How South Korea Won the First Round of the 5G Race

5G is coming much faster than the industry expected and accelerating much more quickly than 2G, 3G, or 4G. While there was no 4G capable handset available in the first year of 4G, companies like Huawei, Samsung, Oppo, Vivo, LG, ZTE, and Sony have already announced their 5G capable phone for 2019 just one year after the official 5G standard was published. A total of 15 smartphones and a decent number of other 5G capable devices, such as Customer Premises Equipment (CPE), mobile hotspots, modules, and smart TVs, are also being developed for commercial launch. The total number of 5G-capable products is expected to reach around 50 in 2019. Overall, ABI Research expects that 5G will need less than four years to achieve 500 million subscribers, which took five years for 4G and 10 years for 3G. 

There are a few early deployers that have been particularly successful with the adoption of 5G. A leading position in the 5G race has several advantages: stimulating economic growth, establishing geopolitical superiority, and even gaining advantages in terms of military and intelligence powers. Currently, South Korea can be seen as the most successful 5G nation, despite tremendous efforts made by the United States, China, Japan, Switzerland, and the United Kingdom to expand 5G.

South Korea launched commercial 5G for businesses on the December 1, 2018, and the big launch day for consumers was April 3, 2019. By the end of June 2019, the country has approximately one million 5G subscribers and a network of more than 120,000 5G basestations. The country is expected to have four million 5G subscribers by the end of 2019, and will also have three non-standalone 5G networks with a total 240,000 cells, which will consist mainly of 32T32R massive Multiple Input, Multiple Output (MIMO) active antennas and 8T8R radio remote heads and passive antennas. Despite some initial difficulties and the postponed launch date, South Korea leaves behind economic superpowers in the race of 5G adoption and became the clear early winner in the 5G race.

There are no two countries with the same 5G deployment strategy, and the current status of 5G deployments already allows for the first conclusions to be made and best practices to be spotted. South Korea’s Ministry of Science and Information and Communications Technology (MSIT) is heavily coordinating the telecommunications industry in South Korea and actively shapes and encourages the market and its participants. In the last twenty years, the country succeeded in leveraging its densely urbanized population and relatively small landmass to deploy one of the best broadband infrastructures nationwide. The global political environment and South Korea’s basically neutral status between China and the United States also helped local Mobile Service Providers (MSPs) access technology and products from Huawei, Nokia, Ericsson, and local vendor Samsung. SK Telecom and KT both use Samsung, Nokia, and Ericsson equipment while LG U+’s 5G network relies on Samsung, Huawei, and Nokia equipment. Other than the wider range of available 5G network solutions, the price level is also lower compared to a market including just Ericsson and Nokia. MSPs can execute their multivendor strategy during network development much easier and have signifiantly better position during dealing with the eqipment vendors. This neutral status is also helping South Korean companies export their 5G-related products and services basically everywhere and profit from the vacuum generated by trade restrictions. The combination of this substantial demand for 5G and trade restrictions provides an opportunity for South Korean equipment manufacturing companies to expand internationally. For example, Samsung Networks’ business is already building up new capabilities vertically and breaking out from this regional player role.

South Korea is basically the world’s largest test-bed and first mover in 5G and its spin-off applications. Beyond the given variables, such as existing advanced mobile infrastructure, consumer data hunger, and above-average willingness-to-pay for telco, South Korea has other virtues, which is why the country basically won the first round of the 5G race. Political decision makers should monitor these South Korean actions and implement best practices. Straightforward roles and responsibilities, financial incentives, and the active regulatory role of the South Korean MSIT were essential. First of all, the country completed its 5G spectrum auctions for both mid-band and high-band at a relatively reasonable price in June 2018. Second, the regulator has succeeded in allocating continuous spectrum blocks with significant size: 2 x 100 MHz and 1 x 80 MHz on the mid-band and 3 x 800 MHz on the 28 GHz band.

This coordinated launch date is also a great tool for regulators. It helps MSPs to agree on a collective 5G promotion, rather than waste resources on competitive marketing. South Korea’s MSIT also plans to invest more in 5G Research and Development (R&D) and financially support the three main MSPs. The ministry plans to invest KRW86.3 billion (appoximately $73 million) on 5G R&D by 2020 and also promised MSPs significant tax benefits as they worked together to launch real 5G, not just showing off with a few 5G basestations for marketing purposes.

Despite the several dense urban areas in South Korea, MSPs favored 32T32R massive MIMO units. For the first look, 64T64R massive MIMOs have 16 layers and higher capacity and performance, making them look optimal for the busy South Korean concrete jungles. However, they are heavier, bigger, have higher Total Cost of Ownership (TCO) and, most importantly, are harder to deploy at a rapid rate. One 32T32R massive MIMO can be carried and physically installed with only one on-site engineer because the equipment is significantly smaller and usually weighs less than 25 kg. Regulations are much different in many countries when the equipment to install is heavier than 25 kg, more than one on-site engineer is needed for the deployment. This can slow down deployments and substantially increase related costs. It is recommended that MSPs consider the physical characteristics of the equipment and the need for electricity: changing the grid for each site could be an enormous additional cost during upcoming network densification.

5G data traffic also reached 22.9 GB per person in the first month of 5G in South Korea, and the majority of this traffic is video: 20% is related to Augmented Reality (AR) and Virtual Reality (VR) content. This means that consumers are choosing 5G not because they are attracted to unique 5G applications, but because of the data offer for enhanced Mobile Broadband (eMBB). As discussed in the ABI Insight 5G Boosts the Race for the “Netflix of Gaming” Position (IN-5485), the first applications will be gaming, e-sport, real-time content, AR/VR, and immersive media related. MSPs should prepare for the 22.9GB/person/month to increase significantly after consumer and industrial applications crystallize, just like it dide with 4G. Even though every MSP and country will have a unique way of deploying 5G, South Korea has succeeded to be in the forefront and provide many key takeaways for the whole industry.