July 21, 2025
SEOUL – 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Q: What is the subsidy law and why is it repealed?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.
yeeun@heraldcorp.com
