LGU+ Sole Bidder for Additional 5G Frequency Allocation... SKT and KT Withdraw

LGU+ Holding Adjacent Bands, Sole Bidder
SKT "Ongoing Discussions on Our Requested Frequency Bands"
KT "Thorough Review Needed for Additional Allocation Compliance"

[Asia Economy Reporter Cha Min-young] The Ministry of Science and ICT announced on the 4th that LG Uplus has applied for frequency allocation for mobile communications alone. SK Telecom and KT, who had previously expressed dissatisfaction due to the high facility investment costs, did not participate in the bidding.

Ministry of Science and ICT closes applications on the 4th... LG Uplus bids alone

The Ministry of Science and ICT posted a public notice on February 2nd for frequency allocation for mobile communications in the 3.40~3.42 GHz band (20 MHz bandwidth) and accepted applications until 6 p.m. on the same day.

Frequencies are usually allocated through an auction. The process involves a first stage of multiple rounds of ascending bids, followed by a second stage of sealed highest bids. In cases like this where only one operator bids alone, the allocation is converted to a government-assessed fee allocation through review according to Article 11, Paragraph 1 of the Radio Waves Act.

As LG Uplus is the sole applicant for frequency allocation, the Ministry of Science and ICT plans to begin reviewing LG Uplus's eligibility for the allocation application. A review committee will be formed within this month to conduct the allocation review.

With LG Uplus bidding alone in this auction, the possibility of acquiring the frequency at the minimum competitive price has increased. The current minimum competitive price set by the Ministry of Science and ICT is approximately KRW 152.1 billion + α, which is about KRW 5.6 billion higher per year compared to the allocation in 2018 (KRW 135.5 billion + α).

An LG Uplus official stated, "We submitted the frequency usage plan to the Ministry of Science and ICT this afternoon," adding, "LG Uplus will secure additional 5G frequencies to improve service quality and contribute to enhancing customer benefits."

KT: "Need to check fulfillment of allocation conditions" SKT: "Ongoing discussions on requested frequencies"

SK Telecom and KT, who have argued that the method is effectively favorable only to LG Uplus, did not participate in the bidding. This is because the additional allocated frequency bands are separated from the bands currently allocated to SK Telecom and KT, making additional facility investment unavoidable. The use of 'Carrier Aggregation (CA)' technology, which combines separated bands, is required, causing facility investment costs to increase exponentially.

A KT official said, "We understand that this additional allocation was decided by the government after careful consideration, but since it is an auction allocation that only LG Uplus can participate in, we decided not to participate," adding, "However, since quality gaps due to the performance superiority of foreign equipment still exist, thorough inspection of the fulfillment of allocation conditions, such as the sincere construction of an additional 15,000 base stations to promote competitive investment and enhance 5G services for the public, is necessary in line with the allocation policy's intent."

This concern stems from the possibility that the additional 5G frequency allocation issue could affect the 5G communication quality evaluation rankings. In the government's 5G quality evaluation in the second half of last year, download speeds ranked SK Telecom-KT-LG Uplus, while 5G coverage ranked LG Uplus-KT-SK Telecom. If an additional 20 MHz bandwidth is allocated this time, there is a possibility that LG Uplus could overtake in the rankings. For this reason, some in the market have suggested postponing the frequency allocation timing to ensure fair competition, reflecting differences due to the use of domestic and foreign equipment. This is because there is a technological gap between Huawei equipment (64TRX) used by LG Uplus and domestic equipment used by competitors. The commercialization of domestic equipment to compete with Huawei is expected in June 2023.

SK Telecom plans to continue discussions on the 5G frequency bands it proposed to the Ministry of Science and ICT earlier this year. The Ministry of Science and ICT has decided to discuss and determine the timing of allocation for the additional 3.7 GHz band requested by SK Telecom at the beginning of the year. An SK Telecom official said, "After long consideration, we decided not to participate in the 3.4 GHz band 5G frequency auction this time," adding, "SK Telecom will continue to consult with the government regarding the frequencies we requested to improve public convenience and promote investment."