Around the college scholastic ability test (CSAT) held on the 13th of this month, the three mobile carriers raised the common subsidy (formerly the posted subsidy) for the latest smartphones by about 200,000 to 300,000 won to court test takers. But even if customers choose a high-priced plan costing more than 100,000 won, the device subsidy tops out at around 550,000 won, drawing criticism that this is not much different from last year's CSAT season, when the Mobile Device Distribution Improvement Act applied. Although the cap on subsidies disappeared with the repeal of the law in July, critics say the carriers' subsidy policies have not strayed far from past levels.
According to the telecom industry on the 27th, the three mobile carriers—SK Telecom, KT, and LG Uplus—simultaneously raised the common subsidy for the Galaxy S25 Plus model on the 21st. SK Telecom increased it from a maximum of 170,000 won to 500,000 won, KT from 130,000 won to 500,000 won, and LG Uplus also raised the common subsidy from 250,000 won to 500,000 won.
The common subsidy for the base iPhone 17 model is showing a similar trend. After LG Uplus raised the maximum common subsidy from 200,000 won to 550,000 won on the 28th of last month, SK Telecom and KT also raised it to as high as about 450,000 won on the 14th of this month. For both the Galaxy S25 Plus and the base iPhone 17, subscription to a high-priced plan costing more than 120,000 won a month is required.
Despite the repeal of the Mobile Device Distribution Improvement Act removing the cap, additional subsidies remain bound by the "15% rule." According to the telecom industry, most additional subsidies currently do not exceed 15% of the common subsidy, the same ceiling allowed under the law. An industry official said, "Every year around the CSAT date we raise subsidies for the latest devices to market to test takers, and the subsidy level this year does not seem much different from last year." In fact, in Nov. last year, SK Telecom and KT raised the posted subsidy for the base iPhone 16 model for test takers who took the CSAT, from 200,000 won to as much as 450,000 won. At that time, LG Uplus raised the posted subsidy to 500,000 won.
Why are carriers keeping subsidy policies at similar levels to before, even though the cap disappeared with the repeal of the Mobile Device Distribution Improvement Act? The industry points to rising expenses from hacking incidents at SK Telecom and KT this year as a major reason. With security investments and compensation to victims squeezing marketing budgets, analysts say the environment is not conducive to aggressive subsidy competition among the three carriers.
The structure of the device market, where competition has vanished, is also cited. In Korea's device market, Samsung Electronics and Apple effectively form a two-strong structure. Because Apple does not provide device subsidies in Korea, in practice only Samsung Electronics bears device subsidies. Carrier subsidies are shared by manufacturers and carriers, but as competition among manufacturers has disappeared, subsidy competition has also weakened, observers say.
Until 2021, before LG Electronics exited the phone business, a "big three" of Samsung Electronics, Apple, and LG Electronics existed in Korea, and manufacturers often deployed aggressive subsidies to clear inventory or expand share. But now, insiders say Samsung Electronics only pays out large subsidies temporarily when it needs to handle inventory or boost a new product's popularity. Although foreign brands such as Xiaomi and Motorola have entered Korea, their market share remains below 1%.
The industry expects carriers will not spend large subsidies through the end of this year. Instead, attention is on Jan. next year. An industry official said, "Around Jan. next year, if KT, which is dealing with hacking incidents, announces a waiver of early termination fees, a subsidy frenzy could break out," adding, "There are many consumers waiting for this."