이동통신 단말기 보조금과 유통규제에 대한 평가 - 단통법을 중심으로 -

Abstract

This paper critically evaluates Korean government’s regulations on retailing of mobile handsets, focusing on the Mobile Device Distribution Improvement Act (MDDIA) enacted in 2014. The MDDIA, unpopular from the outset, has become one of the most debated regulations in Korean telecommunications history. The law was set to correct problems of mobile retail competition in Korea, but its legitimacy and effectiveness have been under constant controversy. An important characteristic of mobile phone service is that it cannot be consumed without a mobile handset, making them perfect complements. This means consumers care about the total cost of the combination than separate prices of handset and service. On the other hand, production of mobile handsets and providing services require massive investments in facilities, networks, and R&D, which make these industries naturally oligopolistic. Competitions are often local and intermittent in these industries, while product differentiation and price discrimination are commonly used. It is no coincidence that short-lived and locally targeted campaign based on handset subsidies are more common than service fee competition. The MDDIA, however, considers these characteristics as the source of disarray in retailing and not a normal method of competition. Such a view entails undesirable consequences. First, the MDDIA seeks to outlaw any price discrimination among users, but this is an impossible goal that would only result in discretionary interventions. Second, lawmakers believed that the restriction of handset subsidies would lead to service fee competition, but it may just reduce overall competition instead. Third, the law also placed a cap on handset subsidies, which is irrelevant of user discrimination but clearly reduces subsidy competition. Finally, the law requires the mobile carriers to publicly announce handset subsidies, but this could work as the medium of collusive behaviors. Judging from a recent few years of market performances, however, these concerns are yet to realize in full scale. This could be an optical illusion from the compensatory regulation that forces mobile carriers to offer substantial amount of blanket fee reduction (up to 25%) for contracts without handset subsidy. Such intervention however further distorts market competition and does not fit the goal of the MDDIA. Recently, lawmakers are contemplating even stronger regulations that require itemized disclosure of subsidy sources or complete separation of handset retailing from mobile services. I believe such drastic regulations would not correct the pitfalls of the MDDIA but may harm the functioning of overall mobile ecosystem.