support fund mainly to expensive smartphones | Intensified competition mainly for support fund |
|---|---|---|
| - Two or three times (100 times at maximum) price difference based on where and when to buy - Formation of abnormal mobile device distribution structure (such as illegal or expedient selling on online) - Occurrence of extreme users discrimination that never happened anywhere in the world |
- Inducement of unnecessary mobile device replacement - Inducement of joining high price mobile device plan and purchasing expense mobile device with payment of support fund as a lure - Increase of burden on household mobile communication costs - Distribution of mostly expensive premium phones in the market - Continuous damages to the users - Impossible to perform normal devices and services competition in the market |
- Budget phones and low and middle priced mobile devices which are affordable due to low support fund compare to high price smartphones - Disturb formation of healthy services/mobile devices competition in the market |
Regulatory framework comparison before and after enforcement of Mobile Device Distribution Improvement Act related to the support fund
| Division | Before enforcement (Telecommunication Business Act) | After enforcement (Mobile Device Distribution Improvement Act) |
|---|---|---|
| Maximum support fund | 270,000 won (there is no guideline and legal basis) |
Limit the support fund between 250,000 won and 350,000 won. Decide maximum support fund by considering competitive situation of the market and impact on users’ convenience. |
| Disclosure of support fund | None | Disclose per mobile device within maximum level |
| Discrimination of support fund | Discrimination is possible within 270,000 won |
Discrimination is possible within 15% range of disclosed amount |
| Payment with discrimination based on condition of high price mobile device plans, mandatory subscription of additional services, and limit on selection | Autonomous selection is possible for necessary mobile device plans and additional services | |
| Exemption from regulation on maximum support fund | For mobile devices over 20 months old from release | For mobile devices over 15 months old from release |
| Manufacturer | Development and distribution by focusing on high price premium phones | Development and distribution of mobile devices for various users |
| Store | There is no regulatory basis | Direct investigation and restriction is possible |
Definition of terms for Mobile Device Distribution Improvement Act (Article 2)
Major details of Mobile Device Distribution Improvement Act
Distribution structure of mobile communication services and devices
Legislation relating to the improvement on distribution structure of the mobile communication devices
| Subject | Details |
|---|---|
| Regulation on terminal support fund | - Public announcement of payment requirements and details of support fund shall be made and support fund shall not be paid if there is any difference in details - However, additional support fund may be paid by agencies and stores within the range of 15/100 of the support fund which was officially announced by mobile communication companies |
| Prohibition on discrimination of support fund payment and disclosure system | - Payment of the support fund with unfairness and discrimination based on subscription type, mobile device plan, and location of living shall be banned |
| Limit on conclusion of individual contract in connection with the support fund | - The conclusion of individual contracts that limit selection of the users by imposing obligations to use special mobile device plans and additional services for certain period of time with a condition of paying support fund shall be limited and such contract shall be invalid. |
| Benefit for the users who did not receive the support fund | - The benefit such as discount on fees equivalent to the support fund for the users who joined the services without receiving the support fund shall be provided. |
| Notice with separation of terminal purchasing cost | - The purchasing costs for mobile devices shall be clearly separated from services charges and notified or claimed. - The discounted amount on fees which is applied at the time of entering service contract shall not be explained or indicated or advertised as the support fund. |
| Acceptance of appointing stores | - When the agencies appoint the stores, the appointment shall not be allowed without prior consent of the mobile communication companies. - The stores shall indicate the fact that prior consent of he mobile communication companies was received and post it at business site. |
| Establishment of fair distribution environment | - The manufacturers shall not unreasonably reject conclusion of the contract relating to the terminal distribution with the mobile communication companies. - The condition with irrationality or discrimination or limitation shall not be imposed regarding the support fund. |
| Prevention of exporting lost or stolen terminals | - The export of lost or stolen terminals to the overseas shall be prohibited. - When used terminals are exported, the confirmation whether the applicable terminals are lost or stolen terminals or not shall be made. |
| Emergency order to stop | - Korea Communications Commission shall have authority to order temporary stop on acts of mobile communication companies, agencies, and stores if there is a concern of hindering users’ benefit due to excessive and discriminatory payment of the support fund |
| Submission of materials and investigation of fact | - The manufacturers, mobile communication companies, agencies, and stores shall submit data related to distribution of mobile communication terminals to the minister of Science, ICT and Future Planning and Korea Communications Commission |
Benefit of introducing Mobile Device Distribution Improvement Act
