"Let's Just Auction It" Counterproposal for Frequency Reallocation by the Three Telecom Giants

[Asia Economy Reporter Koo Chae-eun] As the government and telecom companies fail to narrow their differences over the reuse value (reallocation fee) of 2G, 3G, and 4G mobile communication frequencies whose usage period expires next year, the three major telecom operators have counter-proposed an 'auction.'

According to the telecommunications industry on the 3rd, the Ministry of Science and ICT's research team for determining the reallocation fee of operating frequencies will hold its final meeting on the 5th. In response, the telecom companies have agreed to propose at the final meeting on the 5th that the frequencies should not be reallocated but rather put up for auction. A telecom industry official stated, "If it is difficult to accept the industry's request, we plan to suggest at the research team meeting on the 5th that an auction be considered for all reallocation frequencies at this point to properly evaluate the market price of the frequencies the government intends to estimate," adding, "If the auction is conducted based on the minimum competitive prices at each past auction point, the economic value of the frequencies can be properly assessed."

Despite the inconvenience and the possibility of price increase pressure due to competitive bidding among the three telecom companies, they believe the auction price would be lower than the reallocation fee proposed by the government, thus presenting this as a last-ditch measure.

The reallocation frequencies in question are 310 MHz out of the total 320 MHz of 2G, 3G, and 4G frequencies whose usage period expires next year, excluding SK Telecom's 10 MHz 2G bandwidth, which has already ended service. The problem lies in the significant price gap between the government and the telecom companies. The three telecom operators consider an appropriate fee to be around 1.6 trillion won, which is 3% of the expected and actual revenue during the period of borrowing the frequencies. Since these are reallocation frequencies, not new allocations, there is no competitive demand, and the purpose is to protect existing users, so they reject calculating the fee based on past auction reference prices. On the other hand, the government is reportedly estimating the reallocation fee at about 2.9 trillion won by reflecting half of the past auction price and half of 3% of the expected revenue, in accordance with a proviso in the Radio Waves Act that allows consideration of past auction methods if frequencies were allocated that way before.

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