Friday, August 19, 2011

Bidding War Over Mobile Frequencies in Korea Continues

The Joongang Daily reports that the continued bidding war for use of mobile frequencies in Korea is beginning to worry some experts.
Market watchers are concerned that a bidding war between the nation’s two largest telecom firms over an important mobile frequency band could end up hurting the winner down the road.
On auction since Wednesday have been slots for three mobile frequency bands: 2.1-gigahertz (GHz) band, 1.8 GHz band and 800 MHz band. The Korea Communications Commission (KCC) - the country’s telecommunications regulator - is running the auctions.
The bands are like roads for voice calls, text messages and data applications. They are finite public property, managed by the government and rented to mobile service operators on 10- and 15-year contracts. Securing vital spectrum slots are crucial to meeting surging data demand from smartphone and tablet PC users.
Previously the government had allocated the bands, but this year it decided to auction them off to the highest bidder.
It is the space on the 1.8 GHz band that market watchers are keeping their eyes on. The bidding war has already gone through 21 rounds and the price has risen from 445.5 billion won to 543.7 billion won.
“We cannot let our enemies have ‘the best weapon’ without a fight,” an SK Telecom official said.
Market watchers say the final price could be up to three times the opening bid and that worries financial experts. They point to cases in Europe, which held spectrum auctions between 2000 and 2001 that ended up burdening telecom firms and making them less competitive.

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