"With average revenue per user (ARPU) growth stagnating, carriers will not overextend themselves to make leading network investments. As a national core industry, they will end up resembling Korea Electric Power Corporation. The government and carriers will continue to have diverging expectations." (Kim Beom-jun, professor of accounting at Catholic University)
Mobile communication service is a representative national core industry. That is because mobile service is not merely a private service but has a public-interest character as social infrastructure, administrative service, national security, and disaster response. For this reason, permits and registrations are required to operate. Carriers have enjoyed the benefits of a stable oligopoly based on the public asset of spectrum, but they have been hesitant about next-generation network investment, saying it "doesn't make money."
Experts say that as the three carriers have declared they will transform into artificial intelligence (AI) corporations, they are even more likely to neglect their core business of network investment. There is also criticism that the government, ahead of the 6G (sixth-generation mobile communication) era, is effectively leaving lagging network competitiveness unattended.
◇ The title of "first to commercialize 5G" rings hollow… Experts say "China will commercialize 6G first"
According to the industry on the 26th, Korea was the first in the world to commercialize 5G (fifth-generation mobile communication) in 2019, but many assess that it has fallen behind in preparation for 6G. As the next-generation mobile communication, 6G is essential infrastructure to realize advanced converged services such as Autonomous Driving, air taxis, and telemedicine, which are future core technologies. The frequency bands used by 6G differ from those used by 5G. While 5G uses the gigahertz (㎓) band, 6G utilizes the terahertz (㎔) band to achieve ultra-high speed, ultra-low latency, and ultra-connectivity. It can also build an integrated terrestrial, aerial, maritime, and space communication network including satellites, greatly improving network shadow areas (regions with weak radio signals).
According to a survey by the Korea Information Society Development Institute (KISDI) of 51 experts from industry, academia, and public institutions in the second half of last year, in response to the question, "Considering each country's 6G competitiveness, which country do you think will lead 6G standardization?" Korea ranked fourth with 3.9%, following the United States (43.1%), China (39.2%), and Europe (13.7%). In particular, to the question of the "country to commercialize 6G first," Korea ranked second. Despite achieving the world's first commercialization in 5G, many domestic experts expect Korea to be outpaced by China in 6G.
In its report, the Korea Information Society Development Institute (KISDI) said, "While China is ahead in some aspects of 6G technological prowess, perceptions questioning domestic carriers' future network investments and capabilities in recent years also appear to have had an impact."
Carriers' reluctance to invest in networks stems from the slowdown in average revenue per wireless subscriber (ARPU), a key revenue indicator. With a declining population and deepening aging, there are no positive factors to improve ARPU. The government's stance on reducing household communication costs is also continuing. As of last year, the wireless ARPU of SK Telecom, KT, and LG Uplus was tallied at 29,061 won, down 0.8% compared with 2024. The three carriers' ARPU has been on a steady decline since 2022.
◇ 5G SA investment delayed because it "doesn't make money"… key to advancing 6G
Carriers' lukewarm stance is evident from their investment in 5G SA (standalone mode). 5G SA is a precursor technology to 6G. 5G SA provides service solely over the 5G network without assistance from the LTE (Long Term Evolution) network. It is a step forward from the existing non-standalone mode (NSA). 5G SA is key to enabling ultra-low latency for the Metaverse, Augmented Reality (AR), and Virtual Reality (VR). Kim Hong-sik, an analyst at Hana Securities, said, "To leap forward as a physical AI powerhouse, improving telecom infrastructure through the introduction of 5G SA is essential," adding, "To evolve into AI-based 6G, 5G SA is a process that must be passed through."
But domestic carriers were hesitant to build 5G SA. They delayed adoption, saying there is no difference in perceived quality between NSA and SA and that NSA even has a higher maximum transmission speed, disadvantaging SA in government quality evaluations. But their real concern is different. From a carrier's perspective, even if they invest in 5G SA, there is no suitable revenue model to recoup it.
KT is currently the only operator providing 5G SA service. At the end of last year, the government made the introduction of 5G SA by SK Telecom and LG Uplus mandatory as a condition for reallocating 3G and LTE spectrum. SK Telecom and LG Uplus, which had held out, could no longer delay and promised to build 5G SA within the year. Choi Su-han, a professor at Dankook University's College of Software Convergence, said, "Due to lukewarm 5G investment, the expected ultra-low latency services of 5G are not being realized at all."
Bang Hyo-chang, policy committee chair at the Citizens' Coalition for Economic Justice, said, "It is true that carriers hesitated because investing in 5G SA would not increase subscribers or revenue," adding, "They will accelerate 5G SA build-out centered on specific regions and industries, but achieving 100% build-out within the year will be difficult."
◇ "The government must create killer apps and business models to use 5G SA"
There are also calls that the government should consider a different approach than before to induce carriers to invest in networks. In 2018, the government allocated the 28-gigahertz (㎓) band to the three carriers, but they neither made the promised investments nor kept the spectrum, returning it on the grounds that "profitability is low."
Kim Beom-jun, a professor of accounting at Catholic University, said, "The government must continuously provide priming support to create killer apps and business models that can utilize 5G SA." Lee Chan-young, an analyst at Eugene Investment & Securities, said, "Most content consumed today can be sufficiently implemented even at the 4G and 5G level," adding, "Without the emergence of innovative killer services, it will be difficult to build public consensus for raising ARPU."