The 4th Mobile Carrier Emerges... Government Mobilizes All Support Measures for 28 GHz

Exclusive Frequency Supply, Tax Benefits, and Policy Fund Support
"Potential in Market Environment Changes... Some Inquiries"

[Asia Economy Reporter Oh Su-yeon] The government has launched a search for new operators in the 5G 28㎓ band. It has introduced incentives such as exclusive frequency supply for three years, reduced initial entry costs, expanded tax benefits, and policy fund support worth 400 billion KRW. The plan is to select new operators in the fourth quarter, leading to the launch of the fourth mobile carrier within the year.

The Ministry of Science and ICT announced the '5G (28㎓) New Operator Entry Support Plan' on the 31st at the Government Seoul Office.

Hong Jin-bae, Director of the Network Policy Office at the Ministry of Science and ICT, is announcing support measures for new entrants in the 5G (28GHz) sector on the afternoon of the 31st at the Government Seoul Office in Jongno-gu, Seoul. [Image source=Yonhap News]

The Ministry of Science and ICT canceled the allocation of two 28㎓ frequency bands assigned to KT and LG Uplus last December. It will first promote the entry of new operators in one of these bands.

The 5G 28㎓ band, known as the 'dream 5G' for its high speed, has a shorter reach and weaker diffraction compared to the 3.5㎓ band currently used nationwide in Korea, making it difficult to pass through obstacles. Existing telecom companies have also struggled to find ways to utilize it. However, it is necessary for the expansion of ultra-high-speed and low-latency services such as the metaverse, augmented reality (AR), and virtual reality (VR). It can provide fast transmission speeds in densely populated environments. Overseas, telecom powerhouses like the United States and Japan are exploring the use of the 28㎓ frequency mainly in densely populated hotspot areas.

Support Including Exclusive Frequency Supply, Tax Benefits, and Policy Funds

The government is preparing customized support policies covering all stages from frequency allocation, initial network construction, to device procurement and distribution to help new operators build competitiveness.

Among the previously canceled 28㎓ bands, an 800㎒ bandwidth will be allocated to new operators as an exclusive band only accessible to them for at least three years. Anchor frequencies essential for providing 28㎓ services (frequencies used for signal control and billing, requiring at least 20㎒ bandwidth) such as the 700㎒ and 1.8㎓ bands, which have high usability in terms of equipment and device procurement, are being considered.

The frequency allocation units will allow new operators to choose between nationwide and regional (metropolitan area) options to reduce their burden. If they wish to build a nationwide 5G network using mid- and low-band frequencies, a supply plan for the 3.7㎓ band will also be reviewed.

The allocation price was not disclosed on the day. However, unlike the existing payment method where 1/4 of the total amount must be paid immediately upon allocation, the payment amount will gradually increase after the business matures to reduce the burden. Temporary increases in tax credit rates and assistance in securing funds through policy financial institutions will also be provided.

To enable efficient network construction, existing infrastructure of telecom companies will be allowed for use, and interconnection fee reductions will be supported. For service operation, 28㎓ self-supplied devices will be introduced, and joint procurement of equipment and devices will be supported.

The Ministry of Science and ICT will operate a research group from February to discuss frequency allocation plans. It plans to announce the frequency allocation plan in the second quarter and select new operators in the fourth quarter.

Will the Fourth Mobile Carrier Emerge This Time? "There Is a Possibility for New Operators"

The government has attempted to introduce a fourth mobile carrier seven times since 2010 but failed. However, given the changed telecommunications market environment, the possibility is now considered higher.

Hong Jin-bae, Director of the Network Policy Office at the Ministry of Science and ICT, said, "In the past, the selected operator had to build the entire base network, requiring basic investments of several trillion KRW. The MVNO and self-supplied device distribution markets did not exist then. Wholesale provision for MVNOs is now well established, and the base network is provided. Adding 28㎓ hotspots allows offering premium services. I believe there is a possibility for new operators to enter," he said.

The government estimated that about 300 billion KRW would be needed to build approximately 300 networks centered on 28㎓ hotspots. The Ministry of Science and ICT plans to provide about 400 billion KRW in loans or credit through policy finance.

Before this government support announcement, there were some inquiries about new operators for the 28㎓ band. Director Hong said, "It is difficult to say which operators, but there have been some inquiries," adding, "Now that the policy plan has been announced, I hope operators with close consumer contact will combine telecommunications and provide various services."

Telecom companies have not expressed their positions on the government's policy announcement. However, some opinions suggest that the emergence of a fourth mobile carrier will not be easy. The telecom market is saturated, and since existing telecom companies have struggled with the 28㎓ band, it is difficult to challenge easily.

Park Yoon-gyu, Second Vice Minister of the Ministry of Science and ICT, said, "Currently, the telecom market is fixed around the three major telecom companies, and competition in quality and rates among operators is stagnant. We hope that this new operator entry support will showcase differentiated 5G services in the telecom market and serve as a catalyst for revitalizing competition. While enhancing user benefits, we plan to strive to continuously develop network competitiveness such as equipment and devices," he stated.