Latest news with #MobileDeviceDistributionImprovementAct
Korea Herald
an hour ago
- Business
- Korea Herald
Korea ends phone subsidy law: Are cheaper smartphones coming?
Samsung's new foldables, Apple's upcoming iPhone 17 to test new free-market phone pricing South Korea is to officially repeal its decade-old handset subsidy law on Tuesday, opening the door to bigger discounts and potentially cheaper smartphones — just in time for the launch of Samsung Electronics' new Galaxy Z Flip7 and Fold7 later this month and Apple's iPhone 17 in the fall. Industry insiders say a 'subsidy war' is likely to break out, as mobile carriers rush to regain market share with aggressive pricing and subsidies. SK Telecom, in particular, is expected to take bold action after losing over 800,000 subscribers in a major April data breach. The repeal marks a major shift in the mobile phone market. Carriers and retailers will no longer be restricted by government-set subsidy limits, allowing for more flexible and competitive pricing. Phones could even be sold at 'zero-cost,' depending on the plan and promotions. To help consumers understand what the repeal means and how to make smart choices in the new free-market landscape, The Korea Herald answers key questions below. Q: What is the subsidy law and why is it repealed? The Mobile Device Distribution Improvement Act was passed in 2014 to make phone pricing more transparent and fair. It capped store discounts at 15 percent on top of official carrier subsidies and required carriers to publish fixed subsidy amounts. But over time, critics said it had the opposite effect — inflating smartphone prices, limiting consumer benefits and making the market harder to navigate. After years of complaints from consumers and industry players alike, the government decided to repeal the law to encourage more competition, bigger discounts and greater pricing flexibility. Q: What's changing now that the law is gone? Carriers no longer need to publicly post fixed subsidy amounts and retailers are no longer restricted to 15 percent discounts. That means devices could be sold with much higher discounts — even for free, depending on the plan. However, retailers must now clearly explain all subsidy conditions in their contracts. Q: Can I still see how much of a subsidy I'm getting? Yes, but only voluntarily. The major carriers — SK Telecom, KT and LG Uplus — have agreed with regulators to continue posting subsidy information online by rate plan, although it is no longer legally mandated. Q: Where do I find extra discounts from stores? Discounts will vary by store. Authorized dealers and independent shops may offer different incentives, so it pays to compare offers before signing a contract. Q: Can I combine the 25% discount with store deals? Yes. You can still choose the 25 percent discount for going contract-free and also get additional discounts from retailers, thanks to looser rules. Q: Do discounts depend on how I sign up? Yes. Retailers can now offer different discounts depending on whether you are switching carriers, starting a new plan or upgrading. That kind of 'discriminatory pricing' was previously restricted, but is now allowed. Q: Is there a limit on how much discount I can get? No. There's no longer a cap on discounts. The carrier, phone-maker and store can set subsidy amounts freely. In theory, this means that even the latest phones could be priced at zero, but only under specific plans or conditions. Q: What counts as unfair pricing now? While pricing can vary by plan and contract type, stores must offer equal subsidies to everyone under the same conditions — the same phone, plan and type of contract. The telecom regulator will monitor for violations. Q: Will phone-makers reveal more about incentives? Yes. Companies like Samsung and Apple must now report monthly data on incentives they give to carriers and retailers. This info will be submitted to the Ministry of Science and ICT and the Korea Communications Commission. Q: What should I check before signing a contract? Always review: Who is providing the subsidy (carrier or retailer) How it's being applied Any extra fees or plan requirements Retailers must disclose everything clearly and if they don't, they could face penalties. Q: Are my consumer rights still protected? Yes. Protections remain in place, including bans on: Discrimination based on age, region or disability Being pushed into expensive plans Misleading or false advertising Q: What about vulnerable groups like the elderly? The government says it will pay special attention to 'information-vulnerable' groups like seniors and teenagers, ensuring they are not excluded or misled in the new competitive environment. Q: How is the government keeping watch? A joint task force of regulators and telecom firms will meet at least twice a week to monitor the market and respond quickly to any signs of chaos or abuse. Q: Can I buy new phones cheaper now? Possibly soon. Industry insiders say a 'subsidy war' is inevitable, at least in the short term, as mobile carriers ramp up aggressive marketing and offer larger discounts to win over customers. SK Telecom, which lost over 800,000 subscribers after a major hacking incident in April and dropped below 40 percent market share, is widely expected to launch a bold pricing strategy to regain ground. The timing also adds fuel to the fire: Samsung's latest foldables, the Galaxy Z Flip7 and Fold7, hit the market on July 25, while Apple's iPhone 17 is expected later in the third quarter. These high-profile launches are seen as key moments that could set the tone for how the postsubsidy market unfolds — and whether Korean consumers will finally get their hands on premium smartphones at lower prices.
