Korean Mobile Carriers Expected to Wage ‘War of Money’ in Frequency Auction

As the Ministry of Science and ICT is scheduled to release a 5G frequency auction draft this month, the three domestic mobile carriers – SK Telecom, KT and LG U+ -- are busy drawing up an optimal bidding strategy.

The spectrum to be auctioned this time is highly likely to be 300MHz bandwidth in the 3.5GHz band (3.4GHz-3.7GHz) and 2.4GHz bandwidth in the 28GHz band (26.5GHz-29.5GHz).

The mobile operators’ focus is on the 300MHz bandwidth in the 3.5GHz band as it is seen as the most lucrative spectrum in delivering 5G services.

To provide 5G services, an operator needs to secure 100MHz bandwidth in the 3.5GHz band. But demand is likely to exceed supply as the combined bandwidth demanded by the three mobile carriers is 320MHz. SK Telecom reportedly wants to have 120MHz, while KT and LG U+ each want to secure 100MHz.

As a result, fierce competition is expected among the carriers to secure enough bandwidth in the 3.5GHz band. Analysts believe the cost of securing 100MHz bandwidth in the 3.5GHz band would exceed 3 trillion won, although the price could differ depending on the auction methods.

The most important point in this auction will be which mobile carrier will take home the most lucrative sections of the 300MHz bandwidth in the 3.5GHz band.

The three operators are expected to bid for sections in the 3.5GHz and 3.6GHz as the high scalability of this bandwidth prevents interferences.

For the carriers, an equally important point is to avoid the sections that are susceptible to interferences.

Experts note that the 20MHz bandwidth of the 3.40 GHz to 3.42GHz band is most susceptible to interferences, meaning that the mobile carrier that will receive this section will be the most disadvantaged in 5G competition.

It has been pointed out that this section may mix with public frequencies, causing interferences. To solve the frequency interference problem, a filter or a guard band has to be used. This means a portion of the 3.4GHz frequency band should be sacrificed. Even if an operator secures 100 MHz in this band, only 80 MHz can actually be used. So some experts argue that the government should provide incentives to operators that will be given the band.