No Immediate Impact Seen After Korea Ends Mobile Subsidy Cap Law

While the Terminal Distribution Act, which stipulates the upper limit of subsidies for mobile telecommunication companies, was abolished, the change in the telecommunication market was not significant. Telecom companies such as SK Telecom (CEO Yoo Young-sang), KT (CEO Kim Young-seop), and LG Uplus (CEO Hong Bum-sik) engaged in a war of senses, and each retail store focused on the opening of pre-orders for Samsung Electronics' foldable phone lineup Galaxy Z Fold 7 and Flip 7, which began on the same day.

According to industry sources on Tuesday, the abolition of the Terminal Distribution Structure Improvement Law has lifted the obligation to disclose the subsidy for mobile carriers. The upper limit of the subsidy for retailers, which was limited to less than 15 percent of the subsidy, has also disappeared. In particular, regulations on the prohibition of discrimination between mobile carriers and distributors by subscription type and rate plan have also disappeared, leading to competition between mobile carriers and distributors in various forms for the operation of the subsidy for mobile carriers and distributors.

However, the telecom service provider did not move on the first day of the law's abolition. Rather, the telecommunications company seems to want to wait and see.

An official from a telecommunications company said, "The priority is to look at market conditions rather than come up with any policy that says the law will disappear right now." An official from another telecommunications company also said, "The atmosphere is not much different from before."

Even in distribution stores, which are direct channels for consumers to buy mobile phones, there was no movement of change due to the abolition of the Terminal Distribution Act.

For now, the retail market is busy pre-ordering Galaxy Z Fold 7 and Flip 7. On the same day, SK Telecom, KT, and LG U+ started pre-ordering Galaxy Z Fold 7 and Flip 7. This pre-ordering was held for seven days from July 15 to 21.

"We are busy digesting the volume of Galaxy foldable phones," a retail store official said. "We need to focus on this right now." Another store official also said, "We need quite some time to open the volume."

The industry predicts that the market change will not be significant due to the abolition of the Terminal Distribution Act. When one telecommunications company goes ahead with the expansion of subsidies, other telecommunications companies may respond to it, but it is difficult to change significantly compared to the previous one.

An industry official predicted, "Every day, there is a net reduction and net increase in numbers of the three telecommunication companies, and telecommunication companies that lag behind this can respond by releasing subsidies in large quantities, but it is expected to be similar to the previous one."

Another official said, "The Galaxy Z Fold 7 and Z Flip 7 will be officially released on July 25." "There may be some changes from this point on, but we need to see the situation."

fun3503@chosunbiz.com