Ringfenced spectrum, licence cancellation and a new plan to boost competition in telecoms have dialled up the pressure on operators
Government allocates spectrum to private 5G use: South Korea’s Ministry of Science and ICT (MSIT) has announced that spectrum for private 5G networks has now been assigned to 21 organisations across 36 locations. In October 2021, the Government adopted a policy aimed at supporting the growth of the private 5G market, a move considered crucial to the digital transformation of the country’s enterprises and industries. With frequencies in the 4.7GHz and 28GHz bands, organisations would be able to deploy their own dedicated 5G networks independent from the public networks of mobile operators. The spectrum assigned by the MSIT can be used in two ways:
Private 5G operator: Following regulatory approval, an organisation builds private 5G networks for enterprise customers and charges a fee (typically monthly) for the service, with equipment often provided for free; or
Enterprise DIY: Firms build private 5G networks for their own use, purchasing equipment (e.g. base stations) from systems integrators or vendors.
The MSIT’s policy is designed to drive competition and innovation: Supporters of the MSIT’s approach consider that allowing operators to enter the private 5G market would risk its monopolisation, creating the barriers to entry for new entrants or smaller players that would limit innovation, hinder the development of novel use cases and potentially lead to higher prices for customers. They also argue that operators may suffer a ‘conflict of interest’, prioritising investment in public mobile networks over private ones, to the detriment of the latter. Proponents therefore believe that encouraging competition and diversity in private 5G would increase the options available to businesses and organisations seeking dedicated connectivity, particularly in specialised solutions tailored to the needs of specific verticals. South Korea’s decision follows that of Japan, which made private 5G (or ‘local 5G’) spectrum available to the market in 2019, excluding domestic operators such as NTT Docomo and KDDI from the assignment process. A similar plan has been hatched by the Department of Telecommunications in India, while certain European countries have taken steps to incentivise the creation of private standalone 5G networks, for instance to drive post-COVID-19 recovery efforts.
Pressure on operators has ramped up in the past year: While the Government’s policy represents a clear opportunity for some firms (South Korean electronics giant Samsung has been selected to provide a variety of private 5G network solutions to business and public sector clients), it is not the only decision that may have left operators feeling hard done by. In 2022, they faced pressure from new Minister of Science and ICT Lee Jong-ho to improve 5G coverage in rural areas and to introduce cheaper tariffs given the increasing pressure on consumer finances. In November of that year, the MSIT penalised operators for failing to reach a mandated base station deployment target using 28GHz spectrum, first revoking KT and LG Uplus’s licences, and then SKT’s. Regulatory scrutiny looks set to intensify, with the MSIT recently unveiling a three-point strategy to boost competition and investment in the telecoms sector.
