COUNTRY SNAPSHOT: Global Broadband Capital

The broadband services in South Korea are perhaps one of the best examples
where the government has deregulated a sector to script an unparalleled success
story. Japanese are traditionally known for their love for technology, but
Koreans marched ahead of others in the area of Internet and mobile
communications. It has become a case study, which every regulator and policy
maker wants to replicate. While other countries like India are still struggling
to put their 2G and 2.5G house in order, Seoul is looking at the 4G services.

The Korean success is an example of strong political will and backing to
promote the communication sector. The Korean government and administrators were
quick to realize the need to develop infrastructure, technologies, content as
well as application software to put the country on info superhighway. Once the
goals had been set, laws and regulations were overhauled and obstacles removed
to achieve the target.

Today almost 70 percent of the Korean population is connected to high speed
Internet — 256 kbps and above — and almost equal number have a mobile phone.
At the end of year 2003, the mobile phone density of Korea was 75 and fixed
phone was 51.

Not only government, a very tech savvy population helped by strong private
initiatives has made it possible for Korea to bridge the digital divide in the
their society. Merely opening up the sector to competition was not enough to
ensure spread of information communication technologies. Initially the there was
free Internet and computer training that inspired people to use technology.

A factor contributing to the broadband growth in Korea has been the apartment
complexes. About 70 percent of the Korean population lives in seven key cities,
and about 50 percent of the total population lives in apartment complexes. This
high density and concentration of population has made to take fiber optic cable
into an apartment complex easy.

Path to Deregulation

Though Korea Telecom got the taste of competition in the early 1990s, with
the entry of a second international operator and a domestic long-distance
carrier, it was not before 1997 when new licenses were announced by the
government that liberalization and competition really took off. In 1997, when
new licences were announced for local services, a third domestic long-distance
services, three PCS licences and a local cellular services.

After this, South Korean communication market has never looked back. In fact,
the Korean government has made licensing process simple by keeping on three
licenses - network service provider, specific service providers and value
added service providers. The revenue from the communication sector is reinvested
by the government to fund its projects.

Before the liberalization, Korea Telecom was the only provider. But with
private companies allowed to participate, Hanaro Telecom is said to have set up
ball rolling. In April 1998, Hanaro launched ADSL and in the beginning of 2000,
the incumbent KT too changed from ISDN to ADSL. And by 2002 the two players
accounted for almost 75 percent of the total ADSL market share. Even today KT
claims to have over 50 percent share of the broadband penetration.

In terms of foreign ownership, Korea has been opening up. From 20 percent it
was raised to 33 percent in 1998 and at present it is 49 percent in all
facilities-based telecom companies. Further, there is no restriction in foreign
ownership of companies selling data services, voice services and those offering
value-added services. The government has also been offloading its share in Korea
Telecom and also allowed foreign ownership up to 33 percent.

The Broadband Revolution

According to the Ministry of Information and Communication, currently, the
broadband penetration exceeds 70 percent with over 10 million subscribers. The
demand for high speed always-on mobile connection from the dense and literate
population was very high.

Today, South Korea has one of the world's most developed mobile Internet
markets and almost 40 percent of mobile users subscribe to some form of mobile
data service. Another reason for the growth of Internet services has been the
availability of content in the local language.

The ISPs had been given higher incentive to upgrade and build infrastructure
to offer converged services. These ISPs managed to have multiple revenue streams
from voice over IP, television and Internet services, and, hence, were able to
reach economies of scale.

Gamers' Paradise

Online gaming has been the biggest catalyst in promoting broadband services
and mobile Internet in Korea. The country has not only emerged as the biggest
market for games but has been the test bed for many new technologies in this
field. Gaming in Korea is a way of life and what started with downloading
pictures and ring tones have been transformed into game down loads and
development.

CDMA Showpiece

Network in Korea is predominantly CDMA. And Qualcomm has been instrumental
in bringing CDMA to South Korea. Being a late entrant in the mobile arena, the
officials were not keen on deploying GSM networks. Another factor favoring CDMA
was that the government wanted to boost manufacturing locally rather than
bringing in equipments from outside. While Korean companies imported chips from
Qualcomm, the final equipment and the software running those were developed
locally and thus helped in boosting the local economy. Though the debate between
GSM or CDMA on efficiency continues, for Koreans good user experience has tilted
balance in favor of CDMA.

In a nutshell, the Korean experience shows that governments plays a vital
role in promoting IT and communication services. A conscious national effort to
adopt digital IT technology has resulted in 13.5 percent of the GDP and almost
30 percent of the exports coming from this sector. Without the government
initiative and support it would have been difficult task for Korean companies
and service providers to compete and survive. The initial push through
initiatives ranging from providing free Internet access to schools to becoming a
preeminent user of broadband technology itself has started showing results and
Republic of Korea has become a model to be replicated in developing countries
like India.

Anurag Prasad

South Korean companies focusing on India

Cheil Communications

Address: Gesco corporate center, The great eastern center, 70, Nehru place,
New Delhi -110019

Tel: 91-11-26209 436

Fax: 91-11-26209 450

LG Electronics

Address: Plot No.51 Udyog Vihar, Phase II,Surajpur, Kasna Road, Distt.
Gautam Budh Nagar, Greater Noida, UP-201805

Tel: 91-120 - 2560900/40

Fax: 91-120 -2560956/18

Samsung India Electronics

Address: 7th & 8th Floor, IFCI Tower, 61, Nehru Place, New Delhi —
110019

Tel: 91-11-51511234

Fax: 91-11-51608818/19

Korea Telecom

Address: Suite 311, Ashok Hotel, 50-B, Chanakya Puri, New Delhi — 110021

Tel: 9811440494

Address: #9, Ring Road, Laipat Nagar N, New Delhi-110024

Tel: 91-11-2641-7192/6973

Fax: 91-11-2641-7194

Ucom Technologies Pvt Ltd

Address: 826, B-1 Extension, Mohan Corporate industrial estate, Mathura
Road, New Delhi

Tel: 91-11-5167 8490

Fax: 91 - 11 - 5167 8499

Korean Companies having Telecom Interest but not in India

SK Telecom

Address: 99, Seorin-dong, Jongro-gu Seoul 110-728, Korea

Tel: 82-2-2121-4212

Fax: 82-2-2121-3985

Hansol

Address: 4 Floor, e-place Bldg. 719-24, Yeoksam-dong, Kangnam-ku, Seoul,
135-080, Korea

Tel: 82-2-2056-0831

Fax: 82-2-2056-0974

Daewoo International

Address: 1st Floor, 4/6 Siri Fort Institutional Area, New Delhi-110049

Tel: 91-11-2649-8201/3, 2649-0281/3

Fax: 91-11-2649-5387,2649-4792