3.17 Trillion Won After 'Frequency Value' Conflict... Condition of Building 120,000 5G Stations (Update)

[Asia Economy Reporter Seulgina Jo] The government has finalized the reassignment price for 3G and LTE frequencies, which expire in June next year, at approximately 3.17 trillion to 3.77 trillion KRW. If the three mobile carriers build 120,000 5G base stations as planned, the frequency price will be 3.17 trillion KRW.

Although this is lower than the maximum 4.4 trillion KRW proposed by the government at the public briefing earlier this month based on a five-year term, it remains significantly higher than the carriers' estimated figure of around 1.6 trillion KRW. With the three carriers agreeing to the final plan, the government is seen as having upheld its original proposal of "around 3.2 trillion KRW." The Ministry of Science and ICT (MSIT) indicated that it intends to reflect auction prices similarly in future frequency reassignments.

◆3.17 Trillion KRW if Over 120,000 5G Base Stations Built... Linked to Investment

On the 30th, the Ministry of Science and ICT announced the "Detailed Policy Plan for Mobile Communication Frequency Reassignment" reflecting these details. This followed the public briefing on the 17th and consultations with the Radio Policy Advisory Committee. MSIT decided to reassign 310 MHz out of the 320 MHz frequency expiring in June next year to existing users and finalized related detailed policies allowing reassignment applications six months before expiration.

First, considering the decline of LTE services by 2026, the usage period for the 2.6 GHz band was fixed at five years to secure 160 MHz of wideband 5G frequencies below 3 GHz. For other bands, carriers can flexibly choose usage periods between five and seven years based on the usage status and characteristics of each band. However, considering the possibility of surplus frequencies due to early 5G transition, the usage period for one band per operator in the 2.1 GHz/2.6 GHz bands can be shortened after three years.

The reassignment price offers an option to reduce the fee the more 5G investment is made. If a carrier builds more than 120,000 5G base stations by 2022, the reassignment fee decreases to 3.17 trillion KRW. Conversely, if the number of 5G base stations falls short of 120,000, the fee increases: 3.37 trillion KRW for 100,000 to less than 120,000 stations, 3.57 trillion KRW for 80,000 to less than 100,000, and 3.77 trillion KRW for 60,000 to less than 80,000 stations.

MSIT initially proposed 150,000 5G base stations at the public briefing on the 17th but finalized 120,000 based on carriers' feedback that 150,000 was unrealistic. The base station count includes roaming jointly operated by the carriers. In this case, the actual burden per company is estimated to be about 100,000 stations.

MSIT emphasized again that the announced reassignment price reflects about a 25% adjustment from the originally proposed benchmark price. It explained that the auction price was not fully reflected as some in the industry pointed out. Regarding this, Oh Yong-su, Director of the Radio Policy Bureau at MSIT, explained, "Since LTE is an essential frequency for using 5G services, we believed it was appropriate to calculate the economic value of LTE in a way that best reflects it." He added, "All three carriers will agree that the conclusion is a reasonable judgment," suggesting that auction prices could be reflected similarly in the next reassignment.

◆Three Mobile Carriers Also Accept Government Proposal

The three mobile carriers, which had conflicts with the government over the frequency reassignment fee, expressed regret but announced they would accept the government proposal. They also plan to accelerate 5G investments going forward.

SK Telecom stated, "Although we have some regrets, we respect the government policy," and added, "Through this reassignment, we will provide stable 3G and LTE services while striving to activate 5G investment." KT also said, "We believe the government's reassignment policy plan was reasonably prepared," and pledged, "We will actively respond to government policies to secure early 5G quality and revitalize the market to provide the best communication services to the public." LG Uplus emphasized, "We will do our best to align with the policy goal of efficient use of frequency resources."

Inside and outside the industry, there are repeated calls to clarify standards through legal amendments to prevent ongoing legal disputes over frequency reassignment. Director Oh also mentioned at the briefing that "it is naturally necessary to increase predictability." However, he stressed, "If the law limits the period by referencing a specific auction time or delegates specific ratios through enforcement ordinances, it may result in failure or inappropriate responses to institutional changes such as 5G, so careful consideration is needed."