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KT, the country’s No. 2 mobile carrier, desperately needs to close its second-generation (2G) mobile service after dropping its bid for the 1.8 gigahertz (GHz) band in the government auction, otherwise it will lag behind competitors in adopting the ultra-fast 4G service. The regulator, however, isn’t approving KT’s move without proper guidelines.
KT dropped the bid for the 1.8 GHz band Monday, allowing competitor SK Telecom, the biggest player in the industry, to buy the band at 995 billion won, more than double the starting price.
Both providers desperately wanted the 1.8 GHz band, which is adopted by major global carriers for 4G service, as they can choose from more handsets and cheaper devices.
Though KT dropped its bid, it already has 20 MHz in the 1.8 GHz band. However, it has been using the band for 2G services. As its competitors, SK Telecom and the smallest mobile carrier, LG Uplus, already launched 4G service, KT is in desperate need to evacuate the band and start an LTE service there.
“We sought approval from the Korea Communications Commission (KCC) for our plan to close the 2G service early August,” a KT representative said.
However, it remains to be seen whether the regulator will approve it. KT already sought approval a few months ago, but the KCC rejected it saying the carrier still has too many 2G users.
KT said it has greatly decreased the number of 2G users since then. It currently has 320,000 2G users, a steep decrease from 1.1 million in March when it first announced the plan to halt 2G service.
“The number is decreasing by thousands each day. We expect to get the green light this time,” the KT representative said. KT has been trying to lure 2G users to its 3G service, providing new handsets for free or offering subsidies and exempting subscription fees.
KT Chairman Lee Seok-chae held a press meeting, and announced that KT would halt the 2G service in September to launch LTE service in November. Lee’s remark is regarded as pressure on the KCC to allow it to halt 2G service.
Lee said that KT dropped the bid when the bidding price was below 1 trillion won, though industry analysts estimated the value of the 1.8 GHz band at 1.5 trillion won. Analysts said that KT may have been indirectly pressured by the regulator, which had been criticized for adopting the auction and making the band price soar about 5 billion won every 30 minutes. Rep. Lee Yong-kyung of the minor opposition Creative Korea Party said that the KCC is suspected of internally setting 1 trillion won as the ceiling of the auction, and intervening to pressure the carriers not to bid more than 1 trillion won.
As KT dropped the bid, the bidding stopped right before the 1-trillion-won mark, and the KCC could avoid further blame for the overheated auction. The KCC could have kept the auction from overheating.
Industry analysts say that KCC should give KT the specific number of users the carrier must reach before it may be allowed to halt 2G services.
“Bandwidth is a limited resource, and thus it should be used for more benefit of all consumers,” the KT representative said. “The benefit would be bigger if it was used for the LTE service to everyone instead of serving the few 2G consumers.”
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