5G airwave auction begins today

Industry

Published: 14 Jun. 2018, 20:39

5G airwave auction begins today

The auction of Korea’s 5G airwaves begins today, and the future of the country’s high-speed wireless network will likely hinge on competition between mobile carriers KT and LG U+.

The Ministry of Science and ICT is auctioning off 280 megahertz (MHz) of the 3.5 gigahertz (GHz) frequency band and 2,400MHz of the 28GHz band for a minimum price of 3.3 trillion won ($3.04 billion).

Carriers are keenly interested in the 3.5GHz band, which refers to frequencies that range from 3.42GHz to 3.7GHz. The 280MHz bandwidth within the range will be sold in 28 blocks of 10MHz each. The band is considered the better option for establishing a nationwide 5G network, as it does not require as many relay stations.

The problem is that the maximum bandwidth each carrier can take from the 3.5GHz band is 100MHz. Korea’s largest mobile carrier, SK Telecom, is likely to go for the full 100MHz. KT and LG U+ are expected to fight over the remaining 180MHz-worth blocks.

The two most likely scenarios are KT taking 100MHz and LG U+ 80MHz, or the two carriers each taking 90MHz of the spectrum. The competition will be decided by which carrier is willing or able to spend more money to gain the upper hand.

Industry insiders speculate that if LG U+ decides to settle for 80MHz in the first bidding round, the auction could end immediately, giving carriers what they want at minimal additional cost.

However, no carriers want to be left behind in the race to develop 5G. LG U+ is not far behind KT, Korea’s second-largest carrier, and LG U+ may plan to move ahead through aggressive participation in the auction.

The higher-frequency 28GHz band, which travels short distances, will likely be used to offer narrower 5G services, like Internet of Things connectivity and virtual or augmented reality. It isn’t expected to see as much competition. The auction will be held over two sessions.

In the first session, carriers will select the number of blocks they hope to purchase. The session will go on until bidding competition stops. For instance, if KT and LG U+ each vie to take 100MHz of the 3.5GHz band, the session could go on for a maximum of 50 rounds. For every round, the bid price goes up by about 0.3 percent to 1 percent.

The second session will be about selecting which blocks of the wavelength carriers will take. From the 28 blocks of the 3.5GHz frequency band, for instance, SK Telecom may want the first 10 blocks, the middle or the last 10 blocks, depending on its business strategy.

The government will offer various combinations of blocks depending on how many each carrier secured in the first session. The carriers will then bid on each combination. The combination with the highest combined bid price will be chosen.

The auction, in theory, could last until June 27 if the first session goes as far as the 50th round, but it could finish as early as today if everything goes smoothly.

To prevent unfair competition, three representatives from the three carriers will be locked in three different rooms supervised by security guards. Each room will have two phones, a fax machine, and a laptop without an internet connection. The representatives will only be able to call pre-decided numbers at their company with the phones.

“Beginning with the frequency auction, we hope all relevant parties will focus on making Korea a leader in the era of 5G telecommunications,” said Science Minister Yoo Young-min.

Korea hopes to become the first country in the world to commercialize the next-generation mobile network, which is expected to be 20 times faster than the current 4G network.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]