Digital Development in Korea: Building An Information Society

Digital Development
in Korea
Building an information society
Myung Oh and James F. Larson
Routledge Advances in Korean Studies

Digital Development in Korea
Digital Development in Korea explores the role of digital information and

communications technology in South Korea’s development, starting with and
building upon the crucial developments of the 1980s. Its perspective draws on the
information society concept and on a conceptual model of strategic restructuring
of telecommunications. It also draws on firsthand experience in formulating and
implementing policies. The analysis identifies aspects of the Korean experience
from which developing countries around the world might benefit.
Oh and Larson describe the revolutionary developments of the 1980s including
the TDX electronic switching system, a major surge forward in semiconductors,
the start of privatization and color television and the thoroughgoing restructuring
of Korea’s telecommunications sector. They further explore government leader-
ship, the growing private sector and international trade pressures in the diffusion
of broadband, mobile communication, and convergence toward a ubiquitous
network society. The role of education in these developments is explored in
detail, along with both the positive and negative aspects of Korea’s vibrant new
digital media. The book also looks at Korea’s growing international involvement,
its role in efforts to build a world information society, and finally, its future place
in cyberspace.
This book will be of interest to students, scholars and policy makers interested
in communications technologies, Asian/Korean Studies and development studies.
Dr. Myung Oh is a former Deputy Prime Minister who held four ministerial
positions under four different administrations, beginning with service as Minister
of Communications in the 1980s. He holds a Ph.D. in Electrical Engineering from
Stony Brook University and is acclaimed as the “godfather” of Korea’s telecom-
munications revolution.
James F. Larson is a communication scholar and former Deputy Director of

the Fulbright Commission, Seoul. He holds a Ph.D. in Communication from
Stanford University.
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Tat Yan Kong
2. Market and Society in Korea

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Dong-Myeon Shin
4. North Korea in the World Economy

Edited by E. Kwan Choi, Yesook Merrill & E. Han Kim
5. Legal Reform in Korea

Edited by Tom Ginsburg
6. Women, Television and Everyday Life

Journeys of hope
Youna Kim
7. Transformations in Twentieth Century Korea

Edited by Chang Yun-Shik and Steven Hugh Lee
8. The Development of Modern South Korea

State formation, capitalist development and national identity
Kyong Ju Kim
9. Industrial Relations in Korea

Diversity and dynamism of Korean enterprise unions from a comparative
perspective
Jooyeon Jeong
10. The Global Korean Motor Industry

The Hyundai Motor Company’s global strategy
Russell D. Lansbury, Chung-Sok Suh and Seung-Ho Kwon
11. Korean Workers and Neoliberal Globalisation
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12. Korea in the New Asia

East Asian integration and the China factor
Francoise Nicolas
13. Foreign Direct Investment in Post-Crisis Korea

European investors and ‘mismatched globalization’
Judith Cherry
14. Korea Confronts Globalization

Edited by Chang Yun-Shik, Hyun-ho Seok and Donald L. Baker
15. Korea’s Developmental Alliance

State, capital and the politics of rapid development
David Hundt
16. Capitalist Development in Korea

Labour, capital and the myth of the developmental state
Dae-oup Chang
17. Political Protest and Labour Movements in Korea

Solidarity among Korean white-collar workers
Doowon Suh
18. Retirement, Work and Pensions in Ageing Korea

Edited by Jae-jin Yang and Thomas R. Klassen
19. South Korea Under Compressed Modernity

Familial political economy in transition
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20. New Millennium South Korea

Neoliberal capitalism and transnational movements
Edited by Jesook Song
21. Human Rights Discourse in North Korea

Post-colonial, Marxist and Confucian perspectives
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22. Digital Development in Korea

Digital Development in Korea

First published 2011
by Routledge
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Simultaneously published in the USA and Canada
by Routledge
711 Third Avenue, New York, NY10017
Routledge is an imprint of the Taylor & Francis Group, an Informa
business
© 2011 Myung Oh and James F. Larson
The right of Myung Oh and James F. Larson to be identified as authors
of this work has been asserted by them in accordance with the Copyright,
Designs and Patent Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
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Trademark notice: Product or corporate names may be trademarks or
registered trademarks, and are used only for identification and explanation
without intent to infringe.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
O. Myung.
Digital development in Korea : building an information society/
Myung Oh and James F. Larson.
p. cm. — (Routledge advances in Korean studies; 22)
Includes bibliographical references and index.
1. Information society—Korea (South) 2. Digital communications—
Korea (South) 3. Technology—Social aspects—Korea (South) 4. Korea
(South)—Economic conditions—1988- I. Larson, James F. II. Title.
HM851.O3 2011
303.48'33095195—dc22 2010038145
ISBN: 978-0-415-60646-2 (hbk)

