KT·LGU+ Unprecedented Frequency Allocation Cancellation... Subway Wi-Fi Continues (Comprehensive)

Government Finalizes Cancellation of 28GHz Frequency Allocation... Telecom 3 Companies "Apologize"
SKT, Exempted from Cancellation, Says "Not Realistically Easy"
Support Measures Announced to Promote New Entrants in January

Choi Woo-hyuk, Director of the Radio Policy Bureau at the Ministry of Science and ICT, is making an announcement at the briefing room of the Government Seoul Office on the 23rd. [Image source=Yonhap News]

[Asia Economy Reporter Oh Su-yeon] The government has canceled the allocation of the 5G 28 GHz band frequencies to KT and LG Uplus. SK Telecom, which avoided the cancellation, must install 15,000 base stations by May next year but has expressed that this is realistically difficult. The government plans to activate competition by adding one new operator besides the operators whose allocations were canceled. Additionally, the construction of subway Wi-Fi using the 28 GHz frequency will continue regardless of this cancellation.

On the 23rd, the Ministry of Science and ICT announced that it had completed the compliance inspection of the allocation conditions imposed during the 2018 allocation of the 5G 28 GHz band frequencies and the opinion hearing procedure under the Administrative Procedures Act, finalizing the disposition details.

KT and LG Uplus were notified of the cancellation of their allocations. SK Telecom’s usage period (5 years) was shortened by 10% (6 months), and if it fails to build the originally allocated 15,000 base stations by May 31 next year, before reallocation application, its allocation will be canceled.

Unprecedented Allocation Cancellation... The Three Telecom Companies "Accept Government Decision"

Earlier, based on the evaluation results of the compliance inspection evaluation committee, the Ministry of Science and ICT pre-notified the three telecom companies on November 18 of sanctions for non-compliance with allocation conditions and held a hearing on the 5th for the telecom companies to express their opinions before the final disposition. During the hearing, the three telecom companies expressed regret for failing to meet the allocation conditions but did not raise any objections to the pre-notified disposition.

During the hearing, the three telecom companies did not request any changes to the disposition. The Ministry of Science and ICT accepted the hearing chairperson’s opinion that it was appropriate to maintain the pre-notified disposition as there were no changes in circumstances warranting mitigation.

The three telecom companies had originally agreed to build a combined total of 45,000 28 GHz base stations by the end of last year when they received the 2018 5G frequency allocation, but only managed to build 5,059.

With the cancellation of allocation, KT and LG Uplus will cease using the 28 GHz band as of today. However, the subway Wi-Fi using the 28 GHz band as backhaul, which is a promise to the public, will continue to be constructed and operated. The Ministry of Science and ICT also decided to allow frequency use on subway lines promised by each company to be built and operated until the original allocation period ends on November 30 next year, considering the need for exceptional measures and public convenience.

Additionally, LG Uplus requested a replacement period for equipment necessary to continue the 28 GHz demonstration project service. The Ministry of Science and ICT decided to allow temporary frequency use for up to four months.

Although this is an unprecedented case where the government canceled frequency allocations to telecom companies due to insufficient investment, the operators have expressed their intention to accept the government’s decision without objection.

KT said, "We regret that the poor propagation characteristics and practical limitations of the 28 GHz frequency band did not meet the expectations of the government and the public," and added, "Even if the allocation is canceled, we will actively consult with the government on plans to continue the subway Wi-Fi project." It also stated, "We will participate in various government R&D investments and demonstration projects and actively engage in future investments such as funding support if necessary."

LG Uplus stated, "We humbly accept the government’s decision."

SKT "Realistically Difficult"... Government "Construction Possible"

SK Telecom avoided cancellation by shortening the usage period but expressed a negative view on the possibility of achieving the target number of base stations. It has built only 1,605 over three years, and filling the remaining 15,000 base stations in five months is realistically difficult.

SK Telecom said, "We regret not fulfilling the investment obligations related to the 28 GHz frequency," and added, "Since the allocation of the 28 GHz frequency band, we have continuously strived to create an ultra-high frequency ecosystem and discover business models, but the overall environment has not reached the level for commercialization, and we regret that we could not continue investment."

Regarding the obligation to complete 15,000 base stations by the end of May 2023, SK Telecom said, "Considering the current progress of equipment, services, and related ecosystems, it is realistically difficult to fulfill the obligation by May 2023," and added, "If government policy support such as continued frequency use and conditions for maintaining the 28 GHz subway Wi-Fi service is possible, we will consider continuing the service to expand public benefits."

According to the Ministry of Science and ICT, SK Telecom did not separately request a reduction in the 15,000 base station construction quantity during the hearing. The government is also not considering reducing the obligation at this time, considering fairness with other operators whose allocations were canceled. It believes completion within five months is possible.

Choi Woo-hyuk, Director of the Radio Policy Bureau at the Ministry of Science and ICT, said, "SK Telecom told the government that construction is not easy, but it is not impossible," and explained, "For example, if equipment procurement is not possible, it would be difficult, but since base station construction is an investment issue, it is a matter of corporate choice." He also said, "Since there are operators who were evaluated the same and had their allocations canceled, it is inappropriate to suddenly reduce obligations," and "At this stage, there is no plan to consider (government support)."

New Operator Entry Promoted but 'Burden' 28 GHz

The Ministry of Science and ICT plans to actively promote the entry of a new operator for one of the two canceled bands. Specific measures will be announced in January next year after additional review to enable substantial and diverse support for the new operator. The Ministry will continue discussions through the '28 GHz New Operator Support Task Force (TF)'.

However, at the current technological level, it is difficult to build a network using the 28 GHz frequency, and no suitable revenue model has been found. The 28 GHz band, often called the "dream 5G" for its high speed, has a shorter reach and weaker diffraction than the 3.5 GHz frequency used nationwide, making it difficult to pass obstacles. More base stations must be densely installed, requiring huge investment costs, but 28 GHz specialized content like metaverse or autonomous driving has not been commercialized, resulting in low business viability.

The three telecom companies each invested over 200 billion won to expand the 28 GHz frequency but have already written off most of the investment costs in accounting.

It is true that new operators without business experience will find it difficult to invest huge capital in utilizing the 28 GHz frequency, which even the three telecom companies with technical and business know-how have given up on. This raises concerns that 28 GHz policy may drift.

Meanwhile, since the 5G nationwide network uses the 3.5 GHz frequency, the cancellation of the allocation will not affect the 5G services currently provided to consumers (B2C). Subway Wi-Fi using the 28 GHz frequency as backhaul has completed base station construction and is in the train car installation phase, with plans to proceed as scheduled.

Director Choi said, "Despite various government efforts, it is regrettable that this result has come out," and added, "We will prepare and implement various support measures to induce new operator entry into the canceled 28 GHz band and continuously strive to activate competition in the telecom market so that the public can enjoy higher-level 5G services."

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