Korea Broadband Study

Second OECD Broadband Workshop

Socio-Economic Effects and Policy Issues of Korea Broadband Internet June 5, 2002

Dr. Yoon, Byeong-Nam National Computerization Agency Ministry of Information and Communication Republic of Korea NCA

Second OECD Broadband Workshop

Abstract • In the 21st Century, experts foresee a knowledge based society. – There are currently 500 million internet users worldwide. – Networked knowledge and information has become a powerful tool in enhancing international competitiveness. – The construction of the broadband infrastructure is one of the top priority policy in most country. – The Korean government strongly promoted informatization and the construction of the broadband infrastructure. – As a result Korea has the largest broadband penetration rate in the world. – The broadband internet is creating new markets and cultures. • This presentation will discuss: – The current status of Korea’s active broadband services. – Policy issues to promote more broadband services. – Socio-economic effects of the broadband services. MIC, Republic of KOREA

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Introduction

MIC, Republic of KOREA

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Infocommunication Status ( Population : 47million )

29

30

24

(in millions)

25

30 24

20 15

Telephone Mobile Internet

10 5 0 1997 MIC, Republic of KOREA

1998

1999

2000

2001 NCA

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Broadband Internet Household [ Unit : million ]

9

ADSL

8

8.09

CATV

7

7.04

LAN

6

6.25

Total

5

5.10 4.02

4 3

2.63

2 1

7.81

1.57 0.86

0 Mar. 2000

Jun. 2000

Sep. 2000

MIC, Republic of KOREA

Dec. 2000

Mar. 2001

Jun. 2001

Sep. 2001

Dec. 2001

Feb. 2002

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Internet Usage at Home Monthly Average Access Time in Each Country 18

[ Unit : hours ] 16.2

16 14 12

10.5

10

9.6 8.2

8

7.6

6 4 2 0 Korea

MIC, Republic of KOREA

Canada

U.S.

Germany

Japan

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Revenue of Telecom Services 10

9.2

(USD billion)

8 6

7.1 6.1

5.7

5.3

5.1

4 2

6.1

7.1

3.8

Wired Telecom Services

2.6

Wireless Telecom Services

0 1996

MIC, Republic of KOREA

1997

1998

1999

2000

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Digital Society and Policy Issues

MIC, Republic of KOREA

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National Grand IT Projects • National Grand IT Projects since 1980 – TDX switch system in 1984 – CDMA mobile system in 1996 – National Basic Information System in 1996 – ATM Broadband Internet System in 2000 • Cyber Korea 21 (1999-2002) • e-Korea Vision 2006 (2002-2006) MIC, Republic of KOREA

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National Knowledge Management Project • A consolidated national knowledge system through digitalization of knowledge information was needed. • “Information Knowledge Database Expansion and Consolidation System Construction Plan (1999∼2003)” • Act of Knowledge Resources Management (Jan. 2001) • Digitalize the data in 5 fields: – Education, history, science & technology, culture, telecommunication • Korea Institute of Science and Technology Information digitalized 9 DB (2000) • Ministry Of Culture & Tourism digitalized 15 DB (2001) • Korean Education Research & Information Service digitalized 14 major DB, $19 million US (2002) MIC, Republic of KOREA

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National Knowledge Management Project Monthly Access

301, 259 327, 718

4, 000, 000

MIC, Republic of KOREA

869, 309

397, 700

Cultural Heritage Cultural Art Film Science & Technology Research Articles

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Cyber University < Cyber University >

< Cyber University Students > [Unit : Thousand persons ]

16

15

14

16.7

16 14

12

12

10

10

8 6

18

8

6

6

4

4

2

2

0

0

2001

MIC, Republic of KOREA

9.8

2002

2001

2002

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Cyber University • The internet manages all the universities administrative services. • Tests, final exams, assignments the requirements for a degree are no different than off-line universities. • There was a 170% increase in the number of registered students in 2002 totaling 16,700 students. MIC, Republic of KOREA

