The Three Major Challenges for the Telecommunications Industry in 2023: 'Frequency, Regulation, AI'

Additional 5G Frequency Allocation, Competition Over 3.7-4.0 GHz
Issues Including Network Free Riding Prevention Law and 5G Mid-Tier Pricing
AI Semiconductor Investment Race to Secure AI-Based Technology

[Asia Economy Reporter Lim Hye-seon] As 5th generation (5G) mobile communication enters its maturity stage, the major issues in the telecommunications market next year are also expected to start with 5G. Fierce competition among the three mobile carriers for additional frequency acquisition is anticipated. As part of the government's policy to reduce household communication costs, plans are underway to diversify 5G service mid-tier plans, and regulatory issues remain piled up. The 'Network Free Riding Prevention Act' also needs to reach a conclusion. Preparations for future growth areas such as artificial intelligence (AI), satellite communication, AI semiconductors, and quantum cryptography are also accelerating.

Renewed Competition for 5G Frequency Acquisition

According to the telecommunications industry on the 18th, the Ministry of Science and ICT plans to allocate an additional 3.7?4.0 GHz band frequency (300 MHz bandwidth) to telecom companies next year. The Ministry formed a research team last year and is currently discussing this. The mobile carriers receiving additional supply will be able to provide faster communication services. SK Telecom is actively pursuing this. Earlier this year, SK Telecom requested the Ministry of Science and ICT to allocate an additional 3.7?3.72 GHz band (20 MHz bandwidth). LG Uplus proposed to the Ministry that the three carriers jointly build a network in the 3.7?4.0 GHz band.

This month, the government announced the cancellation of the 28 GHz frequency allocation, declaring that one of the existing telecom companies can no longer enter the 28 GHz frequency band. This is to promote new entrants and market competition. Accordingly, the three mobile carriers are expected to engage in a fierce battle over the 3.7?4.0 GHz frequency band.

Focus on Introduction of 5G Mid-Tier Plans and the Fate of the Network Free Riding Prevention Act

The launch of additional 5G mid-tier plans has also been announced. To enhance user convenience and expand choices, the National Assembly and the Ministry of Science and ICT hold the position that mid-tier plans should be diversified. In August, the three mobile carriers introduced mid-tier plans offering 24?31GB of data for 59,000?61,000 KRW. Next year, discussions on plans offering 50?70GB of data are expected to accelerate.

The 'Network Free Riding Prevention Act,' dormant for three years, is also a challenge to resolve. Global major content providers (CPs) such as Google and Netflix account for more than 30% of domestic and international data traffic but refuse to pay network usage fees. To address this, the National Assembly has proposed seven bills specifying the payment of legitimate network usage fees. The lawsuit between SK Broadband and Netflix is also expected to conclude in the second half of next year.

Full-Scale Investment in 6G Satellite Communication and AI Semiconductors

On the 1st, the Ministry of Science and ICT applied for a preliminary feasibility study (PFS) for the ‘Low Earth Orbit Satellite Communication Technology Development Project.’ This is to secure a lead in the satellite-centered 6th generation (6G) mobile communication era. The project, running for eight years from 2024, will launch four satellites for low earth orbit communication services with a budget of 590 billion KRW. The Ministry plans to launch a total of four low earth orbit communication satellites by 2031. KT SAT plans to launch satellite communication services before 2030, when 6G commercialization is expected. SK Telecom is also conducting research and development on 6G based on satellite communication. According to market research firm Research and Markets, the global satellite communication equipment market is expected to grow to 53.7 billion USD (approximately 60 trillion KRW) by 2026.

Efforts are also being concentrated on AI semiconductors. AI semiconductors are system semiconductors that serve as the 'AI brain,' executing large-scale computations at ultra-high speed and low power. The government aims to expand the domestic AI semiconductor market share in data centers to 80% by 2030. To achieve this, a total of 826.2 billion KRW will be invested from next year through 2030 to secure world-class technology. Increasing the domestic production rate to 80% will reduce dependence on the United States.

SK Telecom has entered the global market through Sapeon. Naver recently partnered with Samsung Electronics to start solution development. KT invested 4 billion KRW in domestic AI infrastructure solution company More last year and invested 30 billion KRW in Rebellion in July this year. Plans include next-generation AI semiconductor design and verification, and collaboration on large language models. The goal is to become a ‘full stack’ provider offering both hardware and software.

Acceleration is also underway in quantum cryptography communication development. The government invested 81.8 billion KRW in quantum technology this year, an increase of 68% compared to the previous year. The government plans to focus investments to narrow the gap in quantum technology with advanced countries.

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