The government said it will discount by about 15% the fees for 3G (third-generation mobile) and LTE spectrum whose usage terms expire in stages next year, based on past auction prices, while making provision of 5G (fifth-generation mobile) SA (standalone) service a mandatory condition for allocation. The government also offered operators a discount option tied to the number of 5G indoor base stations they install through 2031.
Nam Young-jun, head of the frequency policy division at the Ministry of Science and ICT, said at a public briefing on "Detailed policy plan for reallocating mobile spectrum" held at IT Square in Gangnam District, Seoul, on the afternoon of the 1st that for 3G and LTE spectrum whose usage terms expire in stages next year, "This reallocated spectrum has already had its value assessed through market competition, so while we referenced previous allocation fees, we also reflected the value-declining factors stemming from the introduction and spread of 5G SA."
The spectrum the Ministry of Science and ICT is moving to reallocate is due in June and December next year, totaling 370 MHz: SK Telecom 155 MHz, KT 115 MHz, and LG Uplus 100 MHz. The aggregate fee for the spectrum being reallocated this time is 3.2 trillion won. To expand 5G service, the government set a discount option tied to the number of additional 5G indoor base stations operators install through 2031. Depending on the number of additional 5G indoor base stations installed by each operator, the allocation fee aggregates would be reduced to: △ 3.1 trillion won for 10,000 or fewer stations △ about 3 trillion won for 10,000 or more △ about 2.9 trillion won for 20,000 or more.
The basic spectrum reallocation period was set at five years. However, the 20 MHz slice in the 1.8 GHz band and the 100 MHz slice in the 2.6 GHz band, which are highly likely to be repurposed for 5G and 6G (sixth-generation mobile), were designated for band reorganization review and their usage terms shortened to three years. For one block in either the 2.1 GHz band or the 2.6 GHz band, one year of use is allowed, after which the usage term can be shortened by one year.
◇ Mandatory provision of 5G SA service… discount options based on number of installations
The Ministry of Science and ICT moved to adjust LTE spectrum prices because, while 5G was in its early commercialization phase at the time of the 2021 reallocation, it has since entered a mature phase, reducing demand for LTE spectrum. The government previously also applied a 27.5% discount to spectrum fees if 120,000 5G radio base stations were built.
The reason the government made 5G SA service provision a mandatory compliance item is the judgment that evolution of 5G SA-based technology is needed for the age of artificial intelligence (AI) and 6G. 5G SA is a technology that uses only 5G for both base stations and the core network. Data transmission and reception, as well as authentication and control signaling, all run on the 5G network. With "ultra-low latency," in which information is delivered between devices in a very short time, it offers fast response. By contrast, NSA mixes 5G and LTE. Carriers chose NSA from revenue and quality perspectives, but experts say they should hurry to build commercial 5G SA networks to secure global competitiveness as the industry moves beyond 5G to 6G. In Korea, only KT built a commercial 5G SA network in 2021. SK Telecom and LG Uplus are operating networks based on 5G NSA (non-stand alone).
Choi Su-han, a professor at Dankook University's College of Software Convergence, said, "Due to lukewarm 5G investment, the ultra-low latency 5G services that were expected are not happening at all," adding, "Investment in 5G SA to stabilize 5G is essential to move smoothly into the 6G era." Kim Ye-won, a professor in the business administration department at Sejong University, also said, "Mandatory provision of 5G SA service is an appropriate investment incentive by the government."
◇ SK Telecom says "not based on past auction prices" vs. LG Uplus says "policy consistency must be maintained"
One point of contention in this spectrum reallocation was the C-group 2.6 GHz band, where SK Telecom and LG Uplus hold 60 MHz and 40 MHz, respectively. LG Uplus secured 40 MHz in that band for 478.8 billion won in a 2013 auction and, upon reallocation in 2021, received an additional five years and met 5G base station buildout requirements to receive a 27.5% reduction. SK Telecom, by contrast, took 60 MHz in a 2016 auction, and amid intense competition, won it for a total of 1.2777 trillion won over 10 years. The draft reallocation plan the Ministry of Science and ICT unveiled that day effectively sided with LG Uplus.
Sung Seok-ham, head of business cooperation at SK Telecom, said, "Past auction prices are only a reference and should not be an absolute standard," adding, "Just as the same car model in similar condition commands the same price in the used-car market, we earnestly ask that the same evaluation criteria be applied to the same band to calculate the fee." Ahn Jeong-min, a professor in the forensic science and convergence department at Hallym University, said, "The Ministry of Science and ICT is invoking the Radio Waves Act to say it bases decisions on past reallocation fees, but this needs to be reconsidered legally."
Park Kyung-jung, head of external relations (executive director) at LG Uplus, said, "The claim of 'same band, same fee' is a distorted interpretation of the government's criteria for reallocation policy," adding, "Spectrum reallocation fee calculations must be based on the Radio Waves Act to maintain policy consistency and predictability."
Park Cheol-ho, head of telecom policy at KT, said, "KT is in a situation similar to SK Telecom's," adding, "It would be good to have a forum to discuss the idea that an auction price, once set, follows like a tail."
The Ministry of Science and ICT plans to review and reflect the opinions gathered through the public briefing and announce the final plan within the year.