Removing the Label of 'Unreliable 5G'... Commercialization of 'Ultra-Fast 28GHz' with Slow Speeds

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[Asia Economy Reporter Joesulgina] The commercialization timeline for the essential "ultra-high-speed 28 GHz" band network, crucial to shedding the label of "unreliable 5G," is expected to be delayed beyond initial projections. Mobile carriers, which need to invest massive resources, have been hampered by the impact of the COVID-19 pandemic, and there is no suitable business model to guarantee profitability, resulting in a lack of concrete scheduling. At present, it is also unclear when smartphones supporting the 28 GHz band network will be released domestically.

◆ "Equipment and services not yet complete" Industry unable to set plans = According to related industry sources on the 12th, the three major mobile carriers have yet to begin selecting equipment vendors for the commercialization of 28 GHz 5G. Except for KT, which sent a Request for Proposal (RFP) for the 28 GHz band along with the 5G equipment vendor selection in 2018, no other carriers have sent out RFPs as of early May.

There are no specific base station construction plans by company. SK Telecom’s Chief Financial Officer (CFO) Yoon Poong-young stated during the first-quarter conference call, "The related ecosystem, including equipment and services, is not yet complete. Commercialization will be decided in connection with the schedule once it is set." Considering that it takes at least six months for various tests and optimization after selecting equipment vendors, the initially expected commercialization within this year is practically out of reach.

The 28 GHz band network, which secures bandwidth ten times wider than the 3.5 GHz band, is regarded as essential infrastructure to realize the Fourth Industrial Revolution era, including smart factories and smart cities. An industry insider explained, "The speed of 28 GHz 5G can be up to 20 times faster than LTE and several times faster than current 5G." It is literally ultra-high-speed, true 5G. While the U.S. has already commercialized 5G on the 28 GHz band, Korea, which boasted being the first in the world, is still far behind, limited to non-standalone mode (NSA) that mixes LTE and 3.5 GHz bands.

◆ Reduced investment capacity and deprioritization = The government and the three major carriers plan to start building 5G base stations on the 28 GHz band this year, the second year of 5G commercialization, but this is also likely to be delayed. The overall economy has frozen due to the COVID-19 impact, reducing carriers’ investment capacity, and the expansion of 5G smart factories, considered a viable business model on the 28 GHz band, is also unlikely.

Within the industry, voices suggest it is not an urgent matter. Previously, when submitting 5G frequency usage plans, the three carriers announced plans to build 45,215 5G 28 GHz band base stations over three years (2019?2021), about 15% each, or roughly 15,000 stations per company. However, this mandatory construction ratio only needs to be met until 2021. Ultimately, this year will likely see only groundwork for base stations, with full-scale investment expected to begin next year.

Since the business model is centered on business-to-business (B2B) transactions, 28 GHz 5G services that consumers can experience, such as on smartphones, are expected to be further delayed. New devices scheduled for release in the second half of the year, like the Galaxy Note20, are expected to be launched domestically only on the 3.5 GHz band, not the 28 GHz band. An industry insider said, "Investment willingness from carriers is important for the 28 GHz band network, but the market is currently unfavorable," adding, "Regarding 5G investment, we are focusing more on in-building construction, which reached only half of last year’s target, and the commercialization of standalone mode (SA)."

The three carriers expanded their 5G investment scale to the 4 trillion won range in the first half of the year but are judged unlikely to increase their annual capital expenditure (CAPEX) plans. The market is also shrinking, and the number of 5G subscribers this year is expected to decrease by double digits compared to initial forecasts.