Even though high-end smartphones such as Apple’s iPhone 6 have a high-entry price, they’re always cheaper when purchased outright than with a two-year contract from carriers. But that doesn’t mean all potential buyers have the same perception on prices, or are willing to spend that much money at once on a new phone. South Korea is one market where smartphone competition is at an all-time high, with carriers and retailers engaged in a price war to attract more customers. And it looks like some of these retailers are willing to break the law to sell you an iPhone 6 or iPhone 6 Plus for a more affordable subsidized price, The Korea Times has learned.
The iPhone 6 models have hit stores on Friday, smashing the Galaxy Note 4 launch record in the process. But local carriers are forbidden by law to offer subsidies of more than 345,000 won (or $325) to buyers purchasing handsets with a contract. In fact, all three carriers in Korea, including SK Telecom, KT and LG U+ were banned from selling devices earlier this year, as a punishment for their previous subsidy practices, right as Samsung was getting ready to launch the Galaxy S5.
Full price for the iPhone 6 starts at 789,000 won ($730) in the region (for the 16GB iPhone 6 model), with subsidies ranging from 120,000 won to 190,000 won ($140 to $175), depending on the monthly plan chosen by customers. That means the cheapest legal price for an iPhone 6 is 599,000 won ($555).
Despite the government’s efforts to enforce this particular law, it looks like many retailers were willing to break it in order to attract more customers. Some buyers managed to purchase an iPhone 6 for as low as 100,000 won to 200,000 won ($92 to $185), way below that 599,000 won minimum.
Two out of the three carriers denied any involvement, saying they can’t control what other retailers do. Apparently, retailers used “elaborate methods,” as CNET puts it, to make their offers known to customers looking for cheaper iPhone 6 units, including sending coded SMS messages and placing advertisements on forums at dawn, only to delete them moments after in order to avoid detection.
Many of the iPhone 6 buyers who purchased a device for a legal price have complained about the incident, and the government is ready to fine retailers that break the law and even pursue criminal prosecution for top execs.