[Comprehensive] "To Avoid Losing B2B" Why Are 5G 28GHz Bands Allocated to Private Companies Like Naver?

5G Specialized Network Policy Measures Unveiled

[Asia Economy Reporter Seulgina Jo] The reason the government decided to allocate the 28 GHz band of 5G frequencies to private companies, not just mobile carriers, starting from the first half of this year to build 'specialized networks' is the presence of a rapidly growing global 5G B2B market. They judged that limiting allocation only to mobile carriers as before would eliminate competition itself, leading to reduced investment and failure to secure market dominance.

In other words, by breaking the decades-long frequency monopoly system of mobile carriers and introducing a market competition system, the goal is to activate B2B specialized services utilizing 5G networks and dominate the global 5G B2B market.

◆From the first half of the year, 5G allocation to private companies... Priority supply of the 28 GHz band

At the 4th Pan-Government Public-Private Joint '5G+ Strategy Committee' held via video conference on the 26th, the Ministry of Science and ICT discussed the '5G Specialized Network Policy Plan' along with major promotion plans to make 2021 the inaugural year for creating a 5G+ convergence ecosystem.

5G specialized networks refer to 5G networks and customized networks that can be used only in specific areas such as buildings and factories. Unlike enterprise 5G that leases 5G networks from the three mobile carriers SK Telecom, KT, and LG Uplus, local companies can receive frequency allocations directly from the government, hence it is also called 'Local 5G.'

Based on the characteristics of 5G networks?hyperconnectivity, ultra-high speed, and ultra-low latency?smart factories that introduce specific factory solutions are a representative application example. In this case, although the deployment cost for the company is higher than when the mobile carrier is the builder, the operating cost is lower and performance optimization is easier. It is also superior in terms of speed and information security.

First, to activate 5G specialized networks, the government plans to expand participants to include demand companies and software (SW) companies as local 5G operators, and link public projects to create initial market demand. They will comprehensively review and prepare support measures for ▲deployment entities and methods, ▲frequency supply methods, ▲frequency supply bands, and ▲strengthening equipment and terminal ecosystem foundations.

The types of local 5G operators are divided into self-network installers who need to report and registered telecommunications carriers depending on the deployment entity and service target. If the self-network conditions are met, such as limiting use to internal demand, the entity reports as a self-network installer; otherwise, it registers as a telecommunications carrier.

For example, if Naver installs a 5G specialized network at its Pangyo headquarters for exclusive use, it can report as a self-network installer. However, if the company wants to provide the 5G specialized network installed at the Pangyo headquarters not only to itself but also to tenants and visitors within the same building, it must register as a telecommunications carrier. There are also cases involving third parties rather than demand companies. For instance, if an augmented reality (AR) and virtual reality (VR) company installs a 5G specialized network at a large stadium to provide services to spectators, the third party must register as a telecommunications carrier.

The frequency supply band is the 28 GHz mobile communication frequency band and the adjacent 28.9?29.5 GHz band, totaling 600 MHz bandwidth. The supply bandwidth will be decided later considering the frequency demand of companies. Additional B2B frequency acquisition plans through regional shared use in bands below 6 GHz are also being reviewed.

The government will announce a '5G Specialized Network Frequency Supply Plan' including detailed allocation areas and pricing in March as a follow-up policy. After related system improvements, frequency supply for 5G specialized networks will begin within the first half of the year. However, flexibility will be exercised to temporarily allow use through experimental station designation if urgent corporate demand arises.

◆Why break the mobile carriers' frequency monopoly... Activating the B2B market through competition

Accordingly, the decades-long frequency monopoly, which was almost exclusively held by mobile carriers, will be broken. This is the introduction of a competitive market system for 5G specialized networks.

Hong Jin-bae, Director of the Telecommunications Policy Bureau at the Ministry of Science and ICT, said, "If 5G specialized network construction is done solely by mobile carriers, the lack of competition is likely to cause investment contraction and delays, and the global 5G B2B market may be preempted by others. We will expand the builders of 5G specialized networks to include demand companies and third parties beyond mobile carriers to promote market competition and resolve regulatory uncertainties."

Such 5G specialized networks can also be seen in overseas cases such as Germany, Japan, and the UK. Germany has been supplying the 3.7?3.8 GHz band as local specialized network licenses since November 2019 and has issued 102 licenses to companies like Bosch and Volkswagen. Japan supplied the 28.2?28.3 GHz band (from December 2019), 4.6?4.8 GHz, and 28.3?29.1 GHz bands (from December 2020) as specialized network licenses to promote 5G regional expansion. The UK had issued 794 licenses to 13 license holders including BT and Quickline as of the end of last year.

In contrast, South Korea has only allowed telecommunications companies allocated mobile communication frequencies to be builders of 5G specialized networks. Even then, due to unclear market demand and delays in indoor equipment development, it remained at the level of demonstration and pilot projects such as wireless CCTV in automobile parts factories and steel mills. The government judged that if this continued, the global 5G B2B market would be lost.

Inside and outside the industry, companies like Naver and Sejong Telecom are cited as representative companies showing interest in 5G specialized networks. The government recently judged that corporate demand is sufficient based on a 5G specialized network demand survey conducted on 20 companies in electronics, internet, and other sectors. Director Hong explained, "Various industries such as system integrators, internet companies, and small and medium telecommunications companies showed interest." The government has identified that companies need not only to build 5G networks and provide communication services within the area but also software solutions for specific work processes and process innovation.

The government plans to actively discover and apply service models using 5G specialized networks in the public sector such as ports and defense to provide initial market formation support. It will also accelerate B2B terminal development projects through cooperation between large and small domestic companies and strengthen competitiveness of core equipment parts to help secure references. Related research and development (R&D) and pilot demonstration projects will receive 127.9 billion KRW investment this year alone.

Director Hong emphasized, "Through this 5G specialized network policy plan, we will create a foundation for various operators to participate in the 5G market and continuously strengthen the competitiveness of the domestic 5G B2B industry. We will do our best so that this can create new 5G convergence industries and ultimately become an opportunity to expand globally."