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Work at Home • The Samsung SDS introduced “Work at Home” as of March, 2002 • KT introduced “Work at Home” for a Telephone directory Operator 114 since 1998 • Korean Airline introduced “Work at Home” for the disabled flight reservation customer representative since 2001 • Seoul Metropolitan Government is planning to introduce a trial "Work at Home” as of May 2002 • Established laws governing telecommuting on March, 2001 • 10% of working employees have more than 2 jobs and one of them are conducted at home (Source : Jobkorea, survey) MIC, Republic of KOREA

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Growth of Cyber Community

1.3 million communities 33 million e-mail account as of May, 2002

Community portal site 616,820 communities as of April, 2002 Site for reuniting old classmates 8,000,000 members joined within 1 year from the opening date October 1999

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Political Cyber Community • During the Presidential candidate elections, Internet votes were counted after the security identification. – April 18 - 27, 2002 – 2.5% of the votes • More than 81% of Congressmen have a personal homepage. • 61.5% of Congressmen have planned or have used the Internet as means of raising political funds • 84% of Netizens feel that the internet is an effective way to express one’s political opinions.

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Policy against Side Effect • The Telecommunications Ethics Committee was formed to regulate Internet contents. – Suicide site, Abusive materials, Sexual contents, etc. • Information Utilization Protective Division in Ministry of Information and Communication – Policy of private information protection, prevention of unwholesome information distribution

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Internet Newspapers [Unit : Million persons ]

30 25 20 15

24

25

Sep

Nov

19

16

15

15

Jan

Mar

May

10 5 0 Jul

As of Nov. 2001 MIC, Republic of KOREA

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Advent of Prosumers

• The netizens are no longer passive culture consumers but are active culture producers. – Through the development of computer programs, it is easier for users to publish books, produce short films, write music, etc. – More opportunities are available to be involved as a “Culture Producer” – There is an increase of internet broadcasts and DJ’s through internet chat sites. – “Chollian (ISP, www.chollian.net)” has created a personal broadcasting center (www.inlive.com) for netizens MIC, Republic of KOREA

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e-Market Place 234

Number of e-MP

250 181

200 150 100 50 3 0

1998

MIC, Republic of KOREA

17 1999

2000

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Growth of the e-Commerce Market [ Unit : Billion USD ]

120

102

100 80 57.5

60 40 20 0

0

0.5

1997

1998

9.2 1999

2000

2001

※ Source : Ministry of Information and Communication MIC, Republic of KOREA

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Ubiquitous Internet Stock Trading

Stock Exchange

• Stocks can be traded via cellphone and PDA anywhere. • Customized stock trading alerts the investor when the stock reaches a certain price. MIC, Republic of KOREA

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Growth of the Internet Stock Exchange The total transactions in 2001 was $1.2 trillion US [ Unit : % ]

80

69

70

57

60 50

62

40

40 30

16

20 10 0

1

3

4

'98.1

'98.6

'98.12

'99.6

'99.12

'00.6

'00.12

'01.9

※ Source : Ministry of Information and Communication MIC, Republic of KOREA

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Growth of Internet Banking Users • Korea’s Population : 47 million [ Unit : millions ] 12

11.31

10 7.43

8 6 4.09

4 2 0

0.12 '99.12

1.23 '00.06

'00.12

'01.06

'01.12

※ Source : Ministry of Information and Communication MIC, Republic of KOREA

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Summary of e-Korea

1998

2001

3.7 %

66.6 %

-

11.3 million users

Electronic workflow in government

21.2 %

80.6 %

Government e-procurement

19.3 %

87.5 %

Internet stock trades Internet Banking

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Broadband Services and Contents

Internet Movie

 112 domestic movie companies in the year 2000  Revenues were around $18.6 million US.

e-Book

 Currently the e-Book market is in it’s infant stage, therefore it is anticipated to growth rapidly.

