SKT vs LG Uplus Clash Over Frequency Reallocation Pricing

Fierce Dispute Over 2.6GHz Reallocation Pricing

With the reallocation of 3G and LTE frequencies scheduled for next year, SK Telecom and LG Uplus are facing off directly over the valuation of the 2.6GHz band. SK Telecom has raised concerns about the structure in which the payment per unit for the same value band differs by more than two times between operators, while LG Uplus has countered, calling this "an argument that undermines the principles of the system."

According to the telecommunications industry on November 19, the government plans to hold a public hearing at the end of this month and finalize the detailed criteria for calculating the value of frequencies subject to reallocation next year. The frequencies in question total 370MHz, including 155MHz for SK Telecom, 115MHz for KT, and 100MHz for LG Uplus. The biggest point of contention is the 2.6GHz band, where SK Telecom and LG Uplus hold 60MHz and 40MHz, respectively. The frequencies subject to reallocation are divided into five groups (A to E). The government has grouped together frequencies with similar economic value.

SK Telecom argues, "It is unreasonable for the unit price to differ by a factor of two depending on the initial auction price and whether the frequency is being reallocated, even though the government grouped them into the same C group in 2021, recognizing them as having similar value." The company insists that the payment structure should be revised in this reallocation to reflect current value. In the 2016 auction, SK Telecom secured 60MHz (D and E blocks) in the 2.6GHz band for a total of 1.2777 trillion won, which covered a 10-year usage right. In contrast, LG Uplus won 40MHz in the 2.6GHz band in 2013 for 478.8 billion won, and received a 27.5% discount during the 2021 reallocation.

LG Uplus has presented a different interpretation. The company stated, "SK Telecom's argument denies the foundation of the frequency auction system and the established principles for calculating reallocation fees," adding, "According to the Radio Waves Act and government standards, the principle is to calculate the reallocation fee based on the most recently determined allocation fee, and this is a fair rule applied equally to all operators."

LG Uplus also emphasized that the 60MHz in the 2.6GHz band held by SK Telecom is an "ultra-wideband" that can be operated with a single piece of equipment, giving it a different economic value. The company explained that even if the band name is the same, differences in use, bandwidth, and the timing of acquisition mean they cannot be considered the same frequency, and the value to each operator also differs.

LG Uplus further pointed out that SK Telecom was also subject to the same principles in the past. The company stated, "In the 2021 reallocation of the 2.1GHz band, SK Telecom was also subject to the most recently determined allocation fee," emphasizing, "Requesting to arbitrarily change the principles only at the time of reallocation, when they were previously accepted, could undermine the stability of the system."