"Minimum Cost of 1 Trillion Won for Telecommunications Industry... Concerns Over Funding and Viability of 4th Mobile Carrier"

Roundtable on Desirable Mobile Communication Policy Directions on the 16th
Concerns over Economic Feasibility and 28 GHz Frequency Utilization
"Preferential Policies for New Operators May Also Distort the Market"

With the 28 GHz frequency auction for the three candidates of the 4th mobile carrier scheduled for the 25th, experts are expressing concerns about these new entrants' ability to raise funds and the likelihood of their business success.

Participants are taking a commemorative photo at the "Expert Roundtable on Desirable Mobile Communication Policy Directions" held on the 16th at the National Assembly Members' Office Building in Yeongdeungpo-gu, Seoul. Photo by Hwang Seoyul chestnut@

At the "Expert Roundtable on Desirable Mobile Communication Policy Directions" hosted by the office of Assemblyman Byeon Jae-il of the Democratic Party of Korea on the 16th at the National Assembly Members' Office Building in Yeongdeungpo-gu, Seoul, Professor Mo Jeong-hoon of Yonsei University's Department of Industrial Engineering expressed concerns, saying, "It is difficult for new entrants (vying for the 28 GHz frequency allocation) to attract large amounts of capital, and even if they do, competing with the existing three mobile carriers is nearly impossible, making business operations likely to fail." The roundtable featured expert discussions on the current status and recommendations regarding the selection of new 28 GHz operators.

Professor Mo questioned whether the financial issues of the 4th mobile carrier candidates could be resolved when examining their financial structures. Sejong Telecom's 2022 revenue was 232 billion KRW with an operating loss of 7.7 billion KRW, while StageX recorded 27.2 billion KRW in revenue and a 5.5 billion KRW operating loss in the same year. Mirae Mobile has publicly mentioned plans to raise a total of 2.1 trillion KRW, including an initial capital of 800 billion KRW. He stated, "In a market dominated by oligopoly with stagnant growth, it is highly unlikely that small and medium-sized enterprises will engage in fierce competition."

He also cited the example that although the 4th mobile carrier policy was pursued seven times since 2010, no new operators were ultimately selected due to disqualification. According to the licensing evaluation criteria for telecommunications service providers, a score of 60 or above in each category and a total score of 70 or above are required. According to Professor Mo's data, among the 11 companies that participated in the seven rounds, only five scored above 60 in the "financial capability" category. Of those, three barely passed with scores between 60 and 61. Professor Mo added, "Having participated in the evaluation, the reason for failure was economic issues," and "The minimum cost to enter the mobile communication industry is 1 trillion KRW, but no company met this requirement."

Concerns were also raised that the financial capability evaluation in this 4th mobile carrier screening might be inadequate. Ahn Jeong-sang, Senior Policy Advisor of the Democratic Party's Policy Committee, said, "Unlike the past licensing system, the current registration system does not separately evaluate financial capability."

On the 16th, Professor Mo Jong-seop of the Department of Industrial Engineering at Yonsei University is giving a presentation at the "Expert Roundtable on Desirable Mobile Communication Policy Directions." Photo by Hwang Seo-yul chestnut@

There was also emphasis on the technical difficulties of succeeding in business using the 28 GHz frequency. Professor Mo said, "Communication is possible with this frequency in open spaces outside buildings, but it is nearly impossible inside buildings," adding, "While Verizon in the U.S. offers 28 GHz services, it uses this frequency band as a supplementary means alongside other frequency bands rather than providing 5G service solely on 28 GHz." He further argued, "It is difficult to sustain a business using only 28 GHz, and there is concern that no business users will utilize it."

There were also remarks that the government's policy direction to promote market competition and reduce the financial burden on households may not be closely related to the selection of this operator. Professor Kwak Gyu-tae of Soonchunhyang University said, "Policies that favor new entrants when they enter the market often distort the market," and added, "For example, roaming has been temporarily allowed for new entrants until they build nationwide networks, but it is necessary to verify whether the government's long-term policy goals align with the plans of new entrants." He also noted, "There is a possibility of conflict with the MVNO (Mobile Virtual Network Operator) policy, so this aspect also needs consideration."

Ma Jae-wook, Director of the Telecommunications Policy Planning Division at the Ministry of Science and ICT, said, "Since the process of assessing financial capability has been omitted, many questions arise compared to the licensing system era," and added, "It has become very important for the government to play a mediating role afterward. We will discuss the opinions received and look for institutional improvements upon returning to the ministry."

The roundtable was chaired by Lee Kyung-won, President of the Korea Information and Communication Policy Society and Professor of Economics at Dongguk University, and included six panelists: Professor Mo, Director Ma, Advisor Ahn, Professor Kwak, Professor Shin Min-su of Hanyang University's Business Administration Department, and Han Seok-hyun, Director of the Seoul YMCA Citizen Mediation Office.