Internet Game

 The on-line game market exceeded $0.8 billion US for the year 2001.  The market is expected to be more than $1.54 billion US in the year 2002

ASP Market

 $4.9 million US in the year 2000  Grew 580% to $29 million in the year 2001

MIC, Republic of KOREA

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Advanced Internet Service Policy • The results of Cyber Korea 21: – Broadband penetration is over 8 million households – Multimedia contents (Movie, Games, Video, Audio, etc.) are actively use. • Free of charge because of undependable service. – e-government, e-commerce, and e-procurement • More security is needed. • To guarantee the QoS and Security, – e-Korea vision 2006 – ATM MPLS technology MIC, Republic of KOREA

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Certified Digital Signature Users [ Unit : million users]

3.5

3.2

3 2.4

2.5 1.9

2 1.5 1 0.5 0

0.05 2000

MIC, Republic of KOREA

2001

2002.3

2002.5

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Public Key Infrastructure • Digital Signature Act (Feb. 1999) • The Certification Authority supports a secure e-Commerce and e-Government environment. • PKI(Public Key Infrastructure) was established to promote a safe and secure environment for networked services nationwide. – National procurement, e-education, e-civil services, etc. • The government leads the public to use digital certificates and expects that the total number of users will reach 10 million by the year 2002. MIC, Republic of KOREA

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Small Business Network Project • Personal users have affordable access to the internet via services like ADSL, cable modem, etc. • On the other hand, most small-mid sized businesses can not afford the expensive leased line service. • Therefore, the government established Small Business Network Project on December 2001 • The government supported 2.9 million small-mid sized companies through IT education, e-business services and hardware. • In the year 2002, $15 million will be invested into the project. MIC, Republic of KOREA

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Productive Business Management < Analysis on the effects of introducing enterprise resource planning (ERP) to domestic small-mid sized companies > Before ERP

After ERP

Percentage

Sales per employee (US)

$154,000

$208,000

34.3% ()

Customer response time

10.5 days

6.6 days

36.8% ()

Inventory turnover

35.9 days

20.4 days

43.4% ()

End of month accounting

16.2 days

5.6 days

65.5% ()

Source: Ministry of Commerce, Industry and Energy; Nov. 2001

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Internet Advertisement Market

90 80

[ Unit : millions Users]

Wireless

Wired

76.9

70 60

54.6

50 40 30

28.5

20 10 0

0.76 1999

MIC, Republic of KOREA

2000

7.6 2001 NCA

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Internet Advertising • “e-Commerce Consumer Protection Act” on September 2000. Standards for internet shopping malls. – Protection of privacy. – Regulations regarding internet advertising • must receive customers approval for emails • must be less than 30KB – Inform consumers on the risks and hazards on the internet. – Refund policies

MIC, Republic of KOREA

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Growth of the Monternet User 35

[ Unit : millions users] Wireless

30

15

28.0

26.8

25 20

Mobile

30.3 25.7

21.2 15.7

10 5 0 '99.12 MIC, Republic of KOREA

'00.06

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Growth of the Monternet User < Revenue for the wireless internet >

< Profit from the contents services >

[ Unit : millions USD] 140

131

120

30

26

25

100

20

80 60

[ Unit : millions USD]

15

60

10

40 20

5

0

0

2000

MIC, Republic of KOREA

2001

10

2000

2001

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Digital Economy

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Production of the IT Industry The production of IT increased from 58.1 billion USD in 1997 to 109.9 billion USD in 2000 and growth in production is expected for the time being. 120 (USD billion)

109.9

100

88.5

80 60

58.1

67.8

40 20 0

1997

1998

1999

2000

Source : Korea Association of Information and Telecommunication Note : Throughout this statistical profile, we use the current exchange rate 1,300Won/USD

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Share of the IT Industry in GDP The IT industry has continued to have a growing share of the GDP from 8.6% in 1997 to 13.0% in 2000. 13%

14

11.2%

12 10

8.6%

9.3%

8 6 4 2 0

1997

1998

1999

2000

Source : Korea Information Society Development Institute

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Contribution Rate of IT to GDP The IT industry contributed to economic growth(GDP) with a mere 4.5% in 1990, which drastically increased to 50.5% in 2000. 60

50.5%

50 40

32.8%

30 20 10

12.1%

14.1%

4.5%

0 1990

1994

1996

1999

2000

Source : Bank of Korea Note : contribution rate = (the real amount of value added increase from IT industry) / (the real amount of GDP increase)

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ADSL Related Export Status [ Unit : millions USD ] 300 240.1

250 200 150 100 50 0

0.3 1999

11.2 2000

2001

As a leader in internet penetration, ADSL has established various Korean style business models to promote to the world market. ※ Source : Ministry of Information and Communication

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Thank You

MIC, Republic of KOREA

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