South Korea

Description

Today, South Korea has the highest number of broadband users. Ninety two percent of the country has blazingly fast, 3-megabits-per-second broadband at home, and similarly high-speed wireless connections on the road.

The rapid growth of the Korean broadband market was the result of a combination of government pushes and market factors. The government was active in promoting privatization and deregulation in general, and the information technology (IT) sector was no exception.The telecom market is fiercely competitive, and broadband service costs the consumer less than $20 a month.

There are 20,000 PC baangs, or Internet cafes, where you can rent a superfast machine for $1 an hour. Online gaming has become a way of life, with nearly 3,000 South Korean videogame companies boasting combined revenues of up to $4 billion. As a result, South Korea has become the world's best laboratory for broadband services - and a place to look to for answers on how the Internet business may evolve. Smart bet on broadband.

Fast-forward 11 years: Korea is now the most connected and Net-addicted country on Earth.

Enablers

Korean Government: In 1995, the South Korean government made what must rank as one of the most shrewd and far-sighted investments in business history. It spent big on a nationwide high-capacity broadband network that any telecom operator could offer service on, and offered subsidies so that 45 million Koreans could buy cheap PC's. Cost: a mere $1.5 billion. Additionally the South Korean government invests huge amounts of money in nanotechnology.

For ubiquitous communications, the government introduced what it refers to as its IT839 strategy, which covers eight services, three types of infrastructure and nine products.

For RFID-based services, the government has developed several pilot projects including a baggage tracking service among six domestic airports, a national logistics pilot for imports and exports and an inventory management system for the defense Ministry. The government's three key infrastructures are a broadband convergence network supporting computers, communications and broadcasting services; an IPv6 service using the next generation Internet protocol; and infrastructure and ubiquitous sensor network based on RFID.

Finally the competition with the really advanced neighbor country of Japan will drive korea to invest even more amounts of money in technology and thus to shorten the coming age of Ubiquitous computing

Inhibitors

• A possible war conflict with North Korea.
• Risk of making such a focused investment in a high risk sector.

Experts

Yun, Kyounglim, Heejin Lee and So-Hye Lim, The Growth of Broadband Internet Connections in South Korea: Contributing Factors, Asia/Pacific Research Center, Stanford University (Sept. 2002).

Choudrie, Jyoti and Heejin Lee, Broadband Development in South Korea: Institutional and Cultural Factors, European Journal of Information Systems v. 13, pp. 103-14 (2004).

Timing

The government implemented structural reforms in July of 1990. Since the mid-1990s, the Ministry of Information and Communications (MIC) has pursued a policy of high-speed telecommunication infrastructure as a foundation to build a “knowledge-based society.” In the telecommunications sector, competition was allowed on an incremental basis and, in the market for value added services, full competition was allowed. In March of 1995, Korea Information Infrastructure (KII) was established. KII’s goal was to advance the nation’s IT infrastructure. In August of 1995, the Framework Act on Information Promotion was enacted.

The country then experienced economic crisis in 1997 with the rest of the region. During the economic reforms being implemented after the financial crisis, the information technology (IT) sector was one of several that was targeted and considered to be an important factor in the recovery of the nation’s economy. In 1999, the government implemented the program known as Cyber Korea 21, which was intended to accelerate IT development.

In 1999, the government provided US$77 million in loans with preferential rates to facilities service providers (FSP). In 2000, another US$77 million was provided in loans for suburban areas, small cities and towns, and regional industrial areas. Another US$926 million was provided until 2005 in order to supply the rural areas with broadband.

Commensurate with its investment funding, the government implemented various policies designed to increase internet use among the general population. The government provided “internet literacy” lessons to homemakers, the elderly, military personnel, and farmers. In June of 2000, the government implemented what was known as the “Ten Million People Internet Education” project, the purpose of which was to provide internet education to ten million people.

Korea now has the highest penetration of broadband in the world. The number of broadband subscribers in Korea reached 10 million in October 2002, with about 70% out of 14.3 million homes connected at the speed of over 2 Mbps.

In 2002, there were six operators providing broadband services in Korea. The market share leader was Korea Telecom (KT), with approximately 45.8% market share (4.5 million subscribers), followed by Hanaro Telecom with approximately 28.6% of the market and Thrunet with approximately 13.1%. of the market. In terms of technology, KT primarily uses Digital Subscriber Line (DSL). Hanaro uses a mix of cable and DSL. Thrunet service is mainly provided through cable modem.

The South Korean government is ploughing US$800 million into research and development of radio frequency identification (RFID) tags.

In 2006 South Korea has become the world's best laboratory for broadband services

Web Resources

• Korea's Vision in Ubicomp

• (Why the future is in South Korea By Chris Taylor, Business 2.0 Magazine senior editor)