New subsidy on phone bills comes into effect

The expanded subsidy on monthly mobile phone bills begins Friday.

According to the Ministry of Science, ICT and Future Planning on Thursday, a 20 percent discount on bills, raised from the current 12 percent, will be offered.

Subscribers who purchase a new smartphone from a retailer can choose to get the subsidy on their monthly bills instead of a discount on the device. Also, people who bring their own phones can take advantage of the 20 percent discount on monthly telecom bills.

New subscribers don’t have to choose two-year contracts to get the discount. But if they do, they can get both the 20 percent subsidy and an extra subsidy from the telecom operator for choosing the binding contract. However, if the user chooses to get a monthly discount, he or she has to pay for a new smartphone with no device discount.

For example, if someone buys a new 32-gigabyte Samsung Galaxy S6 Edge on a 69,000 won ($63.80) monthly plan on a two-year contract at SK Telecom and chooses to get a discount on the device, that discount could go as high as 204,700 won. Then, he or she will have to pay monthly installments of 32,262 won over the course of 24 months to finish paying off the device. As for the monthly bill, the person gets a 25 percent discount for taking the two-year contract, which brings the monthly fee to 51,750 won. The person’s total monthly telecom bill would be 84,000 won with the monthly payments on the device added in.

But if the same customer goes for the 20 percent subsidy on the monthly telecom bill, he or she gets that subsidy and an additional 25 percent subsidy for signing a two-year contract. The monthly bill will be 41,400 won.

However, that customer has to pay the device’s factory price of 979,000 won in full.

BY KIM JI-YOON [kim.jiyoon@joongang.co.kr]