By Lee Min-hyung
SK Telecom is forming a silent alliance with KT and LG Uplus in response to the government's decision to set the largest-ever reserve price for an upcoming spectrum auction next month.
The three are in a hostile yet symbiotic relationship, over the situation, voicing consensus that the decision will weaken their investment appetites and consequently hold back growth momentum.
The discontent came Friday after the nation's telecom watchdog disclosed details for the auction, setting trillions of won in reserve price for a 140-megahertz (MHz) bandwidth.
The primary concern of the carriers was the 20 MHz bandwidth in the 2.1-gigahertz (GHz) frequency range, the so-called "golden spectrum," as it allows the winner to operate a long-term-evolution (LTE) network with speeds double the existing ones. They said that the auction is a huge burden at a time when they need to expand investments to build fifth-generation (5G) network systems.
The Ministry of Science, ICT and Future Planning (MSIP) set 381.6 billion won ($316.15) as the minimum bid for a five-year license to use the bandwidth, the highest of bandwidths put up for auction. The reserve price for all the bandwidths exceeds 2.5 trillion won.
Currently, SK Telecom and KT are using 60 MHz and 40 MHz in the spectrum, respectively. The 20 MHz bandwidth to be auctioned belongs to SK Telecom at the moment.
The MSIP said it will reallocate the remaining 40 MHz bandwidth based on the auction price for the 20 MHz bandwidth.
Critics say that LG Uplus will be least-affected by the government decision, as the nation's third-largest mobile carrier has nothing to do with the reallocation issue.
However, the company also expressed discomfort over the reserve price.
"The reserve price for the 20 MHz bandwidth is the highest in history, frustrating our investment appetite to expand infrastructure and offer better services," said a company official.
The company also took issue with the five-year license for the 20 MHz frequency, as other bandwidths up for sale will be auctioned with 10-year licenses. The company claimed the five-year license is not enough for telecom companies to see a profit return, after investing enough to build network infrastructure.
KT took a cautious approach to the issue, with an official saying, "We are concerned that the auction rule may delay our plan to operate the 5G network in the next few years." The company said the auction will deal a blow to all three carriers at a critical time when they must expand costs for building more network infrastructure to meet the surging demand for mobile data traffic.
SK Telecom, the nation's telecom market leader, said there remains a question over the standard set for the reserve price of the 20 MHz bandwidth. The company said in a public hearing ― held by the MSIP on Friday ― that the new auction rule is favorable to LG Uplus, because the company is not in a position to pay a massive amount of money for the reallocation after the auction.
SK Telecom is forming a silent alliance with KT and LG Uplus in response to the government's decision to set the largest-ever reserve price for an upcoming spectrum auction next month.
The three are in a hostile yet symbiotic relationship, over the situation, voicing consensus that the decision will weaken their investment appetites and consequently hold back growth momentum.
The discontent came Friday after the nation's telecom watchdog disclosed details for the auction, setting trillions of won in reserve price for a 140-megahertz (MHz) bandwidth.
The primary concern of the carriers was the 20 MHz bandwidth in the 2.1-gigahertz (GHz) frequency range, the so-called "golden spectrum," as it allows the winner to operate a long-term-evolution (LTE) network with speeds double the existing ones. They said that the auction is a huge burden at a time when they need to expand investments to build fifth-generation (5G) network systems.
The Ministry of Science, ICT and Future Planning (MSIP) set 381.6 billion won ($316.15) as the minimum bid for a five-year license to use the bandwidth, the highest of bandwidths put up for auction. The reserve price for all the bandwidths exceeds 2.5 trillion won.
Currently, SK Telecom and KT are using 60 MHz and 40 MHz in the spectrum, respectively. The 20 MHz bandwidth to be auctioned belongs to SK Telecom at the moment.
The MSIP said it will reallocate the remaining 40 MHz bandwidth based on the auction price for the 20 MHz bandwidth.
Critics say that LG Uplus will be least-affected by the government decision, as the nation's third-largest mobile carrier has nothing to do with the reallocation issue.
However, the company also expressed discomfort over the reserve price.
"The reserve price for the 20 MHz bandwidth is the highest in history, frustrating our investment appetite to expand infrastructure and offer better services," said a company official.
The company also took issue with the five-year license for the 20 MHz frequency, as other bandwidths up for sale will be auctioned with 10-year licenses. The company claimed the five-year license is not enough for telecom companies to see a profit return, after investing enough to build network infrastructure.
KT took a cautious approach to the issue, with an official saying, "We are concerned that the auction rule may delay our plan to operate the 5G network in the next few years." The company said the auction will deal a blow to all three carriers at a critical time when they must expand costs for building more network infrastructure to meet the surging demand for mobile data traffic.
SK Telecom, the nation's telecom market leader, said there remains a question over the standard set for the reserve price of the 20 MHz bandwidth. The company said in a public hearing ― held by the MSIP on Friday ― that the new auction rule is favorable to LG Uplus, because the company is not in a position to pay a massive amount of money for the reallocation after the auction.
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