South Korea holds broadband lessons

SINGAPORE--The business environment, government policies and social factors have contributed to South Korea's broadband success.

Speaking at the CommunicAsia conference held here this week, Simon Bureau, managing director of business development consultancy Vectis International, said that the success of South Korea's broadband market provides important lessons for countries that are trying to promote broadband adoption.

With a broadband household penetration rate of over 80 percent, South Korea is often hailed as one of the most wired nations in the world. All Internet users in South Korea use broadband services--there is no more dial-up access.

Highlighting the role of the South Korean government as a key driver of broadband services, Bureau said the government has been aggressive in spearheading broadband adoption since the 1990s. "They've put in large amounts of money, not just in infrastructure but also in applications and content development," he noted.

The government has also adopted other creative ways to boost broadband adoption, including a system that rates buildings based on the availability of broadband services to households. "If you meet certain criteria and your building is qualified, you get tax breaks and your apartment prices will also get higher," Bureau said, adding that South Korea's high population density has also made it cheaper and more efficient to build broadband networks.

Bureau also said that the liberalization of South Korea's telecommunications market in the 1990s brought down voice revenues, which in turn led many service providers to look at broadband as a new growth area. "Broadband became one of the services where competition was fierce, so prices went down and availability was increased," he said.

The emergence of the Internet cafes, or "PC bangs" as they are called in South Korea, also helped trigger the country's broadband market.

"When Korea went through an economic crisis during the 1990s, people found themselves without a job," Bureau said. "So, they went to the Internet cafes looking for jobs and when the economy recovered, they realized that they also wanted to have broadband at home."

Internet cafes in South Korea continue to stay relevant to broadband users, even as most people have high-speed Internet access at home. Bureau said this is because PC gamers still prefer the community nature of PC bangs, and will head down to one to play games with their friends.

"South Korea is very much a community-based society, they like to be part of a group, share information and help others," he said. "This has had an impact on the growth of broadband, as well as in search."

More importantly, a high proportion of Internet content accessed by South Korean users is created by users themselves, as opposed to going to a centralized database, Bureau said. This has increased the need for broadband, since users need to maintain high-speed connections for downloading and uploading bandwidth-intensive materials. "Online gaming, which also requires high bandwidth, further created more demand for broadband services," Bureau added.

South Korean's consumer behavior, too, has had a hand in increasing broadband take-up. "If the neighbors have broadband, they must have it too," he said.