28GHz auction in South Korea: second time lucky?

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February 7, 2024

... the price paid for the spectrum is considerably more than that paid back in 2018, however the winning bidder also received 2×10MHz of 700MHz spectrum thrown in as a sweetener.

Will Stage X – the successful bidder in South Korea’s second auction of 28GHz spectrum –  be able to mount a viable business proposition around its spectrum acquisition? Or will there be a repeat of the outcome from the earlier 2018 auction?

The 28GHz spectrum licences were eventually revoked for all three winning bidders from that previous auction – the three Korean incumbent mobile operators SK Telecom, KT and LG Uplus – due to lack of investment and failure to meet the rollout obligations associated with the licence conditions.

Back in 2018 the three operators had each paid between KRW207.2 billion and KRW207.8 billion (around USD188 million) for an 800MHz parcel of the mmWave spectrum. This was barely higher than the reserve price and only a tiny fraction of the price paid for the 3.5GHz spectrum offered at the same auction.

Just one 800MHz lot from the relinquished spectrum was offered in the January 2024 auction. The objective for the Ministry of Science and ICT was to award the spectrum to a new entrant, as the three incumbent mobile operators were not eligible to participate. This time the rollout obligations were considerably less onerous than in 2018 – just 6,000 base stations to be deployed over three years instead of 15,000.

Of the three auction participants, Sejong Telecom – an Internet service provider and MVNO – dropped out after the first day of the auction, leaving My Mobile Consortium and Stage X to battle over the next four days for the spectrum. The eventual winner, Stage X, is a consortium led by the messaging provider Kakao.

Notably the price paid for the spectrum – KRW430.1 billion (USD324 million) – is considerably more than that paid back in 2018, however the winning bidder also received 2×10MHz of 700MHz spectrum thrown in as a sweetener, in addition to those rollout obligations being less burdensome than in 2018.

So what will Stage X do with its newly acquired spectrum? Without a reasonable mix of low and mid band spectrum it will be difficult to capture market share from the incumbents via a mass market solution. Another challenge is the current lack of affordable 28GHz-compatible handsets.

A more likely business proposition for Stage X would involve deploying private networks, providing services to support smart offices and factories, data centres and R&D facilities, where high speed transport of large data volumes is required.

Only time will tell if conditions for mounting a viable business case for 28GHz have improved over the past six years.