Why Are Korean Consumers Not That Excited With 5G?
- By Lachlan Colquhoun
- November 01, 2022
Rollouts of 5G consumer services are proceeding apace in several regional markets. But if countries like India look for models of what might happen, they might not like what they see in South Korea.
Several years ago, South Korea was leading the world with 5G, and the nation’s technology capabilities were a source of national pride.
Several years on and the reality has been somewhat different, with multiple issues from the cost of installation to the speed of services to the consumer.
A key issue is installation and the fact that what is called “True 5G” is almost prohibitively expensive for providers to install with 28-gigahertz infrastructure.
As a result, what is called 5G in South Korea is actually carried on the 3.5 gigahertz band, which is only four times faster than 4G. One analyst in Seoul says it should be called 4.5G because to call it 5G would be misbranding.
The upfront costs of the 28-gigahertz licenses were over USD430 million, spent by the nation’s three largest telcos. That was an initial investment, as they then had to install the 15,000 base stations required to deliver the service, but only 5% of that has been delivered so far.
Government intervention to install 5G base stations in subway stations yielded disappointing results, so a planned rollout across the subway network is on hold.
While the industry and Government grapple with issues around the consumer market, it is a different story for private 5G networks, which can be set up by companies other than telcos.
The Government has earmarked around USD30 million to enhance private network projects, which have to be licensed but are delivered by a second tier of providers such as SK Networks Service and LG CNS.
So, while consumers are missing out on true 5G, individual buildings and smart factories are finding value, and this is where the 5G business model is gaining more traction.
This is similar to the approach in Germany and France, where the Government prioritizes industrial and smart city use of 5G over the broader consumer market.
Nation Building
In India, the 5G rollout is equated with a sense of nation-building. Although 5G is yet to be rolled out, it could face some of the same issues as in South Korea.
Prime Minister Narendra Modi announced the launch of 5G services in India on October 1. Still, only two operators are currently offering 5G services in a limited number of cities and in select areas.
"Providing spectrum in the band for smaller regional providers to provide service to those outside of those 5G areas is critical for a digitally inclusive New Zealand"
Handsets are also an issue because out of the 600 million smartphones in India, only 60 million are 5G, even though the first 5G smartphone went on sale in India in 2020.
As in South Korea, it seems that much of the initial focus in the consumer market will be site-specific: providing 5G in selective areas such as temples, educational institutions, and transport hubs.
It is yet to be seen, but the prices paid for the 5G spectrum may also prove to be an issue for providers in India. The 5G auction reaped USD19 billion on feverish expectations for what the market could deliver.
Allocating, not auctioning
A completely different approach is being taken in New Zealand, with the Government recently announcing that it would allocate 5G frequencies instead of selling them. This is good news for New Zealand telecommunication users.
"The announcement ensures our MNO (mobile networks operators) get important access to the spectrum they need for 5G mobile rollouts but also puts clear expectations around increasing 5G coverage in regional New Zealand, which we applaud," said Mike Smith, the chair of WISPA.NZ, which represents more than 30 wireless internet service providers in the country.
"We see it as a win for New Zealand. Also, providing spectrum in the band for smaller regional providers to provide service to those outside of those 5G areas is critical for a digitally inclusive New Zealand."
The idea is that instead of mobile operators chasing profits in towns and cities, the allocation will ensure that operators deliver in smaller centers and regions.
That may be true, but the NZ 5G is also at 3.5 gigahertz. So, there is a chance that even though NZ has gone for a different approach — allocating rather than auctioning — consumers will still be disappointed by what has been touted for several years as the next revolution in connectivity.
Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and the NextGenConnectivity editor. He remains fascinated with how businesses reinvent themselves through digital technology to solve existing issues and change their entire business models. You can reach him at [email protected].
Image credit: iStockphoto/kimberrywood