Korean Carriers Join to Build Out mmWave 5G
The three mobile carriers in South Korea are not friends. They compete directly with each other and against MVNOs (Mobile Virtual Network Operators) in what is a highly competitive primarily urban (81.8% of pop.) market of over 51m, about the same population as Texas and Florida combined in an area just a bit bigger than Maine. These carrier, SK Telecom (SKM), KT (KT), and LG Uplus (032640.KS) are well-known for ‘aggressive’ marketing tactics, ‘variable discounting’ based on the customer’s ‘look’, and a number of other questionable practices, so much so that the South Korean government has had to set strict guidelines on phone plan discounting.
That said, the mobile market in South Korea is robust with just over 70m subscribers (includes business customers and multiple plan subs) as of mid-2020, and in that mix about 8m 5G subscriber plans, which has grown to over 11.8m by the end of last year (almost 13m currently), and a government that provided ~$4b in tax support for 5G carrier rollouts last year. Knowing the fact that South Korea began operation on its first 5G network less than 2 years ago makes it even more unusual that South Korea is considered the most advanced country for 5G (~22.7% share of subscribers), having placed ~166,000 5G base stations, or ~19% of the 4G base station total, which began installations almost 10 years ago.
That said, the mobile market in South Korea is robust with just over 70m subscribers (includes business customers and multiple plan subs) as of mid-2020, and in that mix about 8m 5G subscriber plans, which has grown to over 11.8m by the end of last year (almost 13m currently), and a government that provided ~$4b in tax support for 5G carrier rollouts last year. Knowing the fact that South Korea began operation on its first 5G network less than 2 years ago makes it even more unusual that South Korea is considered the most advanced country for 5G (~22.7% share of subscribers), having placed ~166,000 5G base stations, or ~19% of the 4G base station total, which began installations almost 10 years ago.
Last year however, the South Korean government was not keen on one aspect of 5G, mmWave, and while the spectrum has been allocated, a government study indicated that the cost of deploying mmWave coverage, because of its limited coverage, was not conducive to a widespread network and focus should be on the mid-band sub6 spectrum, where carriers had already been focused. Equipment providers all disagreed for obvious reasons, but it seems the carriers also disagreed, and now the government has changed its stance, forming a 28GHz band 5G Common Network consultative body with the three carriers to discuss operational plans for mmWave (28GHz.).
According to preliminary plans the three carriers have agreed to share not only mmWave base stations, but also optical cables and transmission equipment and are discussing ways in which mobile customers can use the mmWave system while roaming, regardless of the carrier with whom they have a subscription. They have even taken it further in that they are discussing creating a super ‘hot spot’ in the Gangnam District of Seoul that will transmit ultra-high capacity content for VR and AR, again with all three carriers sharing the equipment, and the creation of mmWave BTB districts to utilize mmWave in business and industrial situations, again all shared. The government is also now encouraging a similar common carrier mmWave extension of its sub6 (mid-band) network expansion into the South Korean suburbs.
While China gets most of the 5G global press because of the large number of base stations deployed, its area is just slightly smaller than that of the US, or 9,524% larger than South Korea. Chinese 5G deployment is mandated and controlled by the State Government, which is certainly a plus toward expanding the network without the necessity for near-term profitability, but in South Korea, the goal of providing a robust 5G network seems to have helped to join together the three rival companies toward a common goal while reducing costs for all three, an unusual circumstance in any free market country.
While we expect that as the US takes dubious pride in its ‘competitive economy’, US carriers might have or maybe still should think along the same lines as South Korea, rather than duplicating coverage resources, particularly for mmWave, in order to reduce the cost of reaching large numbers of subscribers across the vast space between the east and west coasts. While it might reduce the ‘uniqueness’ of each carrier a bit, it would serve both subscribers and shareholders, but likely would be met with bluster about ‘control’ or similar nonsense unless the government was willing to ‘incentivize’ US carriers with tax breaks to encourage them to share 5G resources. JOHO.
According to preliminary plans the three carriers have agreed to share not only mmWave base stations, but also optical cables and transmission equipment and are discussing ways in which mobile customers can use the mmWave system while roaming, regardless of the carrier with whom they have a subscription. They have even taken it further in that they are discussing creating a super ‘hot spot’ in the Gangnam District of Seoul that will transmit ultra-high capacity content for VR and AR, again with all three carriers sharing the equipment, and the creation of mmWave BTB districts to utilize mmWave in business and industrial situations, again all shared. The government is also now encouraging a similar common carrier mmWave extension of its sub6 (mid-band) network expansion into the South Korean suburbs.
While China gets most of the 5G global press because of the large number of base stations deployed, its area is just slightly smaller than that of the US, or 9,524% larger than South Korea. Chinese 5G deployment is mandated and controlled by the State Government, which is certainly a plus toward expanding the network without the necessity for near-term profitability, but in South Korea, the goal of providing a robust 5G network seems to have helped to join together the three rival companies toward a common goal while reducing costs for all three, an unusual circumstance in any free market country.
While we expect that as the US takes dubious pride in its ‘competitive economy’, US carriers might have or maybe still should think along the same lines as South Korea, rather than duplicating coverage resources, particularly for mmWave, in order to reduce the cost of reaching large numbers of subscribers across the vast space between the east and west coasts. While it might reduce the ‘uniqueness’ of each carrier a bit, it would serve both subscribers and shareholders, but likely would be met with bluster about ‘control’ or similar nonsense unless the government was willing to ‘incentivize’ US carriers with tax breaks to encourage them to share 5G resources. JOHO.
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