ISBN: 978-0-203-82912-7 (ebk)
Typeset in Times New Roman
By Glyph International
To all those who contributed to Korea’s ICT development
and also to the young people and leaders who are striving
for economic growth in developing countries around the
world.
Contents
List of Figures xi
List of Tables xii
Foreword xiii
Preface xvi
Acknowledgements xix
List of Abbreviations xx
Introduction xxiv
1 Digital Development as Korea’s Destiny 1
2 On the Shoulders of Giants: The 1980s Telecommunications

Revolution in Korea 22
3 Government-led ICT Development in South Korea 44
4 Korea’s Broadband Revolution 65
5 The Mobile Revolution: Early Innovation and the

“iPhone Shock” 90
6 Intelligent Buildings, Sentient Cities and the Ubiquitous

Network Society 113
7 Education and Building Citizen Awareness 127
8 Korea’s Information Culture and Media Ecology 143

x Contents
9 Innovation Nation: Korea in the Global Information Society 165
10 Korea’s Place in Cyberspace 181
Appendix 203
Selected Bibliography 204
Notes 207
Index 232
Figures
1.1 South Korea’s Teledensity, Mobile and Internet Usage Trends

(per 100 population). 4
1.2 South Korea GNI per Capita, 1962–2008: Atlas Method,
Current US$. 7
1.3 Effect of Knowledge on Korea’s Long-term Economic Growth
(1960–2005). 10
4.1 Broadband Penetration in Korea and Leading OECD Countries,
1999–2009. 77
4.2 Composition Map of NKN-G (First Phase). 82
5.1 Teledensity and Mobile Subscribers in Korea, the U.S. and China,
1999–2009. 92
7.1 Gross Expenditure on Research and Development in Korea,
1976–2008. 136
7.2 Total and ICT R&D Expenditure in Korea, 1991–2008. 137
7.3 Patent Applications by Leading Patent Offices, 1980–2008. 138
8.1 Number of Internet Cafes (1998–2005). 145
8.2 Number of Internet Users (Age 6 and above, in 1,000 persons). 151
8.3 Purpose of Using the Internet (Multiple Answers)
(Age 3 and above). 151
8.4 Incidents of Hacking and Personal Information Breach in Korea,
2000–2009. 161
9.1 Korea’s Exports of Electrical and Electronic Products. 168
9.2 Photo of Korean Peninsula from Space at Night. 178
Tables
1.1 Contribution of IT to GDP Growth (Unit: Percent). 9

