Next July is expected to be the optimal time to change smartphones. With the launch of Samsung Electronics' new foldable phone coinciding with the repeal of the Device Protection Law, which had limited device subsidies, and the resumption of new subscription sales by SK Telecom after a hacking incident, it is anticipated that competition for device subsidies among telecom companies will be triggered.
According to the industry on the 4th, Samsung Electronics' new foldable phone, the 'Galaxy Z 7 series' Unpacked event, is confirmed to take place on the 9th of next month (local time) in New York, United States. Typically, following the product reveal, there is a week-long pre-sale before the launch, so the domestic release date is likely to be on the 16th of next month.
The telecom industry anticipates that the Galaxy Z 7 series will set an unprecedented pre-sale record. With the repeal of the Device Protection Law allowing for increased device subsidies from telecom companies, and with the resumption of new subscription sales by SK Telecom, it is expected that the company will aggressively offer subsidies to recover subscribers lost due to the hacking incident. The suspension of SK Telecom's new subscription sales was implemented to support smooth SIM card replacement processes. The industry expects that the sales suspension will be lifted in July, when about half of SK Telecom's subscribers complete their SIM card replacements.
Previously, even with the repeal of the Device Protection Law, there was a prevailing view that competition for device subsidies would not be sparked as it had in the past, as it was deemed difficult for the competitive landscape in the market to easily recover.
The domestic mobile communication market has maintained a three-company market share structure of '5 (SK Telecom):3 (KT):2 (LG Uplus)' for a long time. Prior to the implementation of the Device Protection Law, telecom companies competed for market share by providing device subsidies, and manufacturers actively injected money into the market to expand their share. While telecom companies provide the device subsidies to subscribers, manufacturers also bear a certain percentage of the costs.
However, after the Device Protection Law was implemented in 2014, the limits on subsidies were introduced, resulting in a dampening of competition among telecom companies, and since LG Electronics exited the smartphone business in 2021, competition for device subsidies among domestic manufacturers has significantly weakened. According to market research firm Counterpoint Research, last year Samsung Electronics held an 80% market share in the domestic device market, while Apple held 19%, indicating Samsung Electronics' overwhelming influence. The telecom industry reported that in 2014, when the Device Protection Law was implemented, Samsung Electronics had a market share in the 60% range, LG Electronics in the 20% range, and Apple in the 10% range.
In the context of weakened competition among telecom companies and manufacturers, it is difficult for significant subsidies to be allocated for new device offerings. The device subsidy for Samsung Electronics' ultra-slim smartphone, the 'Galaxy S25 Edge,' which began pre-sales on the 14th, was a mere 250,000 won. The pre-sale subsidy for the 'Galaxy S25' series, released in January of this year, was also capped at 245,000 won.
However, after the hacking incident, the accelerated loss of subscribers at SK Telecom indicates signs of restructuring in the domestic telecom market. According to the telecom industry, the number of subscribers leaving SK Telecom in May alone reached approximately 940,000. A representative from the telecom industry noted, "It is unprecedented for close to 1 million subscribers to leave in a short period following the implementation of the Device Protection Law." According to SK Telecom, if the company waives penalties, the estimated scale of subscriber loss could reach up to 4.5 million, which amounts to 19.5% of SK Telecom's total subscribers (23 million).
Ryu Jong-ki, an adjunct professor at Sogang University's Knowledge Convergence Media College, stated, "In the current domestic device and telecom market where competition has weakened, it would be difficult to achieve results with just the repeal of the Device Protection Law, but the SK Telecom hacking incident has increased the possibility of restructuring in the entrenched telecom market," adding, "If the competition for device subsidies among telecom companies is sparked, their operating profits will decrease, but consumer benefits will increase." He further noted that "July will be the optimal time to change smartphones, reflecting the triple effect of the launch of Samsung's new devices, the repeal of the Device Protection Law, and the resumption of new subscription sales by SK Telecom."