Telecom Policy Must Move Beyond Regulation to Incentivize Investment and Innovation in the AI Era [In the AI Era, Toward Telecom Policy 2.0 (Part 2)]

[Financial News] As the AI era begins, calls are growing for telecom policy to move beyond its traditional focus on expanding competition and shift toward encouraging investment and innovation in the industry. The recommendation is to reduce regulatory uncertainty so companies can make long-term investments and to clearly lay out the direction of the national network needed in the AI era.■ Firms fret over investment amid unclear revenue models... Creating investment incentives is a challengeThe Ministry of Science and ICT said on the 19th that it plans to form a public-private consultative body with SK Telecom, KT and LG Uplus and draw up a “Comprehensive Plan for Next-Generation Network Investment and Regulatory Improvements” within the year. The aim is to discuss institutional reforms by bringing together issues that have prompted ongoing calls for improvement, including investment conditions, criteria for permitting services and the transition away from legacy networks.
Telecom companies have recently been concerned about expanding network investment.
An analysis of investor-relations materials from the three telecom companies found that their combined capital expenditure fell by about 37.3%, from 9.6 trillion won in 2019 to 6.02 trillion won in 2025. The decline came as the investment surge concentrated in the early stages of 5G network construction wound down, leaving few practical reasons for further investment.
“Until now, telecom has been a market that grew organically without special government support, so the policy focus has been on reducing rates to protect users,” a telecom policy expert said. “But as growth in the telecom industry stagnates and the need for AI investment comes to the fore, telecom policy that leaves only regulation in place can no longer sustain infrastructure.”
Uncertainty over revenue models is cited as a factor holding companies back from investing. Upgrading telecom networks requires enormous costs, but there are no revenue models that can turn network investment into profits.
In particular, the government has required the three telecom companies to build 5G standalone (SA) networks by the end of this year, but the industry is concerned that there is still no way to generate revenue from 5G SA. “Support measures are needed to reduce regulatory uncertainty and lower the burden of additional investment so the industry can take risks on new businesses,” said Jo Dae-geun, an adjunct professor at Sogang University’s Graduate School of Public Policy.■ 5G SA mandate... Regulatory improvements must open up business opportunitiesNetwork slicing, which divides 5G networks by use case to provide the required quality, is another area where institutional reforms are needed. It is permitted conditionally in South Korea, but discussions are ongoing about the standards and conditions under which services guaranteeing quality to general users can be offered.
The issue is how to distinguish services that require separate quality standards from the regular internet. The government plans to revise its net neutrality guidelines, focusing on criteria for applying priority transmission—including emergency communications—and special services. The challenge is to secure the communications quality needed for disaster response and other purposes while preventing degradation of regular internet quality and unfair discrimination against content.
Spectrum policy must also keep pace for new communications technologies to translate into real-world services. Network operations and plans to recoup investment costs vary depending on the spectrum usage period and fees. If related policies are uncertain, companies may find it difficult to decide when to invest, and the launch of services may be delayed even after they secure spectrum. Setting out in advance when and under what conditions spectrum can be used is also a task in creating favorable investment conditions.■ A national network strategy is needed to connect AI infrastructureThe scope of the national network strategy is expanding from upgrading individual networks to connecting AI infrastructure as a whole. In an environment where AI data centers, domestic telecom networks, submarine cables and satellites operate in tandem, a key challenge is not only investing in each facility but also determining how to connect them. Even if each facility is expanded, services could be constrained if links between them lack capacity or are vulnerable to disruptions.
There are calls for the government to specify the structure for connecting infrastructure, investment priorities and the timeline for institutional reforms. The aim is to go beyond listing individual support measures and set a goal for the kind of communications environment to build, linking technology development and public support with private investment.
“In the past, the government led the market by setting out the direction of the transition to third-generation (3G) networks and a roadmap for technology development and investment, but that roadmap is no longer clear,” Professor Jo said. “It is important in the AI and 6G era, too, to clearly communicate to the market a vision for the future, legislative amendments and the direction of regulatory reform. We need an integrated picture encompassing graphics processing units (GPUs), AI data centers, domestic networks and 6G networks, as well as submarine cables and satellites.”
[email protected] Yoon Hong-jip Reporter