ROK Softens Entry Rule for IMT-2000 Bidding
The government has softened its entry conditions for the synchronous mode or CDMA2000
third-generation (3G) mobile phone license bidding, the winner of which will be selected in
mid-March.
In a major departure from its previous stance, the government has decided to allow firms not
engaged in the telecommunication business to form a consortium to bid for the license.
As a result such companies as POSCO, Powercomm and Qualcomn will be able to form
partnerships to participate in the bidding.
``The current situation is a lot different than last year, when the regulation was strictly
enforced,'' said Ahn Byong-yub, Minister of Information and Communication. ``Unless the
ministry eases the rule on double participation regarding IMT-2000 consortiums, it will be
difficult to proceed with synchronous IMT-2000 business.''
His announcement reflected the dilemma the government faces in picking a winner in the
synchronous mode bidding scheduled for mid-March.
Ever since the government decided it would select at least one synchronous mode operator
last year, the bitter dispute regarding which of the two modes is technologically superior has
remained constant.
Telecommunication industry and analysts have long criticized that the decision is definitely
against market principle considering the significantly larger asynchronous mode or W-CDMA
user market _ which accounted for nearly 80 percent of the market at the end of last year.
With the revision, a company that is part of consortiums formed by Korea Telecom or SK
Telecom can also be part of the consortium that wins the synchronous mode or cdma2000
IMT-2000 service license.
Ahn said he will also allow a healthy ``grand consortium'' regardless of which country the
member companies come from. However, the main shareholders of the KT and SK
consortiums are still barred from holding stakes in other IMT-2000 providers.
However, the government still wants LG Telecom to participate in the synchronous mode
bidding.
Last week, the ministry postponed the awarding of the synchronous mode IMT- 2000 license
from February until mid-March. Analysts viewed this move might be designed to earn more
time to persuade LG into re-bidding for the synchronous license.
Nevertheless, LG said it was not interested. ``We will not carry synchronous mode IMT-2000
business in any case,'' said an LG Telecom spokesman. ``We are not considering partnering
up with anyone in any consortium for the bid.''
Korea Telecom and SK Telecom were awarded licenses for asynchronous-mode or
wideband CDMA service last month after a three-way competition which included an LG-led
consortium.
Analysts say Pohang Iron & Steel Co. (POSCO) and Powercomm, a subsidiary of Korea
Electric Power Corp. (KEPCO), are the best candidates to become part of the
synchronous-mode IMT-2000 service.
The two companies had been part of a consortium seeking the license for synchronous
mode service before joining the SK-IMT consortium.
POSCO, the world's largest steel maker who already participated in the SK Telecom-led
IMT-2000 consortium as the second largest shareholder with a 12 percent stake, is reportedly
seeking a partnership with a synchronous mode IMT-2000 consortium.
Right after minister Ahn's announcement, POSCO said it was interested in joining a bid for a
license to operate third-generation services, which offer video and high-speed data services.
However, the company suggested two prerequisite conditions to jump into the 3G race,
saying a grand consortium would have to include big companies such as Samsung
Electronics and Qualcomm Inc. and massive cuts totaling 1.3 trillion won in costs.
Analysts are not ruling out the possibility that a consortium led by a foreign company may win
the license. Qualcomm of the United States said last week it will form a consortium to
compete for the synchronous mode license.
A further worry for both telecommunication operators and investors is that the true cost of a
network infrastructure for the 3G business as well as any potential return is still uncertain.
European 3G forerunners are already struggling to cope with astronomical network
deployment costs and subsequent loan trouble. Since the government has offered no
explanations regarding such problems, it is a certainty that these issues will continue to
plague the telecom industry and creditors.
kdh@koreatimes.co.kr
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