Dark Horse Rising?
Recently, SK Telecom returned its 5G 28 GHz frequency license to the Korean government. This means that all three major Korean wireless carriers have given up the band. Earlier, they were fined a combined 33.6 billion won (US$25.7 million) by the Korea Fair Trade Commission (KFTC) for their overly exaggerated or false 5G service ads. This situation is calling for the establishment of a fourth mobile carrier in the country, and Hanwha is being considered as a strong candidate.
The Korean Ministry of Science and ICT said that it made the final notification on May 31, as the opinion-hearing process under the Administrative Procedure Act was completed, for the revocation of the 5G 28 GHz frequency allocation, which had been previously notified to SK Telecom. Accordingly, following KT and LG Uplus at the end of 2022, all three telecommunications companies returned their 28 GHz frequency bands after failing to fulfill their usage period.
The reason why the Korean Ministry of Science and ICT decided to revoke the 5G 28 GHz frequency allocation to the telecoms companies was that they failed to fulfill conditions to build base station equipment imposed at the time of the 5G frequency allocation in 2018. At the time, the government allocated 5G frequencies to the three mobile carriers with the condition that each company must build 15,000 28 GHz base stations.
However, they showed a snail’s pace in the construction of 28 GHz network deployments. KT and LG Uplus completed only 10 percent of their required numbers and SK Telecom built only a few thousand base stations.
The telecoms companies have been slow in building 28 GHz base stations as it claims the investment cost is too high. The ultra-high 28 GHz frequency band is characterized by a shorter reach than the 3.5 GHz frequency band, which is the main 5G frequency band used by telecoms companies. For this reason, it is necessary to build base stations for the 28 GHz frequency band more densely than the 3.5 GHz frequency band to ensure wider service coverage. This costs a lot of money.
While the three wireless carriers were reluctant to invest in building 5G base stations, they threw money at running ads to attract 5G service subscribers. Despite their low rates of 28 GHz base station construction, they touted their 5G services, claiming that their 5G speeds reached 20 Gbps. However, 20 Gbps is only a target speed by technical standards and has no empirical basis. In fact, their average 5G transmission speed stood at 0.8 Gbps in 2021. The speed of 0.8 Gbps is 1/25th of 20 Gbps, which means stretched their 5G service speeds 25-fold. As of March this year, they had about 30 million 5G service subscribers. They benefited greatly from their controversial ads.
Although all three telecoms companies have given up the 28 GHz frequency band, the government will revitalize the mobile telecommunications market by allowing a new operator to enter. One of the most likely candidates is Hanwha, experts say.
Hanwha Systems recently applied for registration as a long-term telecommunications provider for the purpose of engaging in the low-orbit satellite communication business. In 2021, it invested in OneWeb and is now collaborating on satellite production and communication services with that company. OneWeb is a low-orbit satellite internet service provider like SpaceX’s Starlink service. After receiving a license for the basic telecommunications business, an administrative measure, Hanwha Systems will target the business-to-business (B2B) market, including military communication networks.
However, market insiders are speculating that Hanwha may enter the market as a fourth wireless carrier in Korea in the future. In general, when a company receives a frequency allocation and registers as a common carrier, it has the right to operate using a frequency. This means that the company will be able to start its business as a mobile carrier.