[5G Hegemony War②] China Unlocks 215 Trillion, US Imposes Regulations, South Korea Steps Back

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[Asia Economy Reporter Seulgina Jo] South Korea, which was the first in the world to secure the title of '5G commercialization,' is going against the global trend in government-led 5G support measures. While China, ranked first in 5G standard patents, plans to pour a staggering 215 trillion won into 5G deployment by 2025, South Korea remains passive in budget allocation. Unlike the United States, which has eradicated regulations, South Korea has added triple-layered regulations after commercialization. With government investment slow and regulations only tightening, there are growing criticisms that "5G Korea is falling behind."

Countries "Lower Tax Burdens and Increase Budget Allocation"

According to industry sources on the 21st, the United States has been accelerating its strategy to promote 5G network deployment since commercialization in April last year. This is based on the judgment that failure to secure a 5G initiative could pose serious threats not only to new industries but also to national security. Having already dominated the content and platform markets through major players like Google and Facebook, the U.S. is focusing support on networks and devices. Recently, the government directly established a support fund worth 27 trillion won to build suburban 5G networks. A subsidy support bill has also been introduced in Congress.

China is also making massive investments. The 'Chinese New Deal' new infrastructure policy announced in April this year includes plans to invest over 8700 trillion won over five years in new infrastructure centered on seven key areas, including artificial intelligence (AI) and 5G mobile communications. This is more than 140 times the budget for the Digital New Deal (about 58 trillion won). Chinese telecom operators plan to build 600,000 base stations within this year and 6 million by 2025.

Japan, which commercialized 5G about a year later than South Korea, has also introduced bold support measures such as large-scale tax credits and 8 billion won in national funding. Notably, a 15% tax credit rate is applied to the additional investment amount made by telecom operators beyond their initial investment plans. The UK is providing a 100% property tax exemption for five years related to 5G investments. It is also investing about 1.2 trillion won in 5G pilot networks and nationwide optical networks, and about 54 billion won to support 5G network deployment. An industry official explained, "The movements of the U.S. and China, which are making large-scale investments, are the fastest," adding, "In countries like the U.S. and Japan, as part of 5G support measures, there are either no or significantly reduced frequency reassignment fees to lower the burden on operators."

In contrast, South Korea does not have a separately allocated budget for 5G deployment. Even the 2% (2+1% in non-capital regions) tax credit, which can be considered a support measure, is uncertain whether it will be extended as it is set to expire at the end of this year.

According to the National Assembly Budget Office, many projects under the Digital New Deal budget, which emphasizes the '5G highway,' are either unrelated to 5G or difficult to guarantee project effectiveness. Professor Hyungnam Moon of Sookmyung Women's University Graduate School of Business said, "Currently, there is almost no part of the Digital New Deal budget directly linked to 5G," adding, "Even investing a portion in 5G or linking the digital dam with 5G would greatly increase effectiveness."

South Korea Also Backtracks on Regulations

Layered regulations are also a problem. A representative example is the amendment to the Housing Act Enforcement Decree by the Ministry of Land, Infrastructure and Transport, which requires the consent of more than two-thirds of residents and local governments when building 5G base station communication equipment. As a result, 5G relay station construction is subject to 'triple regulations' including wireless station reporting and inspection, two-thirds resident consent, and local government approval. This contrasts with the recent U.S. introduction of a 'mandatory approval system within 60 days' to speed up 5G deployment. The U.S. has also relaxed local government regulations that limited 5G infrastructure deployment due to concerns about urban landscape damage. Additionally, South Korea's core 5G services such as digital healthcare and telemedicine are blocked by various regulations.

Experts agree that South Korea should revive its experience of becoming an IT powerhouse through telecommunications infrastructure investment in the 1990s and 2000s. To this end, they emphasize the urgent need for investment incentives such as ▲expanding 5G investment tax credits ▲improving regulations like the Housing Act ▲easing the burden of frequency allocation fees. Professor Minsu Shin of Hanyang University's Department of Business Administration said, "Private investment requires support and promotion, not supervision and control. If frequency reassignment fees are set too high, operators' investment capacity will further decline," urging active incentives.