[비즈한국] ICT (Information and Communication Technology) sector funds will see significant cuts next year, following a similar trend this year. This is because all three major telecom companies—SK Telecom017670, KT030200, and LG Uplus032640—surrendered their 5G 28GHz frequency bands last year, signaling a red light for fund acquisition. Furthermore, the fallout from the cancellation of the fourth mobile carrier's license this year is expected to continue causing setbacks. These two funds are key financial resources for investments, including those in the AI sector. Consequently, there are concerns that ICT research and development (R&D) and support for small and medium-sized enterprises could diminish.
ICT Funds Face Large-Scale Cuts Again Next Year
According to the government's budget proposal, the Information and Communication Promotion Fund and the Broadcasting and Communications Development Fund will see substantial decreases next year to 869.2 billion won and 736.8 billion won, respectively, reflecting the reality of budget restructuring due to deficit operations. The Information and Communication Promotion Fund will shrink by 11.5% from this year's 982.5 billion won, while the Broadcasting and Communications Development Fund will decrease by 18.6% from 905.4 billion won. Looking at the fund management plan for 2025, the operating scale of the Information and Communication Promotion Fund, which totaled 1.3797 trillion won this year, will drop by 26.7% to 1.011 trillion won, and the Broadcasting and Communications Development Fund will shrink by 30.1% from 1.2527 trillion won to 875.3 billion won.
The Information and Communication Promotion Fund is invested in information and communication technology development and national R&D projects. The Broadcasting and Communications Development Fund is used for projects to revitalize broadcasting and communication services and build industrial foundations. The budget for ICT promotion funds was cut by about a quarter last year, and with the operating scale shrinking again next year, there is concern that projects driven by these funds will also wither. Under the fund management plan, projects such as overseas expansion of broadcasting and communication services (a 2.2 billion won reduction) are slated to be scaled back, and in the Ministry of Science and ICT budget, investments in fostering new digital industries and full-scale digital innovation will be reduced by 99.6 billion won and 8.2 billion won, respectively.
However, the R&D budget, which faced controversy due to large-scale cuts last year, is set to be restored to 19 trillion won. This is an increase of about 100 billion won compared to the budget of 18.8686 trillion won two years ago, and about 2 trillion won more than this year. Key investment areas include AI-semiconductors, advanced biotechnology, and quantum technology.
4 Trillion Won Deficit, "Redesign" Needed for Digital Competitiveness
The backdrop is a multi-trillion won deficit structure. 100 billion won is paid out in interest annually, and the core revenue source—frequency allocation fees—has dwindled. Frequency allocation fees collected from telecom companies are distributed to the Information and Communication Promotion Fund and the Broadcasting and Communications Development Fund at a 4.5 to 5.5 ratio.
As of last year, frequency allocation fees decreased to 48% of the previous year's level. In 2022, when the Ministry of Science and ICT conducted a third-year performance review on 5G frequency allocation, it was found that the three major telecom companies had only built 10-12% of the mandatory network construction requirements for the 28GHz band. Consequently, the Ministry revoked the 28GHz frequency allocation for KT and LG Uplus in December 2022, and for SKT in May last year. In the process of covering the largest tax revenue shortfall in history last year, the government borrowed 250 billion won from postal insurance reserves at an annual interest rate of 4.04% to supplement the lack of resources in the Information and Communication Promotion Fund.
The National Assembly Budget Office pointed out regarding the cancellation of 5G frequency allocations that "the three major telecom companies achieved the result of increasing profits through cost savings in equipment and expensive service plans compared to service quality, due to their failure to fulfill the 28GHz construction obligations." While finding new owners for the frequencies is considered the most certain solution, the cancellation of Stage X's qualifications as the fourth mobile carrier in the first half of this year has dashed hopes for securing additional ICT funds.
During a briefing on the achievements and future plans of the Yoon Suk-yeol government's science and technology and digital policies on the 17th, Song Sang-hoon, head of the Information and Communication Policy Office, stated, "In addition to fund projects, we are organizing new projects under the general account or other accounts to maintain and expand overall expenditures."
Along with criticism that the government failed to achieve its network construction strategy, there are concerns that the reduction in fund operations makes cuts to ICT R&D and support projects inevitable. The deficit for ICT funds is expected to reach 4 trillion won next year, and the government has announced a plan to reduce the operating scale by at least 300 billion won every year. It has also expressed its will to re-attempt the process during the frequency reassignment periods coming in 2026 and 2028. However, skepticism remains, as seen in the recent failure despite lowering barriers to entry. An industry official said, "Building facilities and maintaining business requires enormous capital and capacity. Limits have been exposed even with installment payments for auction fees, so I am skeptical about how this can be carried forward as of now."
Some argue that the entire framework for securing funds and investment needs to be re-established. The critique is that the original intent of the funds—such as fostering industries and supporting research and development—is not being properly realized. Kim Yong-hee, a professor at the Graduate School of Media & Communication at Kyung Hee University, noted, "It is a sound and good fund that contributes to the growth of various content businesses, but there is a lack of deep thought regarding where these funds should be used. Medium- to long-term plans of five years or more or strategic utilization plans need to be supplemented." He added, "Funds are being used in areas where the general account should apply, and there is a lack of incentives for the telecom and broadcasting companies that provide the resources, so change is necessary."