SK Telecom picks 5G suppliers, snubs Huawei

SK Telecom named Samsung Electronics, Ericsson and Nokia as the suppliers for its 5G network equipment on Friday, ultimately choosing not to include Chinese company Huawei despite its more competitive pricing.

SK Telecom is the first among Korea’s three mobile carriers to announce its suppliers for the equipment.

The company said in a statement released Friday that it made the choice on the grounds that they “are leaders in [5G network] technology and have the capacity to vitalize the ecosystem.” Financial factors like investment costs were also part of the consideration, the company added.

Equipment from the suppliers was tested between June and August.

The companies will supply the equipment to be used in SK Telecom’s base station nationwide for its 5G network. SK Telecom expects to finalize contracts next month to allow the necessary equipment to be manufactured by March next year.

The leading mobile carrier previously worked with the same three partners for its 4G network equipment. This will ensure higher compatibility in the early stages of 5G deployment, during which the transmission will be partly supported by the existing 4G infrastructure.

Friday’s announcement makes SK Telecom the first carrier to answer the big question in the industry at the moment - will Huawei become a 5G network equipment supplier in Korea? With SK Telecom now out the picture, KT and LG U+ have yet to decide whether they will make the controversial but thrifty decision to pick the Chinese manufacturer.

Earlier this year, SK Telecom, KT and LG U+ made ambitious pledges to realize their high-speed 5G networks by March 2019. If they manage it, Korea will be the first country to reach the technological milestone.

It typically takes at least six months to install a telecom network nationwide, which means the carriers don’t have much time to waste on their supplier selection in order to meet their March deadline. The question of including Huawei on the list is likely why the decision has taken so long.

The Chinese tech giant is a rising star in the global market for 5G network equipment, thanks to recent aggressive investment. The biggest advantage of Huawei is the price, according to industry sources. It can offer high-quality 5G equipment at a price that is 20 to 30 percent less than other global competitors.

But the downside of the budget option is that security concerns surrounding Huawei have been raised by the governments of the United States, Britain and Australia.

Choosing Huawei comes with issues at home as well - the Korean public is likely to react poorly to a local company choosing to partner up with a Chinese firm on such a big and symbolic project. An industry source added that the price issue isn’t just to do with the initial purchase cost, but also concerns long-term maintenance.

Experts expect that 5G will make it possible to download an ultra-high definition movie in seconds and stream virtual reality videos. The range of applications of a 5G network goes beyond mere smartphones - a vast variety of Internet of Things technology and even autonomous cars will benefit from the faster data speeds.

The suppliers that the Korea carriers choose are likely to benefit from being involved on an early, large-scale 5G installation project which could place them a step ahead of other players in the game when it comes to securing similar projects in the future.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]