'Jjeon-ui Jeonjaeng' Frequency Reallocation Value 1.5 Trillion... Academic Research Released

[Asia Economy Reporter Koo Chae-eun] A study has revealed that the appropriate reassignment fee for the 310 MHz bandwidth of telecommunications frequencies scheduled for reassignment in 2021 is expected to average between 1 trillion and 1.5 trillion KRW.

This is the first time that an appropriate economic value for reassigned frequencies has been proposed at an average level of around 1.5 trillion KRW based on academic research. This figure shows a significant gap compared to the government's proposal (around 3 trillion KRW) ahead of the reassignment fee determination by the Ministry of Science and ICT in November.

According to the industry on the 19th, Professor Shin Min-su of Hanyang University presented these research results at a special seminar titled "Policy Directions for Efficient Use of Frequencies" hosted by the Korea Information and Communication Policy Society. Based on benchmarking analysis comparing domestic and international assignment fees, the appropriate value for the 290 MHz bandwidth?excluding the 20 MHz bandwidth of LG Uplus scheduled for return?was estimated to be between 476.8 billion and 1.5357 trillion KRW.

Professor Shin stated, "To ensure a reasonable calculation of assignment fees reflecting market and technological environment changes, the economic value of frequencies should be calculated according to a model suitable for reassignment," and introduced that "benchmarking" and "revenue-cost" analysis models were used for the economic value estimation.

Using the average assignment fees of similar frequency bands from 13 countries including Korea, the UK, Germany, Australia, Canada, Spain, and Sweden as a reference, the economic value of the frequencies was presented as 1.0015 trillion KRW. Narrowing the reference to major countries such as the UK, Germany, and France, the reassignment fee value was estimated at 476.8 billion KRW. When converting only the results of the domestic frequency auction (2018) to the reassignment target frequencies, the economic value was estimated at 1.5357 trillion KRW.

Comparing the mobile telecommunications industry with other industries through revenue-cost analysis, the reassignment target frequencies were estimated to have a minimum economic value of 879.7 billion KRW, a maximum of 2.0475 trillion KRW, and an average of 1.4287 trillion KRW. The revenue-cost analysis estimates the maximum economic value (marginal willingness to pay) that frequencies can bring by subtracting the average operating profit margin of other industries from the operating profit margin of mobile telecommunications services.

Professor Shin analyzed, "The value of frequencies needed for reassignment to continue providing services to customers is set significantly lower than that for the new 5G service, which also contributes to user welfare."

On the other hand, mobile carriers are opposing the reassignment fee calculation, arguing that if it is calculated according to the existing formula of 'government calculation formula (3% of expected/actual sales) + reflection of past auction prices,' the fee would exceed 2.6 trillion KRW, causing excessive economic burden.

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