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South Korea aims for global leadership in wireless, broadband Internet markets in Information Age

Madanmohan Rao reports from the e-Government Summit in Kyongju

South Korea has reason to be excited with its vision of "e-Korea." Amid signs of an economic recovery, pickup of the high technology sector, and the build-up towards the World Cup finals this year, the east Asian "tiger" economy is making impressive progress in sectors like broadband and wireless Internet for substantial gains in the domestic and international markets.

Policymakers, business leaders, analysts and academics from North America, Europe, Asia and Australia gathered in the eastern Korean city of Kyongju for the Korean Association of Regional Information Societies' (KARIS) third annual international summit, called "Searching for Regional Informatisation Strategy in Knowledge Societies."

"The challenge for South Korean IT companies and policymakers is to remain at the cutting edge of international competitiveness in new knowledge industries while also enriching the daily lives of our citizens," said Seang-Tae Kim, professor at Sunkyunkwan University and president of KARIS.

A wide range of initiatives is being launched in this regard, ranging from high-tech marketing alliances and rural community networks to R&D and online cultural projects.

The year 2002 will be a transition period for tech-savvy Korea to be transformed into a knowledge-based "e-society," according to Information and Communication Minister Yang Seung-Taik.

Market research firm IDC estimates that e-government spending in Korea will experience robust growth at over 20 per cent through 2003 (China will lead other Asian governments, with a compound annual growth rate of nearly 40 per cent).

According to the Ministry of Communications, the total revenue from the Korean Internet industry amounted to US$31 billion in 2000. While the dotcom bust certainly took its toll in 2001, the Internet economy is bouncing back quickly this year.

The number of Internet users in Korea was about 25 million as of the end of 2001 and will reach 27 million at the end of this year, out of a total population of 48 million. 56 per cent of Koreans use the Internet at least once a month.

According to surveys conducted by the Korea Advertisers Association (www.kaa.or.kr), the economic recovery coupled with the maturing of online advertising practices are leading to a healthy pickup of online ad revenues this year for portals like Daum, NHN and Lycos Korea.

According to the Bank of Korea, the proportion of Internet banking services users in Korea reached 24.2 per cent of the nation's population, the third highest in the world, following Sweden (29.4 per cent) and Norway (28 per cent). Cyberstock trading accounts for about 80 per cent of total transactions, as more investors trade shares via PCs and wireless devices.

The share of e-commerce in total transactions increased to 8.6 per cent in 2001, up from 4.5 per cent in 2000. E-commerce services are offered by over 2,000 sites (of which 30 per cent are pureplays).

On the cyberlaw front, the Ministry of Finance and Economy has come up with strengthened regulations for online transactions in order to protect customers - for instance, via compensation for late or failed deliveries of ordered goods.

On the corporate strategy front, the global approach of Korean companies is to climb up the value chain from products and basic services to high-end consulting and knowledge property rights.

For instance, Korea's royalty income from MPEG (Motion Picture Experts Group) standard technologies is expected to reach $300 million in 2005 with the full-fledged implementation of IMT-2000 mobile services and digital TV broadcasting.

The Enhanced Communication Transport Protocol (ECTP), a multicast protocol for efficient Internet broadcasting developed by South Korean engineers, is expected to help generate over $5 billion worth of export revenues annually from 2004.

The number of domestic broadband Internet subscribers is forecast to reach 11 million this year, up from 7.8 million last year. Broadband Internet penetration rates are expected to reach 76.4 per cent of the country's 14 million households this year.

Companies such as Korea Telecom (KT), SK Telecom and Hanaro Telecom are targeting projects like broadband Internet services for massive apartment complexes in northeast China, broadband networks in Russia, CDMA markets in Kazakhstan, and ADSL networks in Thailand.

The number of mobile phone subscribers in Korea has inched up to almost 30 million. More than 21 million Koreans have access to the Internet through their mobile phones.

Cellphone users now account for 60 per cent of the Korean population.

The three major wireless carriers -- KTF, SK Telecom, LG Telecom - already offer CDMA 2000 1x, a wireless service of up to 144Kbps data transmission. There seems to be some confusion, however, over whether CDMA2000 1x is a 2.5G or 3G technology.

The carriers plan to offer CDMA 2000 1x EV-DO ("evolution data optimised") 2.4 Mbps services before June this year when the Korea-Japan World Cup soccer championships commence, so that customers can view soccer games through their mobile gadgets while on the move.

Korean automobile makers Daewoo and Hyundai are also deploying telematics services, or in-car data services based on wireless communication, digital radio broadcasting and GPS.

Korea's Mobile Vision 2005 plan aims for targets of $15 billion in mobile technology exports in 2002 and $35 billion by 2005.

LG Electronics has reportedly captured almost half of Chile's CDMA mobile handset market and a quarter of the CDMA market in Brazil as well. Samsung Electronics is among the top five cellphone makers for GSM and CDMA in the world along with Nokia and Motorola, moving ahead of Siemens. Samsung and LG are entering the market for GPRS phones as well. Some analysts predict that mobile phones could overtake TV sets in consumer adoption in 2004.

"Mobile Internet may be the biggest gamble in business history, but millions of people are using it now and the foundations for a shift to a true enabler of untethered life are already in place," according to Nam Yong, president of LG Telecom.

South Korea has emerged as one of the true success stories in the global economy, making rapid progress since it became independent from Japanese occupation on August 15, 1945. Today, it is among the fifteen largest economies in the world, the largest producer of ships, the leading producer of dynamic random access memory (DRAM) chips, the fifth largest automobile manufacturer, and second largest steel maker.

By 2025, a unified Korea could become one of the top eight economies of the world, according to the U.K.-based firm Euro- Asian Business Consultancy (EABC) -- which also expects that Korea would form a free trade agreement with Japan and China, the world's second and third largest economies.

The key question facing Korea is how successfully it can make the transition to a knowledge-based economy over the next decade, according to Paul Chamberlin, a U.S. analyst who has penned his thoughts on the matter in a recent book called "Korea 2010: The Challenges of the New Millennium."

"We have projected our technology strengths to international audiences very well - but not our cultural strengths. While we have certainly adapted and innovated with technologies in our local language, we need to do more in the English language in areas like Internet content so that we can share and leverage our culture with a larger international community," said Sun-Phil Kwon, professor at Mokwon University.


The writer can be reached at madan@techsparks.com


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