1.2 Economic Structure of Korea, 1962–2005. 13
2.1 Number of TDX Subscribers Worldwide and Estimated
Value of Exports. 35
3.1 Classification of Service Providers in the Early 1990s Reform. 54
3.2 Privatization and Market Liberalization in Korea. 58
3.3 Roles of the National Informatization Strategy Committee
and the CIO Council. 62
4.1 ICT Development Index: Indicators and Weights. 69
4.2 Country Rankings on Various Penetration Measures. 73
5.1 Estimated New Market Effect of Major Technologies
Developed by ETRI, 1976–2003 (in billions of Korean won). 98
8.1 Online Media Usage Rate by Type – Internet Users
aged 6 and Over. 152
8.2 Major Internet Economy Service Volume. 154
9.1 Shares of Countries’ Electronics Production by Sophistication
Category (Percentages). 169
Foreword
South Korea has been a phenomenal economic and technological success. But
why? How could a country burdened by occupation, hot and cold wars, and mili-
tary rule rise to prosperity, democracy, and technology? Despite decades of open
communication, to the outsider the Korean governmental and business decision-
making process is still somewhat of a mystery. Language, culture, and a patriotic
desire to shine combine to leave the outsider guessing why and how things
were accomplished. As a result, South Korea’s story has been an inkblot into
which others project their fantasies. They claim Korea as an exemplar for their
pet theory. Capitalism. Industrial Policy. Oligopoly. Secondary education.
Universities. Science. Social cohesion. Export orientation. And on and on. For a
while it seemed that those who knew did not write, and many of those who wrote
did not know.
Why then did they write?
A story of decline or poor performance can be leveraged by politicians or
stakeholders into advocacy arguments for different policies. Stakeholders trumpet
scare scenarios to mobilize patriotic sentiments for funding and policies.
Nowhere is this tendency stronger than in the ICT area. Here, Korea has moved
from a white spot on the map to the position of world leader in mobile wireless,
broadband internet, and television technology, leaving even Japan in its wake.
Informed outsiders know the surface facts but rarely the inner story or, in some
instances, where results have been disappointing. Korea has become the model to
emulate for many developing and emerging countries. If Korea could do it, why
not us? But what is it, exactly, that Korea did? It is here that one must move from
biased guesses to informed analysis and meaningful comparisons.
As the world becomes interconnected, the interest in comparisons among coun-
tries has grown. A veritable cottage industry of comparison-spewing institutions
has emerged. Who of the 195-plus sovereign nations on this planet is the most
innovative? The most electronically connected?
On the positive side of the ledger, one can better put one’s own country and
others in perspective. One could, ideally, identify universality, trends beyond a
specific national political constellation, yet one could also find particularity –
when a country departs from a bad global trend – and try to learn from it.
xiv Foreword
But the real motivations are often less benign and knowledge-driven. Behind
most cross-national comparisons there lurks an agenda. It can be relatively harm-
less, such as promoting the visibility of the organization that creates the index. In
those instances, there are incentives to stress the provocative items among many
other findings.
The problem is worse where parties interested in the result sponsor the compar-
ison. They will tend to show the sponsor either at top, or making great progress,
or burdened by a problem for which the sponsor advocates some policy action.
Then there are issues of comparability (”apples vs oranges”). National data are
often incompatible with each other. And what do we mean by ”national” data,
anyway? In Spain, six different studies of the country’s internet density were
conducted in the same year (2002), and they differed by 250 percent. Which is
then the “true” Spanish figure to be used in an international comparison?
There are definitional issues. Which of these leading cellphone countries has
the highest mobile penetration? In one year, it was South Korea, by 20 percent,
counting subscribers. But Switzerland was ahead by 20 percent if low-usage pre-
paid phones were counted too. And the US was ahead if minutes of use per capita
were used as the yardstick. Each can legitimately be proclaimed as the leader or
the laggard, and the choice may well depend on the argument being made.
In the absence of reliable data provision, data sets from inter-governmental
organizations have achieved a near-canonical status among researchers. And yet,
examples abound of problems in such international data. The World Bank, for
example, reports GDP data from around the world, including, as someone
observed, several countries which do not actually report GDP figures. Educated
guesses maybe? If so, the estimates of the IMF about the GDP for Zaire were only
60 percent of those of its sister institution, the World Bank.
In the murky supply chain of information, there is an even greater problem
with national data suppliers than with the international aggregators. Take the
broadband internet, where the debate over national comparisons has been partic-
ularly lively. Incentives abound to inflate numbers. For governments, because it
makes them look good in terms of high-tech policy. For incumbent phone compa-
nies, because a good international standing gives them an argument against
re-regulation. New entrants, too, inflate numbers because it gives them credibility
with potential customers and investors. So who is there left on the other side with
a reality check? Academia and journalism must provide detached analysis.
Into this void step two authors. Myung Oh is the ultimate ICT insider, a man
who has been at the table at almost every juncture of decision-making, and with
the added credentials of an educational leader. His partner is James Larson, who
represents the world’s curiosity by position, research background, and tempera-
ment. Together they have produced an excellent volume that combines internal
perspective with external distance. While there may have been some prior articles
dealing with issues the authors have identified, this volume is unique in its scope,
historic range, and informed analysis. By being written in English, it opens the
world of Korean ICT to non-Koreans. I, for one, plan to re-read it every time I
travel to Seoul.
Foreword xv
So what is next? What major initiatives can one expect from this leading coun-
try? After forging ahead in fiber broadband, wireless, and consumer electronics,
what lies around the next bend in the superhighway?
Every infrastructure or major industry will eventually peak in terms of new
investments. It happened to the railroads. It happened to electricity. And it will
happen to ICT, too. Once fiber is laid to most homes, once high speed mobility
is established across the country, and once most consumers have big and flat-
screen TV sets around their homes, what comes next? And while there are many
winners from ICT, surely there are some losers, and they will make their voices
heard. Thus, broadband internet is not the end of history. And this is precisely
why it is important to watch Korea with an informed eye: as a leading country
today, it will encounter the next generations of challenges first. By learning about
Korea today, we may learn about ourselves tomorrow.
Professor Eli Noam, Director

