Telecom companies feud over resource sharing

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Telecom companies feud over resource sharing

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Telephone poles, cable ducts and fiber optic networks - they’re the greatest assets for telecom companies vying to commercialize the next generation of wireless networking known as 5G, and carriers will fight to the death to hold onto them.

The network, which promises higher speeds of up to 20 times existing LTE, has to be delivered on frequency bands with shorter waves, and to do that, mobile carriers say they have to build base stations closer together. This has caused tension between KT and other telecom companies because the former owns more than 70 percent of the cables on which base stations have to be built, but it has been reluctant to share.

SK Telecom and LG U+, the two largest rivals, argue sharing infrastructure is necessary to efficiently develop a 5G network, but KT maintains that letting other carriers ride free on its wires could hinder future investment in equipment.

As the government’s deadline for setting up a 5G network - March 2019 - approaches, the Ministry of Science and ICT finds itself caught in the middle. The minister, Yoo Young-min, recently convened a meeting between the heads of the three major carriers and encouraged them to make joint investments so that the three can share core infrastructure.

The companies, however, have been unable to reconcile their views.

“The carriers reached an agreement on the big idea that we should cooperate to prevent overlapping investment on 5G,” an industry source said on the condition of anonymity. “But we are stuck in the discussion of what infrastructure to share and how much to pay for using each other’s equipment.”

The core infrastructure for 5G includes wired networks like optical fibers, cable ducts installed underground and utility poles above ground. The high-speed network will likely run on a high-frequency band of 3.5 gigahertz and a super high-frequency band of between 27 to 29 gigahertz, both bands with incredibly short waves that can’t travel long distances. The bands are also strongly influenced by obstacles like high-rise buildings. Such characteristics require mobile carriers to set up extra base stations for stable 5G connection.

KT owns a majority of existing infrastructure in Korea by grace of its status as a former public corporation owned by the government. It laid the core infrastructure when the country first established wired networks. Other competitors later established their own infrastructure, but it was difficult to add more when KT’s wired networks were already running through cities. SK Telecom and LG U+ currently lease part of KT’s infrastructure, but KT is not obligated to share all of it, and it remains difficult for mobile carriers to build new infrastructure from the bottom up because it requires trillions of won in investment.

The government hopes to bring the three companies to a consensus by this June, when it will auction frequency bands for 5G to mobile carriers.

For now, the government has proposed three guidelines on how to share the infrastructure. First, each carrier should try to install its own infrastructure in regions with high data traffic. If such installation is not possible, for instance due to objection from landowners, or if a region has low data traffic, companies ought to share infrastructure. And if that’s the case, carriers should pay a reasonable price.

Among these guidelines, the most difficult to negotiate is expected to be the “reasonable price.” Industry sources say KT is likely to ask for more than what they are receiving now from competitors.


BY SOHN HAE-YONG, KANG KI-HEON [kim.jeehee@joongang.co.kr]

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