Broadband: How South Korea leads the way
Published: 28 Jul 2004 15:55 BST
Korean regulators set out a clear path for the network industry with well-publicised national goals. All big office and apartment buildings would be given a fibre connection by 1997. By 2000, 30 percent of households would have broadband access through DSL or cable lines. By 2005, more than 80 percent of households would have access to fast connections of 20Mbps or more -- about the rate needed for high-definition television.
The government also spent $24bn building a national high-speed backbone network linking government facilities and public institutions.
Even sceptics in the United States say that the South Korean government's advocacy role and intense focus can serve as a model for other countries looking to modernise their infrastructure.
"Had it not been for the government leadership, they would not be where they are today," said David Young, the director of technology policy for Verizon Communications. "There is a lesson to be taken there in setting a goal and providing support to achieve it."
A cursory look at the financial numbers shows why. During construction of the network, about 13.5 percent of South Korea's gross national product came from businesses selling equipment and services, Sang-kyoo Choi, the director of the IT Industry Cooperation Division, International Cooperation Bureau of the Ministry of Information and Communication (MIC), said in an interview.
Between 1995 and 2003, the market for IT servers increased by more than four times, and the network equipment market also quadrupled in size, according to the MIC. Start-ups such as PolyPix, a maker of Internet telephony software, have appeared. Japanese venture investor Softbank has a stake in PolyPix, which is one of the software providers for Yahoo's Japanese broadband services.
Cumulative revenue from online content has similarly exploded. Companies that provide online games and services like the Cyworld blogging site have penetrated all segments of society and become a national obsession. Corporate executives chronicle their daily lives through blogs.
The daily pervasiveness of broadband in South Korea is one of the primary reasons that Intel created a new lab dedicated to the digital home in Seoul. The company is studying how Koreans use the Internet, from shopping to gaming, to understand how the technology can be developed for other countries.
"The usage model is critical," said M.C. Kim, general manager for Intel Korea. "Online gaming is one of the killer apps."
In many ways, the most important question answered in the country's grand broadband experiment has been one of demand. Broadband progress has long been delayed in the United States and other countries as a result of uncertainty about how much interest consumers would have in paying for the expensive infrastructure needed for high-bandwidth services.
As a result, entire industries have been paralysed for years by a classic Catch-22, as content companies and network carriers waited for one another to make the first move before investing in broadband products. Telecommunications start-ups tried to break that stalemate in the 1990s by investing large sums to offer rival high-speed connections to customers, only to be gutted in the dot-com bust.
What South Korea showed is that, if you build it, they will definitely come.
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