This study asks whether the location of monetary relief in a multi-part mobile subscription (device subsidy vs plan discount) affects consumer choice when the total monthly payment is taken into account. We label this mechanism source-of-savings framing disutility.
We ran a choice-based conjoint experiment with 1,009 current 5G subscribers in the Korean market, where policy makes the two relief formats mutually exclusive. Each respondent evaluated five full-profile choice tasks that varied network quality, data allowance, monthly plan fee, eligibility for the 25% Select Contract discount, device subsidy, and carrier. We estimated mixed logit models with a log-normal price coefficient and a frame-by-payment interaction to capture both price sensitivity and the incremental effect of relief location.
Results show a framing penalty for the device-subsidy option at the representative payment. The penalty tends to become larger as the total monthly payment rises and is weaker for people with higher-tier devices. More price-sensitive consumers are also more averse to the device-subsidy frame. This means that in a regulated mobile subscription, the placement of relief in the contract can affect choice even when the payment level is controlled.
This study introduces and empirically validates source-of-savings framing disutility in a policy-driven subscription environment. It shows that the location of relief and the payment structure interact in a price-contingent and segment-specific way that is common in Korean 5G contracts. It also clarifies when carriers and regulators should emphasize on-bill discounts rather than device-linked relief to support transparency, competitiveness, and consumer welfare.
