Tuesday, August 30, 2011

Pyrhhic Victory for SK in Korean Bandwidth Auction?

In the words of a headline in The Korea Times, SK Telecom won a Pyrhhic Victory in the recently concluded bandwith auction here. For SKT, winning is bittersweet, the article reported, since it has to pay an enormous amount after repeated rounds of proposals and counterproposals with some describing it a “Pyrrhic victory.” The final bid by SK Telecom amounted to 995 billion won.
Opting to concentrate on cloud computing instead, KT declined to continue bidding for the 1.8 gigahertz (GHz) band.
“We decided to stop bidding for the 1.8 GHz bandwidth, to prevent social controversy and national loss following excessive competition in an auction that was held for the first time in the country,” KT said.
As noted by the Joongang Daily,The 1.8-GHz band is thought to be the most suitable for fourth-generation (4G) mobile communications technology. Many mobile carriers in Europe, the United States and Asia have chosen it for their 4G mobile telecommunication services. It can process data much faster than the 3G service, and thus carry out more tasks such as playing full high-definition content.
Both of the telecom giants were determined to clinch the band since the auction began on Aug. 17. As a result, the auction dragged on for nine days and 83 rounds, and the bidding price soared to 995 billion won ($919 million), more than double the minimum bidding price of 445.5 billion won set by the KCC.
The KCC, which ran the auction, did not place a limit on how many rounds could take place, nor how high the bidding price could go.
Finally KT backed off. When the auction resumed yesterday morning, KT bid for the 800-megahertz (MHz) band, and as the sole bidder, the company got it for the minimum bid price of 261 billion won.
“We withdrew from further bidding for the 1.8-GHz band in light of the social controversy about the overheated competition and national loss,” KT CEO Lee Suk-chae told reporters. “I thought if I use more than one trillion won on spectrum, KT won’t be able to do more important things.”

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