[Exclusive] SKT's 2G Termination Rejected... Government Says "Reduce Remaining Subscribers Further"

Ministry of Science and ICT Rejects SKT 2G 'Early Termination' for the Second Time
Third On-Site Inspection May Take Place This Month
Regarding Approval Rumors for the First Half of the Year: "Not the Time to Confirm, But Will Accelerate"
SKT Faces 'Third Attempt' to End 2G Like KT in 2012
Industry Says "Leading Operator Must Pave the Way for Generational Shift to Promote 5G Expansion"

[Asia Economy Reporter Koo Chae-eun] It has been confirmed that the Ministry of Science and ICT recently rejected SK Telecom's application for the early termination of its 2G service. The reason cited was the slow decrease in the remaining subscriber base, which still numbers around 300,000. This marks the second rejection, leading SK Telecom to attempt a 'third try' at ending its 2G service. As the termination of 2G is delayed beyond expectations, voices within the telecommunications industry are increasingly criticizing the waste of 2G frequency and 01X number resources.

Ministry of Science and ICT: "Remaining subscriber numbers must be further reduced"

According to industry sources on the 12th, SK Telecom's re-submitted application for early termination of its 2G service, filed in January, was rejected, and the company has recently submitted the application again. The Ministry of Science and ICT is currently reviewing the validity of the third 2G termination approval application. A senior official from the Ministry explained, "Currently, SK Telecom has about 300,000 2G subscribers, which is about 1.2% of its total subscribers. The rate of decline is slow, and we believe there is room to further reduce the number of B2B (business-to-business) and IoT (Internet of Things) subscribers, so the application was rejected." The first rejection was due to a 'violation of the Terms and Conditions Act' raised by the Fair Trade Commission, and the second rejection was due to the 'number of remaining subscribers.'

Regarding expectations that the 2G service termination might be approved as early as June, the official drew a line, saying, "We are speeding up the review and making progress, but it is not the nature of this process to confirm the timing of the termination approval."

The '1% principle' for remaining subscribers applied during KT's termination is planned to be used only as a reference, but the absolute number of subscribers being higher than the precedent is working against the service termination. In 2012, KT was able to enforce the termination of its 2G service after reducing its 2G subscriber count to 150,000 and having its third termination approval application accepted. At that time, KT's 2G subscribers accounted for about 0.98% of its total subscribers, just under 1%. Currently, SK Telecom's 2G subscribers number about 300,000 (1.2%).

On-site inspection planned this month... Industry calls for "quick decision-making"

However, the telecommunications industry points out that if the 2G termination is delayed, SK Telecom, the market leader, will inevitably face setbacks in its 5G investments, making swift decisions necessary. This is because most major countries preparing for 5G commercialization declared the end of 2G services early. In Japan, the three major telecom companies?SoftBank, NTT Docomo, and KDDI?all ended their 2G services in 2012. In the United States, AT&T terminated its 2G service in 2017, and Verizon and T-Mobile plan to end theirs by this year. Additionally, Australia, Canada, Thailand, Taiwan, and Singapore all ended 2G services by last year. Professor Shin Min-soo of Hanyang University's Business School said, "Considering the efficiency of hyper-connected infrastructure in the 5G era, the termination of 2G should be expedited based on reasonable compensation for existing 2G subscribers."

There are also criticisms that the approval timing should not be delayed based on the vague premise of 'reducing the number of remaining subscribers,' especially when most remaining subscribers refuse to switch to 3G or 4G. An industry insider said, "Since the subscriber characteristics and distribution of KT and the current SK Telecom are different, this should be considered comprehensively, and it should not be judged solely on whether the remaining subscriber number is below 1%. To achieve the government's goal of completing nationwide 5G network construction by 2022, quick decision-making is necessary."

Meanwhile, the Ministry of Science and ICT plans to conduct a third on-site inspection for SK Telecom's 2G termination within this month. The inspection will check whether the instability or risks of the 2G equipment system have improved compared to the March inspection and to what extent redundancy has been implemented. During the previous inspection, 80% of the equipment was operated alone because there were no spare parts for 2G equipment to enable redundancy.