The law concerning the improvement of the distribution structure of mobile communication devices, commonly known as the “Device Distribution Act,” which regulated the upper limit of subsidies given to mobile phones, has been repealed after 10 years. This is expected to stimulate competition among telecom operators, which could reduce the burden on consumers when purchasing devices. There is speculation that subsidy competition among telecom companies could intensify with the release of the Galaxy S25 series next February.
On the 26th, the Ministry of Science and ICT announced that the repeal of the Device Distribution Act passed the National Assembly’s plenary session. The law was originally introduced in 2014 to prevent discriminatory subsidies given to users but had the effect of reducing competition among telecom companies and compelled users to purchase devices at relatively higher prices.
The government decided to fully repeal the law and has been supporting discussions with the National Assembly. The repeal abolishes the “mandatory disclosure of mobile carrier support funds” and the “cap on additional support funds by distribution stores (within 15% of disclosed support funds),” creating conditions conducive to enhancing subsidy competition among operators. The removal of regulations that banned subsidy discrimination based on subscription type and plans is expected to enable telecom companies to use various marketing strategies to provide benefits to users.
The selective agreement discount system, which offers rate discounts to users who do not receive subsidies, will be maintained. The government plans to ensure that the current level of rate discounts (25%) remains available to consumers. Also, measures such as prohibiting misleading acts about device purchase costs for users, requiring pre-approval of sellers for a healthy distribution market, and prohibiting unfairly discriminatory subsidy instructions by mobile operators and manufacturers will be transferred to the Telecommunications Business Act to continue protecting market health and user rights.
Particularly, to prevent discrimination against the elderly and disabled, regulations prohibiting unjust discrimination based on age, residence, or physical conditions will be maintained in the Telecommunications Business Act even after the repeal of the Device Distribution Act. New responsibilities for market management will be established to create a healthy distribution environment, and the Korea Communications Commission plans to enhance monitoring of unfair practices in the market.
Minister Yu Sang-min of the Ministry of Science and ICT stated, “We will work to minimize any side effects that may arise from the repeal of the law, while promoting free subsidy competition among operators to alleviate the burden of purchasing mobile devices for citizens. Along with the repeal of the law, we will continue pursuing policies to reduce household communication costs, such as strengthening the competitiveness of budget phone operators, encouraging the trade of used phones, and more.”
With the repeal of the Device Distribution Act, it is expected that subsidy competition among telecom companies will intensify with the Galaxy S25 series. As the S25 series is anticipated to include many AI-related technologies, there is speculation that demand for phone replacements will increase. The IT industry predicts that telecom companies will likely competitively offer subsidies for the popular S25 series to gain customers during this stagnant period.
According to the IT industry, Samsung Electronics will host a Galaxy Unpacked event on January 22nd in San Jose, California, to unveil the Galaxy S25 series, with its release expected in early February.