The U.S. cellular market exists as it does with heavy hardware subsidies. That’s why you can go out and buy a $600+ phone for $199. The gigantic string attached to the deal is that you’re locked into a multi-year contract with a carrier, unable to move. For most people though, it seems to be the popular choice as unlocked options haven’t unseated subsidized hardware. Overseas in many markets, however, things are much different. “Off-contract” (read: full price) phones are the norm though subsidized deals still exist here and there. In South Korea things are very different. If you’re a carrier offering high subsides, you get fined and a new account ban slapped tacked on top.
Three South Korean cellular carriers (SK Telecom, LG U+ and KT) have been offering smartphone subsidies to customers greater than $252. Again, it is against the norm but if they are seeing success from it, why stop? Apparently business isn’t as “open” over there as the Korea Communications Commission isn’t happy about the practices of the aforementioned three carriers and has punished them quite severely. Monetarily, SK Telecom will have to fork over (all figures USD) $6.49 million, KT with $2.654 million and LG U+ having to cough up $2 million. (The Korean values are 6.89 billion, 2.85 billion and 2.15 billion respectively – all Korean won)
More damaging than simple monetary fines are the sales bans the Korea Communications Commission is imposing. Starting January 7th, the three carriers mentioned cannot sign up any new accounts – KT for 20 days, SK Telecom for 22 days and LG U+ for 24 days. Furthermore, each carrier will have 1 month to submit a paper to the Korea Communications Commission outlining how they will prevent the infractions (too high a subsidy basically) from happening again.
Here in the U.S. we are hugely spoiled with subsidies sailing past South Korea’s $252 cap by several hundreds of dollars at times. If any such ban was enacted, you can bet that consumers and carriers alike would revolt, possibly with pitchforks and fire. All that said, Americans, cherish your subsidy because not everyone is so lucky.