Telecommunications in South Korea

South Korea is one of the leading economies in the Asia-Pacific region. Along with Hong Kong, Singapore and Taiwan, its economic development in the 1980s and 1990s caught the attention of the world. Having been one of the poorest countries in the 1960s, it has become the 10th largest economy today.

The country's economic progress has been matched by developments in the telecom industry. From a situation in the late 1970s where there were only 250,000 lines serving a population of more than 40 million, there are now more than 20 million lines in service. In fact, as an indication of the country's level of development, the demand for fixed lines has started to drop as other, more advanced, services supersede the requirement for basic telephony.

Of particular importance among such other developments is the popularity of mobile phones. The mobile sector was slow to develop and, by the mid-1990s, only two million people were subscribers. However, very rapid growth took place in the late 1990s and early 2000s, and now the subscriber base stands at almost 40 million.

Moreover, a large proportion of these subscribers uses their mobile phones for data applications. The three mobile operators based their 2G networks on CDMA technology, which allowed an incremental transition to the provision of data services. South Koreans, being techno-savvy, were quick to take advantage of the more advanced data applications when they became available.

Also, the trend away from basic fixed lines has been spurred both by the remarkable penetration of broadband services in the community, and by the avid use made of these services. Broadband penetration is high, with a range of technologies being used for the purpose. While xDSL is the most popular technology today, the government's plans to put a ubiquitous next-generation broadband network, consisting of multiple technologies, in place by 2010 means that broadband use will continue to expand and will do so in many different forms.

Not only is high-speed broadband widely available, the use being made of it is extraordinary. South Koreans spend longer online than anyone else, encouraged by the fact that services are decidedly affordable.

Naturally, many of the applications to which this online activity is directed are common to broadband users elsewhere, but what stands out in South Korea is the popularity of online gaming. Championships contested by teams that are sponsored by major companies abound, and gaming is now a major economic activity in its own right.

E-commerce is another activity that is being encouraged by the widespread availability of broadband. While the economic value of this activity is still limited, it is growing and future prospects are good. Hopes are high that e-commerce via TV, known as t-commerce, will become especially popular.

The country is also at the forefront of developments in broadcasting, with the convergence of the telecom and broadcasting industries currently being of particular significance. Digital satellite-based direct-to-home (DTH) services were introduced in 2003, the numerous cable operators are upgrading their networks to compete and the government has decreed that there will be full digital deployment by 2010. The telecom operators are planning broadcasting services, while broadcasters are hoping to expand into the telecom market. A range of triple-play models - incorporating telephony, broadband and TV- is already on offer and more will follow.

The government's policy is to de-regulate and liberalise the telecom industry as quickly as possible. A great deal of progress has been made in this direction, but the regulatory body still plays a very interventionist role at times when it feels it needs to mould developments to fit its overall plans.

Traditionally, the Korean economy was highly protected, and foreign investment used to be difficult (at best). The situation has changed in recent years, but there are still barriers to entry that foreign companies need to understand before making any commitment. However, the level of development in the country, particularly in the telecom sector, is such that foreign companies should look seriously at the benefits of entering the South Korean market.

The government is aiming to position the country as a leading technology hub in North East Asia, and developments indicate that it is well on the way to achieving that goal.