Ericsson Korea maintains that its software for base stations constitutes core infrastructure, not a simple commodity, following a court ruling on service surcharges. Local telecom operators must apply surcharges to boost domestic base station manufacturers, even for foreign vendors lacking local production facilities.
Court Upholds Service Surcharge
The Seoul Administrative Court’s 6th Division, led by Chief Judge Na Jin-i, upheld a decision on February 27 regarding Ericsson Sun Korea’s (formerly Ericsson Elji, now Ericsson Korea) bid as the primary contractor for the Yeoksam Office user equipment project. Officials confirmed the ruling on March 26, requiring service surcharges on related deals.
Ericsson Korea, in partnership with LG Electronics, manages sales of Ericsson AB’s unmanned network systems, broadcasting systems, and base station core software. The company has supplied such software—linked to Ericsson AB’s robotic unmanned control networks—to major local carriers including SK Telecom, KT, and LG Uplus.
Ericsson Korea categorized these software sales and distributions as “commodity import deals” under service codes. However, without domestic manufacturing operations, base station manufacturers argue such imports warrant surcharges to support local industry.
Government and Local Classifications
The Seoul Metropolitan Government designates Ericsson Korea’s software deals as “low-end imported base station core business” service codes. Joint Korean-Swedish ventures receive a 10% bidding preference.
From July 2016 to May 2021, Ericsson Korea faces 14.8 billion won in surcharges on base station deals.
Ericsson’s Stance
An Ericsson Korea representative stated, “If software is treated as a commodity, imports from other countries via Ericsson AB’s know-how would encompass everything. Viewing import deals as service codes poses risks.”
The government panel representative countered, “Ericsson AB’s software deployment involves low-end base station operations, not commodities. That deal qualifies as a service code.” They added, “This software integrates into hardware, enabling control functions that hardware alone cannot achieve.”
The panel emphasized, “Over the long term, the Ericsson group dominates base stations through experience, operations, and information, yielding clear results.”
