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Samsung, Huawei vie for 5G network market in Korea

LG Uplus Vice Chairman and CEO Kwon Young-soo, second from right, takes a look at 5G network equipment developed by Huawei at this year's Mobile World Congress in Barcelona, Feb. 28. / Courtesy of LG Uplus

By Baek Byung-yeul

The much hyped auction for frequencies for fifth-generation (5G) networks will be held Friday.

While Korea's three telecommunication companies are set to take part in the bidding as the super-high speed network is scheduled to be commercialized next year, it remains to be seen which network equipment company they will work with.

The initial cost of launching the 5G network is estimated at around 20 trillion won ($18.5 billion), given that SK Telecom, KT and LG Uplus invested around 20 trillion won when constructing the long-term evolution (LTE) 4G network.

The competition to win orders for 5G network infrastructure is expected to begin as soon as the three carriers are allocated frequencies.

While the companies are conducting tests on 5G network equipment from domestic and overseas companies, industry watchers presume the competition will be fierce between Samsung Electronics and Chinese telecommunication company Huawei.

Samsung has a 40 percent market share in the country's 4G network equipment market. However, Huawei also entered the Korean market providing equipment for 4G network in the early 2010s. In 2013, the Chinese firm supplied network equipment to LG Uplus.

While SK Telecom, KT and LG Uplus will compete for 28 blocks in the 3.5 gigahertz spectrum and 24 blocks in the 28 gigahertz frequency bands, Huawei has its strength in the 3.5 gigahertz spectrum and Samsung is the leading company in the 28 gigahertz band.

With its speed and reliability improvements, the use of more stable infrastructure is highly important. As such, Huawei is expected to be the biggest competitor for Samsung as the Chinese firm has the largest market share of global mobile infrastructure.

Besides its quality network equipment, Huawei is also known for its competitive prices; 30 percent lower than those of its competitors.

Security concerns matter

While it is clear that the 5G era will impact every sector in technology, many countries are becoming increasingly cautious toward the Chinese company due to security concerns.

The Australian government is reportedly considering whether to allow Huawei to join the construction of its 5G network.

Though Huawei has provided 55 percent of the 4G network infrastructure there, Australian politicians expressed their concerns over allowing its involvement in the 5G network.

"Both Huawei and ZTE must report to a Communist Party cell at the top of their organizations," Australian Labor Party Member of Parliament Michael Danby recently told the government. "Let me issue a clarion call to this Parliament: Australians 5G network must not be sold to these telecoms."

In response Huawei Australia Chairman John Lord said the company was not linked to the Chinese government.

"We believe that companies like Huawei are privately owned, not owned by any committee or any government, and should be looked at and put into competitive tendering," Lord was quoted as saying by Australia's ABC network.

As it has done in the U.K., Lord added Huawei would also be willing to provide Australian intelligence agencies oversight of its operations. "That was the way to enter the market and be as open as possible and that's what we're offering around the world," Lord said.

In Korea, Huawei faced security controversies in 2013 when LG Uplus used Huawei equipment in constructing its 4G network. Due to the backlash, LG Uplus said it would not use Huawei products for services in areas near U.S. military bases here.