Government's 28GHz Revival... "Maybe It's an Obsession"

Despite the government offering unprecedented conditions such as lowering the 28 GHz frequency price to attract a fourth mobile carrier, there are still forecasts that new entrants will find it difficult to enter the market. This is because they must bear massive network investment and equipment maintenance costs without guaranteed profitability. Some question the fundamental reason why the government is fixated on the 28 GHz service, which even the three existing mobile carriers have failed to succeed in.

According to the new carrier frequency allocation plan (draft) released by the Ministry of Science and ICT on the 12th, the minimum competitive price for new entrants to participate in the frequency auction is 74 billion KRW, and the number of base stations to be built by the third year is 6,000. This is significantly lower compared to the minimum competitive price of 270.2 billion KRW and the network construction obligation of 15,000 base stations when the three carriers were allocated 5G frequencies in 2018.

The Ministry of Science and ICT also lowered the installment payment ratio for the first year from the current 25% to 10%. This structure allows payment of 7.4 billion KRW, which is 10% of the total price, in the first year, followed by 15% in the second year, 20% in the third year, 25% in the fourth year, and 30% in the fifth year.

To reduce the network construction burden on carriers, the ministry also accepts frequency allocation applications by regional zones. However, nationwide network applicants will be given priority in the selection process. In addition, benefits such as policy financing and tax credits are provided.

[Image source=Yonhap News]

Despite these unprecedented conditions such as lowering frequency prices and granting regional selection rights, opinions suggest that it will still not be easy for new carriers to enter the market. Rather, the 28 GHz construction obligation is pointed out as a hindrance to companies deciding to enter the market.

An official from a budget phone company said, "Although the number of base stations to be built has been reduced, the increasing installation and maintenance costs every year are still burdensome. Ultimately, there will come a moment when they give up because they cannot endure the deterioration of profitability." He added, "Also, it is questionable whether any company would enter the market to attempt a business that even the three carriers, who have operated mobile communication infrastructure for decades, have failed at."

The lack of terminal devices supporting 28 GHz 5G also causes hesitation for new carriers to enter the market. Since the commercialization of 5G in 2019, no terminal devices supporting the 28 GHz band frequency have been released domestically. Even Samsung Electronics' latest smartphone, the Galaxy S23, does not have a 28 GHz antenna for the domestic market.

Some even describe the government's efforts to maintain the 28 GHz service as an 'obsession' to cover up policy failure. An industry official said, "Due to the characteristics of the 28 GHz radio waves, the limitations of related equipment, terminals, and services have already been confirmed. Overseas, including the U.S., have recognized this and are revising their policy directions entirely." He added, "Only our government is shifting all responsibility onto the carriers and showing a stubborn attitude. It seems like an obsession with the 28 GHz 5G service because they cannot admit policy failure."

In fact, from the Ministry of Science and ICT's perspective, it is appropriate for financial institutions or large corporations with abundant financial resources to hold the status of the fourth mobile carrier. However, due to the strong perception that the telecommunications industry is a regulated industry, financial institutions and large corporations have been reluctant to enter the market. The industry consensus is that the government needs to make new policy decisions to break away from this perception.

Another industry official said, "The more actively the government intervenes in the activation of the 28 GHz 5G service, the more the industry feels burdened. The 28 GHz construction itself is inevitably perceived as regulation and coercion." He added, "Creating conditions where the private sector can autonomously promote the business is the only way to secure even a small number of applicants."

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