Subsidy Competition Remains Calm After DanTong Act Repeal... About 15,000 Number Portability Cases Per Day

Mobile Number Portability Stagnates and High-Priced Plans Burden Consumers
Carriers Continue to "Wait and See" Amid Market Caution

Although the Act on the Improvement of Distribution Structure of Mobile Communication Devices (commonly known as the "DanTong Act") has been abolished, the mobile telecommunications market continues to show trends similar to those before its repeal. Immediately after the abolition, there were predictions that competition over subsidies would intensify, but mobile carriers appear to be adopting cautious strategies.

According to the mobile telecommunications industry on August 3, the number of mobile number portability cases for the ten days from July 22 to July 31, following the abolition of the DanTong Act, totaled 152,411. This averages about 15,000 cases per day.

The view of a mobile phone store at Sindorim Technomart, Guro-gu, Seoul, on the afternoon of the 21st of last month. Photo by Lee Myunghwan

This figure is up to twice as high as the daily average of 7,000 to 10,000 cases in early to mid-April, before the SK Telecom hacking incident. However, it is similar to the levels seen in May and June, when subscriber churn was concentrated due to the hacking aftermath.

This is because consumers do not perceive significant price benefits during device replacement that would motivate them to switch carriers.

According to recent reports from online communities and offline retail stores, distribution channels are currently offering additional subsidies of 600,000 to 800,000 won when purchasing a Samsung Electronics flagship model, provided that the customer maintains a high-tier plan costing over 100,000 won per month for about six months. The industry explains that this is similar to the levels before the DanTong Act was abolished. Another reason consumers do not feel a price difference is that the standard subsidies offered by the three major mobile carriers remain at levels comparable to the official subsidies before the repeal of the DanTong Act.

The industry cites "wait-and-see" tactics as the background for this atmosphere. There is concern that if one carrier offers excessive subsidies and triggers a price war, it could be blamed for market disorder. There is also apprehension that aggressive marketing, while the Enforcement Decree of the Telecommunications Business Act (which partially replaces provisions of the DanTong Act) has not yet been revised, could attract regulatory scrutiny.

The lack of new products to stimulate demand for handset upgrades also appears to be a factor. Samsung Electronics’ foldable flagship models, the Galaxy Z Flip7 and Fold7, were released at the end of last month. However, the Fold7, which features more significant changes compared to its predecessor, is priced at 2,379,300 won for the 256GB model, presenting a high price barrier.

The growing prevalence of purchasing unlocked phones without going through mobile carriers also appears to have had an impact. More consumers are buying unlocked phones and then subscribing to budget mobile virtual network operators (MVNOs) to save on fees. According to the Ministry of Science and ICT, as of June last year, the usage rate of unlocked devices reached 32.6%. The share of MVNOs among all mobile lines increased from 6.85% in December 2019 to 17.47% in May this year.

However, the industry is paying attention to the possibility that the situation could change in the third quarter. In addition to the release of Apple’s new iPhone in the third quarter, there are expectations that the launch of Samsung Electronics’ Galaxy S26 series, scheduled for the first half of next year, could ignite fierce competition.