[2021 National Audit] 5G Again Under Scrutiny... Calls for Revision of 28GHz Policy (Comprehensive)

Minister Lim Hye-sook of the Ministry of Science and ICT is speaking during the National Assembly inspection of the Ministry of Science and ICT, Korea Post, and others at the Science, Technology, Information and Broadcasting Committee held at the National Assembly in Yeouido, Seoul on the morning of October 1, 2021. 2021.10.1 Photo by National Assembly Press Photographers [Image source=Yonhap News]

[Asia Economy Reporter Seulgina Jo] At the National Assembly Science, Technology, Information and Broadcasting and Communications Committee (STIBC) audit held on the 1st, key issues in the IT and telecommunications sector highlighted included 5G communication quality, the status of 5G 28GHz base station deployment, and free-riding by overseas content providers (CPs) on networks. Lawmakers from both ruling and opposition parties criticized the still expensive 5G fees and quality even in the third year of service commercialization.

◆"Expensive and Unreliable Quality Evaluation" 5G Under Fire Again This Year

Jeon Hye-sook, a member of the STIBC from the Democratic Party of Korea, pointed out, "Public dissatisfaction with telecommunication services is increasing," and criticized, "The quality evaluations announced annually by the Ministry of Science and ICT (MSIT) differ from actual speeds." Citing a whistleblower, Rep. Jeon mentioned, "At the whistleblower's residence, where the MSIT quality evaluation showed a download speed of 209.48Mbps, actual measurements revealed only 8.85Mbps."

In response, Minister Lim Hye-sook of MSIT said, "Quality can vary depending on environmental characteristics," and added, "It is necessary to investigate which specific items are causing the speed issues in that case."

Joo Ho-young, a member of the People Power Party, criticized, "5G was promoted to the public as being 20 times faster than LTE, but satisfaction with telecom companies has continuously declined since the introduction of 5G," and pointed out, "Before basic network infrastructure was established, telecom companies, as well as the minister and the president, engaged in exaggerated advertising, raising expectations." Hwang Bo-seung-hee, also from the same party, echoed this by saying, "The government prematurely promoted 5G service as 20 times faster than existing LTE, causing great disappointment among the public."

Lawmakers from both sides also criticized 5G service fees. Yang Jeong-sook, an independent lawmaker, stated, "Currently, 5G plans are up to 22,000 KRW more expensive than LTE," and pointed out, "After introducing a new fee system and conducting a self-simulation, we found that monthly fee reductions ranging from 15,000 KRW to 35,000 KRW are possible."

Rep. Jeon added, "The minimum fee for 4G is 33,000 KRW, which is 12,000 KRW less than 5G, yet the services are almost the same," and said, "When it is time to change phones, customers inevitably have to use 5G if they purchase a 5G-compatible model at a dealership." The situation where users are forced to use 5G plans unless they opt for unlocked phones was also pointed out in last year's audit.

Furthermore, Rep. Jeon criticized the online plans, which are promoted as 30% cheaper, as having low effectiveness, saying, "Don't pretend to do something special with flashy online plans." Many citizens do not choose these plans because they do not allow for contract discounts or family discounts. The number of online plan subscribers accounted for only 0.11% of all telecommunications service subscribers.

Lawmakers argued that fundamental changes are needed in the 5G fee structure. Proposals included switching from a 'flat-rate' system, where fees are set by data usage brackets, to a 'proportional rate' system, where users pay according to actual usage.

Woo Sang-ho, a lawmaker, stated, "Electricity and water bills are paid according to usage, but in telecommunications fees, a flat-rate system is applied, causing telecom companies to collect fees even for unused portions," and argued, "As the fee system is shifting to data-centric, it should be changed so that users pay for the data they use or roll over unused data."

Minister Lim responded, "We will consult with telecom companies," and expressed willingness to review mobile communication fee plans where users pay according to data usage. The STIBC audit that day was attended only by Minister Lim and MSIT officials, without witnesses.

◆5G '28GHz' Deployment Stalls... Criticism of Policy Failure

The status of the deployment of 28GHz 5G base stations, known as the so-called 'real 5G,' also came under scrutiny. With it expected to be virtually impossible for the three mobile carriers to meet the mandatory 28GHz 5G deployment rate by the end of the year, calls were made for government policy changes that consider market realities.

