Korea’s three mobile carriers have called on the government to provide support, such as tax benefits and easing the network neutrality rules, for commercialization of 5G services that is expected to cost up to 20 trillion won (US$18 billion) of investment over the next five years.
While promising to provide support for 5G-related projects, the Ministry of Science and ICT (MSIT) suggested that the three carriers release 5G services simultaneously on “Korea 5G Day” next March to avert excessive competition among them to become the first to launch service. The three operators accepted the ministry’s proposal.
Minister Yoo Young-min met with the CEOs of the three companies at Marriott Hotel in Yeoido, Seoul on July 17 to discuss issues related to the commercialization of 5G services. The CEOs were president Park Jung-ho of SK Telecom, chairman Hwang Chang-gyu of KT and vice chairman Ha Hyeon-hoe of LG U+.
Hwang said, “Launching 5G service is quite burdensome, as building a 5G network requires a substantial amount of investment,” adding, “Government support, such as tax reduction or VAT refund, is necessary.” He continued to emphasize, “Given that the US has abolished the principle of network neutrality, we also need a new approach. There’s a need to consider introducing zero-rating in preparation for a rapid increase in data usage.”
Although the South Korean government’s position is to maintain the principle of net neutrality, which prohibits discrimination of telecommunication services against content providers, mobile carriers argue that the principle needs to be relaxed in the 5G market, where there is no adequate revenue model.
Noting that the three mobile carriers have paid a huge amount of money for the use of frequencies, Park of SK Telecom said the government needs to use the money to foster manpower that can increase user benefits. As the government has secured 3.618 trillion won (US$3.25 billion) from the three companies through the auctioning of 5G frequencies, many experts say that the money should be primarily used to expand 5G infrastructure.
Vice chairman Ha Hyeon-hoe of LG U+, who has made his first public appearance after becoming appointed as the CEO of LG U+ on July 16, spared his words as he was still adjusting to the new position. “We will work hard to provide services that exceed expectations,” he said, adding, “We will synchronize the release of 5G services as proposed by the government and jointly develop technologies related to handsets.”
Yoo said, “For South Korea to become the world’s first country to commercialize 5G service and secure the upper hand in the global market, there’s a need to prevent excessive competition among mobile carriers to release service ahead of others.” He added that the three companies have endorsed his proposal that they roll out their services simultaneously on Korea 5G Day.
The three CEOs refrained from commenting on the use of Huawei equipment for their 5G networks, which has recently become an issue. LG U+, which declared the adoption of Huawei equipment at MWC Shanghai last month, declined to provide any definite answers. SK Telecom president Park said his company is having a tough time deciding on adopting Huawei equipment. Minister Yoo flatly said, “The issue is up to each company.”
Meanwhile, some criticized that it is too much interference for the government to push the three telecommunication companies toward synchronizing the release of 5G commercial services. If any of the three companies delays 5G commercial service for some reason, others will inevitably have to also delay their service release even if they have completed their preparations.