Korea Herald
3 days ago
- Business
- Korea Herald
Handset subsidy ban to be lifted next week
The decade-long controversial ban on handset subsidies will be lifted starting next week as part of efforts to lower the financial burden on consumers for communications service, the science ministry said Thursday. The Mobile Device Distribution Improvement Act, which currently prohibits mobile carriers from providing excessive discounts or illegal subsidies to customers, will be nullified beginning July 22, according to the ministry. The National Assembly passed a motion to scrap the act late last year. The ban, implemented in 2014, was designed to bring transparency to the market by curbing subsidies that exceeded legal limits and foster competition among mobile carriers. But the policy has been criticized for restricting healthy competition by preventing mobile carriers from offering legal subsidies, consequently limiting opportunities for customers to buy cell phones at lower prices. (Yonhap)
Korea Herald
24-06-2025
- Business
- Korea Herald
SK Telecom resumes sign-ups after hacking fallout, braces for subsidy showdown
Carrier lost over 500,000 users during USIM crisis; rivals, new foldables to intensify competition SK Telecom resumed new subscriber sign-ups on Tuesday, 50 days after halting operations due to a massive USIM card hacking scandal, a move expected to reignite competition between Korea's top three mobile carriers. 'Until now, we focused on USIM replacements. We will provide seamless services to new customers through close cooperation with our nationwide sales network starting today,' Lim Bong-ho, head of the MNO business division at SK Telecom, said in a press briefing in Seoul on Tuesday. He also announced that more than 2,600 offline retail stores nationwide have reopened new subscription services. The Ministry of Science and ICT on Monday announced it would lift SK Telecom's suspension on new customer recruitment, saying the company has secured sufficient USIM inventory to meet demand beyond replacement needs. The ministry also cited the stabilization of the telecom company's revised USIM replacement reservation system, introduced on Friday. According to SK Telecom, an average of 30,000 customers per day replaced their USIM cards through Monday, with the cumulative total reaching 9.34 million as of midnight Tuesday. Industry sources said SK Telecom is widely expected to roll out aggressive subsidies to offset recent business setbacks. The company has reportedly lost some 607,000 subscribers between April 22 -- when the USIM hacking incident came to light -- and Sunday. Even accounting for new subscribers gained through third-party vendors, SK Telecom saw a net loss of about 518,000 subscribers. Market watchers believe the exodus may have pushed the mobile carrier's market share below 40 percent. 'For now, our priority is to focus on normalizing operations,' Lim said. Two other mobile carriers -- KT Corp. and LG Uplus -- are likely to respond in kind. The impending repeal of the Mobile Device Distribution Improvement Act, set for July 22, will remove caps on subsidies. The act came into force in 2014 to keep fierce competition to woo customers with hefty subsidies in check. Additionally, Samsung Electronics is gearing up for the unveiling of its Galaxy Z Fold 7 and Z Flip 7 models next month, further fueling competition. However, some sources believe SK Telecom may not be able to commit 'astronomical' sums to marketing, given the financial burden of free USIM replacements and compensation for dealer losses. Commenting on third-quarter marketing spend, Lim said, 'There are multiple events lined up in the third quarter -- including the repeal of the Mobile Device Distribution Improvement Act next month, the Galaxy foldable phones launch and the iPhone release in September. It's difficult to predict marketing costs at this stage as they will depend on market dynamics.' An industry source who requested anonymity said, 'Without the final report from the joint government-private task force investigating the cyberattack, SK Telecom is unlikely to disclose detailed (marketing) plans at this time.' Meanwhile, the ICT ministry said it aims to deliver the final findings of its investigation by the end of this month. SK Telecom is expected to announce compensation measures and plans to prevent similar incidents once the report is released.