According to MSIT's 5G network mandatory deployment policy, the three mobile carriers must build 45,000 28GHz 5G base stations by the end of this year. However, as of the end of August, the number of 28GHz 5G base stations deployed by the three carriers was only 161, achieving just 0.3% of the mandatory deployment rate.

The 28GHz band has a short radio wave reach, requiring many base stations to be installed. Its low concrete penetration rate also reduces usability in urban areas. This is why the nationwide deployment of 28GHz, which the government previously promoted as '20 times faster than LTE,' is realistically considered difficult. Telecom companies argue for B2B use cases such as smart factories and smart farms within industrial complexes instead of nationwide deployment, but the B2B business model is still in an immature stage.

On this day, Byun Jae-il, a Democratic Party lawmaker, questioned, "Isn't 28GHz unusable for B2C? Are there any devices that can use it?" and criticized, "Why are telecom companies being forced to build 28GHz? They shouldn't."

Yoon Young-chan, also from the Democratic Party, pointed out, "The low investment by telecom companies is not unrelated to MSIT's 28GHz frequency supply policy," and said, "When MSIT allocated frequencies in May 2018, it did not sufficiently consider 28GHz 5G technology reviews and related service demand, which lowered operators' investment capacity right from the start."

Accordingly, rather than imposing obligations and burdens on operators, there is an urgent need to create an ecosystem centered on specialized networks with voluntary participation.

However, MSIT indicated that there are no plans to revise the policy yet. Cho Kyung-sik, the 2nd Vice Minister of MSIT, responded, "We need to monitor the network deployment situation," and "There are no plans for revisions so far." If mobile carriers fail to fulfill their network deployment obligations by the end of the year, frequency allocation can be canceled under the Radio Waves Act, and the frequency allocation fee of 622.3 billion KRW will not be refunded.

◆Netflix Free-Riding Controversy... Minister Lim Hye-sook Calls for Legal Guidelines

Criticism was also raised regarding overseas content providers (CPs) such as Netflix, which generate massive traffic domestically but do not pay network usage fees.

Kim Sang-hee, Deputy Speaker of the National Assembly, pointed out, "Some operators are causing a surge in network traffic, and among the top 10 operators, six are overseas companies," adding, "They account for more than 80% of the actual share." She explained that as the online video service (OTT) market expands, certain overseas CPs are placing a heavy burden on domestic networks, leading to consumer harm.

Deputy Speaker Kim emphasized, "Network stability obligations were imposed on five operators accounting for more than 1% of traffic and over one million users, but there has been no effect," and stressed, "We need to induce overseas CPs to invest." She continued, "Overseas operators do not pay network usage fees," and urged, "System improvements to prevent free-riding are necessary, and legislative preparations are underway. The government should actively participate."

Regarding this, Minister Lim expressed the need for government-level legal guidelines. She said, "There are no measures for the massive traffic from overseas CPs," and added, "Network usage fees are subject to voluntary negotiations between operators, but overall legal guidelines are necessary."

A representative case of conflict arising from not paying network usage fees despite generating revenue based on domestic infrastructure is between Netflix and SK Broadband. Netflix lost a lawsuit confirming non-existence of debt against SK Broadband but has appealed the decision. Consequently, SK Broadband filed a counterclaim on the 30th of last month, seeking network usage fees from Netflix based on the civil law principle of unjust enrichment.

Traffic generated by Netflix on SK Broadband's network, which dominates the domestic OTT market, has been increasing exponentially every year. From about 50Gbps in May 2018 to approximately 1200Gbps as of September this year, a roughly 24-fold increase. Correspondingly, SK Broadband's losses for managing and maintaining this increased traffic inevitably rise.

Meanwhile, the audit that day was temporarily suspended across all seven standing committees as ruling and opposition parties clashed over allegations of preferential treatment in the Daejang-dong development project in Seongnam City. When People Power Party lawmakers simultaneously placed placards on audit desks with phrases such as "Those who refuse special prosecution are the culprits" and "Accept the special prosecution for Lee Jae-myung's Pangyo Daejang-dong gate," Democratic Party lawmakers refused to commence the audit, leading to a recess commotion.