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Innovation

South Korea--the broadband leader

special report Washington can learn some valuable lessons about broadband from Seoul.
Written by Michael Kanellos, Contributor on
SEOUL, South Korea--Matt Renck is spoiled.

Ever since moving here to teach English two years ago, Renck has had a high-speed Internet connection of 8 megabits per second--only about average for a South Korean apartment, but nearly eight times the typical broadband speed in U.S. households. He watches TV shows over this connection, creates multimedia projects for his class, and regularly updates a Weblog.

None of what he does is revolutionary; it just happens far faster than it would in America. And that's a little revolutionary all by itself.

"I didn't realize how much the Web had to offer until I got to Korea," said Renck, a programmer by training. "I couldn't appreciate it until I got here and saw what true high-speed access does to change your perception of how fast information truly moves."

For Americans, almost none of whom have access to speeds that Renck and many South Koreans take for granted, this difference is jarring. The United States considers itself the center of technological innovation, yet South Korea has gone considerably further in making a mainstream reality out of the futuristic promises of bygone dot-com days.

Many U.S. executives and policy makers are quick to dismiss the disparity, noting correctly that South Korea's densely populated areas have made it easier for telecommunications companies to offer extremely fast service to large numbers of people. But even with such geographic and demographic differences, the United States can learn some valuable lessons from South Korea's experience in jump-starting a broadband powerhouse.

"I think there are a quite a few lessons," said Taylor Reynolds, an International Telecommunications Union analyst who recently completed a survey of Internet and mobile services in South Korea. "Most of the growth is tied to effective competition, which you don't see in a lot of places in the United States."

The Seoul government's clearly articulated vision for modernizing the country's infrastructure stands in stark contrast to the regulatory morass that has stunted development in U.S. telecommunications for several decades. South Korea's policy--the cornerstone of a national technology initiative to help revive a devastated economy--has created true broadband competition, which in turn has helped prices fall and speeds rise.

Affordable for all
Although its economy is still struggling, South Korea has made significant progress with many forms of digital technology. Citizens can get "video on demand" online, often even with high-definition video, for less than Americans pay to rent a DVD. Low-income students use high-speed Net connections to take free tutorials for the national aptitude test, an SAT-like exam that can determine college admissions and future job paths.

Online gaming is a massive cultural phenomenon, with three TV channels dedicated to the subject and good players attaining the fame of American sports stars. In addition, South Koreans spent more than $1.6 billion shopping online in the first quarter of 2004, or about twice as much per capita as U.S. residents .

"The vision of a broadband society is already here in Korea," said Eric Kim, executive vice president of global marketing operations at Samsung Electronics. "We are two to three years ahead in wireless broadband, and people are using it, too."

The country's achievements are even more impressive considering its starting point in technology. In 1995, fewer than 1 percent of South Korean residents used the Internet, though a larger number subscribed to proprietary Korean-language networks that were somewhat like the closed CompuServe and America Online networks of the late 1980s. By 2004, more than 71 percent of South Korean households subscribed to broadband Net services, according to local estimates.

The decision to focus on broadband began in the mid-1990s and intensified after South Korea's economy was crippled by the collapse of the Asian financial markets in 1997, when policy makers targeted technology as a key sector for restoring the country's economic health.

Korean regulators set out a clear path for the network industry with well-publicized national goals. All big office and apartment buildings would be given a fiber 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 $24 billion building a national high-speed backbone network linking government facilities and public institutions.

Even skeptics 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 modernize 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.

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