Mobile carriers, government still deadlocked over frequency pricing

The Seoul government and telecommunications firms held a meeting to negotiate the pricing of frequency reallocation costs for 3G and Long-Term Evolution networks in Seoul on Tuesday, but failed to reach a compromise.

The latest meeting was held to close gaps that exist between the government and the nation’s three major telecommunications firms, KT, SK Telecom and LG U+.

During the meeting, the ICT Ministry rolled out a new offer to local telecommunications firms, proposing to provide price cuts based on the number of new 5G network stations the companies build within two years.

The ministry would price the frequency reallocation costs at approximately 3.2 trillion won ($2.9 billion) -- around 1 trillion won for each mobile carrier -- if the three mobile carriers finish building a total of 150,000 5G network stations by 2022. Should the number of 5G network stations remain at the current level -- around 50,000 -- the government would charge around 3.9 trillion won, according to the ICT Ministry.

The telecommunications firms, however, continue to argue that the government’s calculations based on the price of past bidding is unfair, because the bidding was overheated and the market value of the frequencies has changed since then. The companies earlier proposed 1.6 trillion won, based on the expected sales from operating the frequencies in the future.

The carriers also claimed that building 100,000 more network stations was unrealistic. The three firms have built around 50,000 stations over the past 8 years.

Previously, the ICT Ministry had announced it would set the price of reallocating the frequencies at 5.5 trillion won in total -- around 1.7 trillion won for each telecommunications firm to use the allocated frequency for 10 years.

In response, the local telecommunications firms asked the government to disclose information regarding the pricing of the frequency reallocation for 3G and LTE networks.

By Shim Woo-hyun (ws@heraldcorp.com)