Korea scraps phone subsidy law after 11 years, triggering subsidy race

(Lee Chung-woo)

South Korea officially repealed its 11-year-old Mobile Device Distribution Improvement Act on Tuesday, igniting signs of fierce competition in smartphone subsidies.

The effects were immediate at retail level. At a mobile phone store in Yangcheon District, Seoul, when asked about the price of the Galaxy Z Flip 7 (list price: 1.48 million won), a store employee replied, “You only need to pay 270,000 won.” He added, “While subsidies haven’t exploded just yet, the combination of SK telecom’s recent penalty waiver and the repeal of the phone subsidy law has prompted subsidy offers on some newer models.”

Indeed, online pricing charts now suggest that devices like the Galaxy Z Flip 7 and the Galaxy S25, released in February, are being offered as so-called “minus phones”—devices where the subsidy exceeds the list price, effectively making them free or better.

With the repeal, telecom carriers are no longer required to publicly disclose standard device subsidies, and the former cap that limited additional subsidies to 15 percent of the official amount has also been lifted. While the three major telecom providers will still offer a baseline subsidy, retailers can now freely offer additional incentives independent of the carriers.

Industry watchers say the deregulation marks the beginning of a new era of open-ended subsidy competition among mobile carriers and retailers.

The recent launch of Samsung Electronics’ Galaxy Z Fold 7 and Z Flip 7 is further intensifying the competition. Pre-orders for the two foldables reached 1.04 million units, setting a new record for the Galaxy Fold series.

Meanwhile, the Korea Communications Commission plans to continue operating a task force it formed with telecom carriers to respond to the law’s repeal and strengthen market monitoring.