Korea eases 3G auction rules

date: 22nd January 2001, source: totaltelecom.com

South Korea, keen to adopt two third-generation wireless standards, on Monday announced incentives for providers willing to use the less popular cdma2000 standard, but analysts expected the moves to have little impact.

The Ministry of Information and Communication said it would allow companies with stakes in consortia that won two 3G licences in December to enter bidding for one more licence next month.

"Except for the largest shareholders in the consortia, those firms will be able to join the race again," the ministry said in a statement.

South Korea, mindful of providers as well as handset makers, had hoped to award three licences last month, two to consortia using W-CDMA technology backed by Nokia, Ericcson and Japan's NTT DoCoMo, and one using cdma2000 developed by Qualcomm.

Mobile leader SK Telecom and state-run Korea Telecom led consortia that won licences, but both opted for the W-CDMA platform.

The ministry rebuffed a W-CDMA licence request from LG Telecom and rejected the only cdma2000 bid received, which Hanaro Telecom offered.

NOT SO ATTRACTIVE

Analysts said the ministry's offer would have little impact on who submits bids, which are due February 26 to 28.

"No companies, including LG, would be inclined to join the bid again unless the government proposes drastic measures like a deep cut in licence fees," said Jeff Kang, a telecom analyst at Credit Suisse First Boston (CSFB) in Seoul.

Other government incentives include a right for cdma2000 service providers to choose preferred frequency spectrum for 3G services and soft loans for the rollout of 3G networks in the countryside.

The ministry also said it would make it mandatory for W-CDMA operators to provide roaming services with the current "2G" service users, who use handsets that work on cdma2000 technology.

"The government appears to be desperate. It will not be easy for it to give up a policy of two 3G standards, either. That's the dilemma it faces now," said Kang at CSFB.

The government wavered in setting policy before December's auction, vowing at one point to leave the matter entirely in the hands of consortia applying for the licences before abruptly retreating to its two platform policy.

It wants W-CDMA used because service providers will be able to tap into the large W-CDMA international user market and wants cdma2000 used as local handset makers have pioneered CDMA technology.

DELAY IN APPLICATION

Analysts said it appeared clear the government wants LG to apply for a cdma2000 licence, which the company has said it is not interested in doing.

"Even with the ministry's incentives, we are not going to change our earlier position to bid again," said Park Hyung-il, an LG Telecom spokesman.

After losing a bid for a W-CDMA licence in December, LG said it would overhaul its telecom business, which some analysts interpreted as meaning it might withdraw from the wireless service sector.

Pohang Iron and Steel Co (POSCO), which has a 12 percent stake in the 3G consortium led by SK Telecom, also said it was not interested in rebidding.

"It's just a government wish that we run again," said a spokesman for the world's largest steelmaker.

Hanaro has said it would rebid in February. But industry watchers said the high-speed Internet access service provider lacked technology to operate 3G services.

Hanaro said early this year it was seeking foreign partners to join in its consortium to raise its chances of winning the licence.

Qualcomm has said it is willing to partner with Korean firms in the bid, including equity participation, but only with "quality" players.

top