Frequency Auction
KT snatched the much coveted 1.8GHz frequency band (D2 Block) in the LTE frequency auction at a price of 900.1 billion won (US$813.7 million), signaling a significant change in the dynamics of the market. SK Telecom and LG U+ took additional frequencies in the 1.8GHz band (C2 Block) and 2.6GHz band (B2 Block), respectively. The three mobile carriers’ total winning bids amounted to 2.4289 trillion won (US$2.1957 billion).
According to the Ministry of Science, ICT, and Future Planning’s announcement of the auction result on August 30, KT won 15MHz in the 1.8GHz frequency band, which is close to what it is already in possession of, after ascending and sealed bids of no less than 50 rounds. The final contract price rose by 611.3 billion won (US$554.4 million) from the initial price of 288.8 billion won (US$261.1 million). In the meantime, SK Telecom obtained 35MHz in the C2 Block at 1.050 trillion won (US$949.2 million) (initial price: 637.8 billion won, or US$576.6 million) and LG U+ took 40MHz at the lowest price of 478.8 billion won (US$432 million).
Under the circumstances, experts are predicting that KT, which has been slower at providing LTE-A services, will be able to catch up with its competitors. Still, it is also said that KT may be haunted by the winner’s curse, as their winning contract bid is higher than expected. KT put forth a price higher than reasonable in the sealed bid to get the D2 Block.
Speed Competition Likely to Further Heat Up
With the mobile frequency auction wrapping up, the three telecoms operators are expected to be engaged in more intense competition to provide faster broadband Internet services.
“We’ve made the most optimal strategic choice in the auction so as to get the solutions for top-class services for our subscribers,” said an industry insider, continuing, “We’ll invest more in our networks while striving to provide ultra-quality videos and content befitting the era of LTE.” Another source added, “Now the stage has been set for Korea to become a global LTE powerhouse by making use of the frequency networks.” He went on, “I hope that the government will continue its efforts to deal with problems like the lack of frequency resources and frequency fragmentation.”
SK Telecom and LG U+ are predicted to bolster their LTE-A services down the road. The former kicked off the world’s first commercial-scale LTE-A services in June this year and has expanded its coverage to 84 cities and more than 20,000 base stations nationwide. LG U+, on its part, is planning to provide its 100% LTE Service across the country so that each and every one of its subscribers can enjoy a speed of at least 150Mbps. KT is going to make the most of the new resources obtained at this time to keep up with them.
“In the mobile telecoms industry, the importance of frequency cannot be overemphasized,” said eTrade Securities Analyst Kim Joon-seop, adding, “The frequency auction has great meaning, in that wireless Internet will be faster than its wired counterpart.”