[5G Hegemony War①] Achieved 'World's First' Like a Military Operation, But...

[Asia Economy Reporter Seulgina Jo] "What’s the point of hastily becoming the world’s first to commercialize 5G? There’s nothing beyond that..." "It’s like we’ve kicked away a fully prepared meal ourselves."

About a year and a half has passed since South Korea snatched the title of 'world’s first 5G commercialization' through a surprise launch reminiscent of an intelligence operation. Recently, the nation’s reputation as an ICT powerhouse was bolstered by the good news of Samsung Electronics’ large-scale 5G equipment exports, but industry insiders are not entirely optimistic. There is growing concern that South Korea is falling behind in the '5G hegemony war,' which has now become a competition between countries.

◆ 5G Investment Becomes a 'Competition Between Nations'

According to the Global System for Mobile Communications Association (GSMA) on the 21st, following South Korea’s commercialization of 5G in April last year, the United States (April 2019), the United Kingdom (May), Germany (September), and China (November) have joined the race, intensifying global 5G investment competition. Currently, 397 mobile operators in 129 countries worldwide are reportedly pushing forward with 5G investments.

The spread of the novel coronavirus (COVID-19) has highlighted the role of 5G networks, further fueling the investment race. Major countries such as the United States, which declared "the 5G competition is a race that must be won," and China, which has embarked on large-scale national funding, are moving beyond industry expectations. Notably, these countries view 5G not merely as a network but as an ecosystem platform, with governments taking the lead. The Chinese government’s budget for the new infrastructure (新基建) policy aimed at digital transformation by 2025 is approximately 870 trillion won, of which 5G construction alone accounts for 21.5 trillion won. The UK and Japanese governments have also launched extensive support measures, ranging from double-digit tax credits to budget allocations.

In contrast, the South Korean government is negative about investing in 5G infrastructure. Even the 2% tax credit, which was an incentive for investment, will expire this year. Meanwhile, a report by OpenSignal in the UK pointed out that "although South Korea led the start of 5G, it is not number one." South Korea ranks second in 5G speed but falls behind Saudi Arabia in 5G subscriber experience speed, ranking third.

An industry insider said, "Given that the commercialization timing among countries does not differ significantly, it is true that we are falling behind in national response and investment," expressing a sense of crisis. Professor Minsoo Shin of Hanyang University’s Business School diagnosed, "Commercialization was successful, but leadership is not being maintained."

◆ Increasing Telecom Debt → Vicious Cycle of Reduced Investment

Experts unanimously agree that 5G is a 'game changer' capable of transforming the entire industrial structure. The Moon Jae-in administration’s emphasis on 5G highways as a key pillar of the Korean New Deal’s digital component is based on this. It is expected to accelerate innovative convergence across industries by combining with artificial intelligence (AI), big data, and more.

GSMA estimates that the economic value created by the 5G ecosystem will reach 4.7% of the global gross domestic product (GDP), approximately 505.1 trillion won. The Korea Information Society Development Institute also forecasts that the 5G-related direct and indirect industries will expand to 116.1 trillion won by 2026.

However, the burden of 5G infrastructure, which is the foundation of national projects, seems to be shifted solely to the private sector. Moreover, the growth rate of domestic 5G subscribers this year has fallen short of initial expectations, and discovering business models is proving difficult. There are concerns that the three major telecom companies, whose financial strength has already weakened due to large-scale investments, will fall into a vicious cycle of increasing debt → reduced investment → rising user fees. Professor Hyungnam Moon of Sookmyung Women’s University Graduate School of Business pointed out, "If this continues, South Korea will lose the significance of being the first to commercialize and will end up kicking away the meal."

Slow regulatory innovation is also one of the obstacles. For example, new businesses based on the convergence of new technologies, such as the 'Tada' service, which once surpassed one million users, commute carpool services, and telemedicine, have been repeatedly stranded. The perceived level of regulatory reform felt by 500 companies affiliated with the Federation of Korean Industries has declined for three consecutive years. The accelerating encroachment of global platform giants in the domestic ICT market is also cited as the biggest concern for future 5G content and service competition.

Professor Shin emphasized, "We need to look at the 5G equipment side as well," adding, "An ecosystem must be established through active support and promotion policies so that everything from 5G equipment to services can emerge."

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