In Korea, early-termination penalties work on a similar three-layer structure across telecom, housing leases, and subscriptions. Here's the whole idea of contracts, cancellation, and penalties at once.
The three-layer penalty
- Pro-rated usage: current-month fees, days used
- Returned benefits (the key part): discounts, subsidies, free gifts, waived installation
- Remaining principal/obligation: device installments, unreturned rental equipment
The core principle
Providers give discounts and subsidies in exchange for a promise of long-term use, and if you don't keep that promise, you return those benefits. That's why a 1 to 2 year phone contract, a 3-year internet contract with gifts, OTT auto-renewal, and a 2-year housing lease all trigger a discount-reclaim penalty if cancelled early.
Full guide to telecom, housing, and subscription cancellation penalties