"Frequency Reallocation Compensation Assessment Must Consider Positive Cycle of Telecommunications Industry"

[Asia Economy Reporter Koo Chae-eun] There is a claim that reasonable frequency reassignment fees need to be determined for the success of 5G, which requires much higher investment costs compared to 4G (LTE). The perspective is that appropriate reassignment fees must be set to create a virtuous cycle structure of 'increased investment → ICT co-growth → economic revitalization → improved user benefits.'

On the 19th, the industry argued, "Excessive reassignment fees worsen the economic virtuous cycle." Frequency reassignment is a concept similar to renewing a lease on a rented house. The government is the "landlord" who owns the "house (frequency)," and the three telecom companies can be seen as "tenants." If they want to continue living there, telecom companies must apply to the government to extend the lease. The contract period is usually five years. The telecom industry is concerned that, depending on the Ministry of Science and ICT's calculation method, they may have to bear over 3 trillion won to use the existing frequency for another five years.

SK Telecom, KT, and LG Uplus, the three domestic mobile carriers, operate their telecom businesses by borrowing the frequency, a national resource, from the government. Ahead of the year-end "record-breaking reassignment," a price controversy is emerging.

A telecom industry official said, "5G uses high-band spectrum, which has poorer coverage characteristics compared to LTE, and the integrated base station equipment configuration requires more than three times the investment cost," adding, "With large-scale investment being made to build the network and 5G funds being depleted, high frequency fees could negatively affect both operators and users." They pointed out that "high frequency fees → reduced investment → increased charges → cost burden on consumers" is the chain of consequences. The telecom side explained, "5G is a core technology driving national ICT development, but due to market saturation, it is difficult to secure investment capacity for 5G," and added, "Reassignment frequency fees should be imposed at a level that can ease the burden on operators so that 5G investment activation and user benefit enhancement can follow."

There are also criticisms that reassignment fees are higher compared to overseas. Another telecom official said, "Even without considering purchasing power parity when comparing countries that impose reassignment fees with South Korea, our level is the highest," and pointed out, "If past auction prices are taken into account, the reassignment fee level compared to overseas could be even higher." The official added, "The U.S. and Japan, which are competing with us in 5G leadership, support 5G investment policy-wise without the burden of reassignment fees, and the UK, Australia, Germany, and France also approach frequency fees from a policy support perspective."

This content was produced with the assistance of AI translation services.