It has been a year since the Mobile Device Distribution Improvement Act was repealed, but in the market, there are assessments that the effects of subsidies competition and cuts in phone bills have fallen short of expectations. Rather than the repeal of the Mobile Device Distribution Improvement Act, the penalty waiver measures due to the hacking incident shook the telecom market over the past year. There are also complaints that telecom companies have intensified sales tactics that concentrate support funds on high-priced plans to steer customers into expensive plans or add-on services.
◇ What sparked the competition among the three telecom companies was the hacking incident, not the repeal of the Mobile Device Distribution Improvement Act
According to the industry on the 24th, with the repeal of the Mobile Device Distribution Improvement Act on July 22 last year, the telecom market returned to a system of autonomous competition in support funds. The Mobile Device Distribution Improvement Act was introduced in 2014 with the goal of preventing only some consumers with information from reaping benefits and creating a transparent market. It capped the official support funds paid by telecom companies and the additional support funds offered by retail outlets. However, criticism mounted that reduced competition worked against consumers and only served to cut telecom companies' marketing costs. It was ultimately repealed last year, 11 years after its introduction.
The Ministry of Science and ICT, in repealing the Mobile Device Distribution Improvement Act, said, "Competition among retail outlets will be revitalized and user benefits will increase," adding, "It will promote competition in the telecom market and ease the burden of household phone bills."
Although there was broad consensus on repealing the Mobile Device Distribution Improvement Act, competition in the telecom market did not emerge to the extent the government expected. According to data from the Korea Telecommunications Operators Association (KTOA), from Aug. 2025 to June 2026, the three telecom companies saw an average of 260,985 number transfers per month, up 3.6% from the same period a year earlier (252,033). But that was because in January this year, KT's penalty waiver measure led to more than double the usual level, with 545,188 number transfers, pulling up the overall average. Excluding that figure, the monthly average number of transfers during the period falls to 232,565. In other words, there was no effect of increased number transfers among telecom companies from competition being activated by the Mobile Device Distribution Improvement Act.
Earlier, in April last year, before the repeal of the Mobile Device Distribution Improvement Act, SK Telecom suffered a SIM hacking incident, sending the number of transfers surging to 312,804, and in July 2025, when SK Telecom implemented a penalty waiver, number transfers reached 520,046. The hacking incidents, more than the easing of Mobile Device Distribution Improvement Act regulations, shook the market.
◇ Support funds are skewed toward high-priced plans
Analysts say the reason subsidies competition has been subdued despite the repeal of the Mobile Device Distribution Improvement Act lies in structural changes in the telecom market. When the Mobile Device Distribution Improvement Act first took effect in 2014, offline retail outlets were effectively the only channel for device distribution, but last year the rate of using unlocked, self-purchased devices rose to 32.6%. That means one out of three devices was sold without going through a telecom company. In addition, as subscriptions to bundled fixed-mobile products rose and device replacement cycles lengthened, a sizable customer base became unresponsive even when support funds increased. On top of that, as the two-horse race between Samsung Electronics and Apple solidified, the manufacturer incentive battles that once fueled subsidy frenzies also subsided.
On the other hand, there are complaints that sales tactics to induce subscriptions to high-priced plans and add-on services by dangling larger support funds have actually strengthened. Conditions such as using co-branded credit cards are sometimes attached as well. This is the result of telecom companies including the number of high-priced plan sign-ups in how they evaluate dealerships, combined with a structure in which monthly phone charges from users on high-priced plans are counted as dealership revenue. Users on mid- to low-priced plans did not feel much change.
The Korea Mobile Distribution Association (KMDA), in a statement on the 22nd, said, "The repeal of the Mobile Device Distribution Improvement Act was implemented with the goals of expanding consumer choice, reducing household phone bills, and revitalizing the market through fair competition, but a year after implementation, consumer benefits have decreased," citing policies that induce subscriptions to high-priced plans as the cause. The association said, "Even after the repeal of the Mobile Device Distribution Improvement Act, mobile carriers are rolling out incentive policies centered on high-priced plans, restricting consumers' freedom to choose plans."
Shin Min-su, a professor in the School of Business at Hanyang University, said, "The repeal of the Mobile Device Distribution Improvement Act created a competitive environment, but the axis of growth and competition in the telecom industry lies not in the core business but in artificial intelligence (AI)," adding, "Telecom companies appear to have judged that it is not appropriate to engage in marketing battles when they must concentrate resources on AI investment." Lee Sung-yeop, a professor at the Graduate School of Management of Technology at Korea University, said, "Aside from increasing subsidies in the process of recovering subscribers after the hacking incident, it is hard to say that higher support funds have reduced the burden of buying devices," adding, "As telecom companies move to expand investment in new AI services rather than increasing subscribers to boost revenue, it appears they are refraining from marketing-level subsidies competition."