Controversial 'Jupasu Value' Formula Revealed Today... Will It Narrow Differences?

Public Briefing on the 17th
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[Asia Economy Reporter Koo Chae-eun] The government and operators are locked in a standoff over the frequency reassignment fees, known as the "war of money." Although the government announced today (17th) at a public briefing that it would try to narrow the gap in positions, it is uncertain whether the industry's opinions will be reflected.

According to the industry on the 17th, the Ministry of Science and ICT (MSIT) will hold a "Mobile Communication Frequency Reassignment Plan Public Briefing" at COEX in Seoul today. Frequency fees are the money paid to the government by telecom companies for using the public resource of radio waves for periods of 5 to 10 years. Initially, the fees are collected through auctions, and upon extension, reassignment fees (renewal fees) are charged.

Standoff over Calculation Formula

The purpose of this briefing is to share opinions on the method of calculating the reassignment fees for frequencies expiring in 2021. The bands expiring next year total 320 MHz: △SK Telecom 105 MHz △KT 95 MHz △LG Uplus 120 MHz. Among these, 310 MHz excluding SK Telecom's 2G bandwidth of 10 MHz are subject to reassignment.

The sharp conflict between the two sides lies in the method of calculating the reassignment fees for these frequencies. The government insists that frequencies previously allocated through auctions must reflect 100% of the auction price according to the proviso clause of the Radio Waves Act, whereas the mobile carriers argue that reflecting the past auction price, which was set under competitive demand, is unreasonable in the context of reassignment. The industry criticizes this as akin to "raising the rent of a house with no demand."

As a result, the reassignment fees based on the government's calculation method soar up to 5.5 trillion won, while the industry's calculation method estimates about 1.5 trillion won.

Telecom companies believe that the proportion of past auction prices reflected in the statutory formula should be significantly lower than 50%. Professor Shin Min-su of Hanyang University's Business Administration Department stated, "If the reassignment fees are set too high, telecom companies will inevitably reduce 5G investments, which could affect consumer welfare and pricing. The reassignment fees should be set at an appropriate level."

Telecom Industry: "Uncertain Whether Opinions Will Be Reflected"

The MSIT appears to be holding an official meeting to exchange opinions on the calculation of reassignment fees and to narrow the gap with operators. The briefing is scheduled to last 2 hours and 30 minutes, including discussion time.

However, the industry expresses discomfort even about the format of the meeting. They argue that the briefing might be a one-sided explanation by the government of its position to operators rather than a forum to gather industry opinions. A telecom industry official lamented, "The discussion time is about an hour. With nine panelists, it is doubtful whether meaningful opinions can be exchanged."

Fundamentally, the lack of clear standards in the Radio Waves Act is said to be fueling the conflict between operators and the government. The current Radio Waves Act does not explicitly specify how to set the criteria for calculating reassignment fees. Consequently, the government and mobile carriers are fighting based on clauses favorable to each side. Seong Sang, Senior Specialist of the Democratic Party, commented, "It is urgent to establish specific standards in the Radio Waves Act to ensure transparency and procedural fairness."

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