KISDI Finds That the Relationship Between Competition and Network Investment Is Changing with the Advancement of Next-Generation Communications Technologies (detail)

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KISDI Basic Research (25-18): Analysis of the Impact of Next-Generation Communications Technologies on Market Competition and Network Investment

Key Findings

- The relationship between market competition and network investment differs between the LTE and 5G eras.
- Under 5G, higher market concentration is no longer significantly associated with increased network investment.
- The expansion of AI and cloud technologies is reshaping the structure of network investment.
- The report proposes policy directions for competition in the 6G era.

The Korea Information Society Development Institute (KISDI, President Sangkyu Rhee) has published KISDI Basic Research (25-18), Analysis of the Impact of Next-Generation Communications Technologies on Market Competition and Network Investment. The report analyzes the relationship between market competition and network investment across LTE and 5G mobile communications markets in 36 OECD member countries.

The study empirically examines how the relationship between market competition and network investment has evolved across different generations of mobile communications technologies, with a particular focus on LTE and 5G. It also presents policy implications for competition and investment in the transition to the 6G era.

As AI-powered services and digital transformation continue to expand, mobile communications networks have become critical infrastructure supporting national digital competitiveness. Consequently, sustained investment in next-generation network technologies has become increasingly important. At the same time, because competition in the mobile communications market is closely linked to operators' investment decisions, understanding how this relationship changes across technology generations has become an important policy issue.

The report finds that mobile network investment in OECD countries increased during the initial deployment phases of both LTE and 5G. More recently, investment has shifted beyond traditional base station deployment toward digital infrastructure, including cloud computing and software. The study also finds that investment per subscriber was relatively lower during the early stages of 5G deployment than during the LTE era, largely because early 5G networks relied on the Non-Standalone (NSA) architecture, which utilized existing LTE core networks.

The empirical analysis shows that the relationship between competition and investment differs significantly across technology generations. During the LTE era, the study identifies an inverted U-shaped relationship, indicating that network investment increased as market concentration rose to a certain level. In contrast, this relationship became much weaker in the 5G era, and mergers and acquisitions among mobile network operators did not produce a statistically significant increase in investment per subscriber.

According to the report, this change reflects the growing adoption of network virtualization and software-based architectures in 5G, as well as the widespread deployment of NSA networks during the initial rollout, which reduced investment incentives associated with economies of scale compared with previous generations.

Minhee Kim, Director at KISDI, stated, "Our findings show that the relationship between competition and network investment is changing as mobile communications technologies evolve. In the 6G era, competition policy and investment policy should be developed in ways that reflect emerging investment structures and evolving service environments."

The report emphasizes that policy approaches for the next generation of communications technologies should recognize that the relationship between competition and investment varies across technology generations. It recommends:

Expanding new service markets, including AI- and B2B-based services, to strengthen long-term investment incentives for the 6G era;
Establishing a competition regulatory framework that reflects evolving investment environments, including the spread of network virtualization and cloud-based network architectures; and
Pursuing competition promotion and investment expansion as complementary, rather than conflicting, policy objectives.

The report concludes that competition and investment policies for next-generation communications markets should be designed with sufficient flexibility to reflect changes in market conditions driven by technological progress.

The full report is available for download from the KISDI website.

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KISDI Finds That the Relationship Between Competition and Network Investment Is Changing with the Advancement of Next-Generation Communications Technologies