Columbia Institute for Tele-Information
Columbia Business School
Columbia University
Preface
Although the authors share a strong interest in the role of ICT in national
development, the story of how this book came to be written is more involved,
and a bit serendipitous. The authors first met in 1991 when Dr Oh served as
Chairman of the 1993 Taejon International EXPO Organizing Committee. A
graduate of the Korean Military Academy and Seoul National University’s
department of electronic engineering, he had earned a PhD in electrical engineer-
ing from the State University of New York at Stony Brook. In the 1980s he
had served for seven years and seven months as Vice Minister and then Minister
of Communications.
The two authors first met at Dr Oh’s temporary offices at the COEX
convention and exhibition complex in southern Seoul, as he was heavily involved
with planning for the forthcoming Taejon International EXPO. At that meeting,
Dr Oh sounded out Larson about his possible interest in conducting research
on Korean telecommunications. The meeting went well and within months
Dr Oh had helped Larson secure funding from DACOM Corporation to support
the research that culminated with publication of his 1995 book, The
Telecommunications Revolution in Korea (Oxford University Press). That book
was the first English-language scholarly monograph devoted to the 1980s, a
critical period in revitalizing Korea’s electronics sector and jump-starting its
digital development.
Over the next decade or more the authors’ paths diverged in interesting ways.
Following the Taejon International EXPO, Dr Oh served very briefly as
Commissioner of the Korea Baseball Organization, and was then called upon
once again for government service as Minister of Transportation and then
Minister of Construction and Transportation from 1993 through 1995. From 1996
through 2001 his career took another turn as he became President and then
Chairman of the Dong-a Daily Newspaper. After that he served as President of
Ajou University in Suwon from March 2002 through December 2003, at which
point he was again summoned to serve his country as Minister of Science
and Technology, a post that saw him designated as Deputy Prime Minister
and Minister of Science and Technology from October 2004 through
February 2006.
Preface xvii
While Dr Oh continued his career as a government leader, Larson worked as
an administrator with the Fulbright Commission in Seoul, with responsibilities
for technology and web-based services. When they met again in the spring of
2007, Oh was some months into his new position as President of Konkuk
University, and both were acutely aware of the need for an updated or completely
new book on Korea’s digital development. Events since the early 1990s,
especially in broadband internet and mobile communication, had carried Korea
well beyond the subject matter of Larson’s 1995 book. Dr Oh found himself
dedicating an increasing amount of time to visiting developing countries which
were seeking Korea’s advice on how best to use ICT for development.
The authors met several times to discuss common concerns. However, their
interests were somewhat different. Oh was considering writing a memoir
and enlisted Larson’s help, sharing with him a number of his published and
unpublished Korean-language manuscripts. As he translated most of those
documents into English, Larson was all the while thinking of writing a
second, thoroughly updated edition of The Telecommunications Revolution in
Korea.
It was in September of 2008 that the two met and had a critical meeting of the
minds that led to this book. At that meeting Larson related to Oh that the publisher
of his 1995 book was not interested in considering a proposal for an updated
second edition, mainly because editors thought the market in the U.S. and Europe
would be too small. Dr Oh immediately replied, “But people in the developing
countries are very interested in this topic!” He had just returned from a visit to
two Latin American countries that were, indeed, very interested in learning
from Korea’s experience. Larson then asked whether Oh would like to co-author
a book, to which the reply was “Of course, why not?” In fact, neither of the
authors had any reason to hesitate on the matter. Dr Oh was increasingly in
demand to consult with leaders of developing nations on behalf of the
Korean government. Larson’s interest in communication for development
dated from his Peace Corps experience in Korea and graduate work at Stanford
in the 1970s. It was apparent that the two shared a strong interest in communica-
tion for development, including Korea’s experience and the possible lessons
this might hold for other developing countries. Agreement to co-author a book
meant that they could combine their perspectives and experience to hopefully
produce something unique and stronger than a book authored by either one of
them alone.
Although Oh’s government career began in the telecommunications sector and
he is widely acknowledged as a leader of the 1980s telecommunications revolu-
tion, it grew from those roots to encompass several other key industries and
technologies that were benefiting from the information revolution and converg-
ing with ICT. Notably, Dr Oh played a central role in fostering the bio industry
and in the development of space technology while serving as Deputy Prime
Minister and Minister of Science and Technology. During his tenure Korea
enacted the Space Development Act and sent a Korean into space for the first
xviii Preface
time in history. The nation also built a satellite for the first time with indigenous
technology and launched it from Korean land into orbital space.
Although this book has a formal structure of ten chapters, it may be helpful for
some readers to think of it as a two-part study. Part one focuses on the challenges
and policies implemented under Dr Oh’s leadership and includes chapters one
through three, and portions of chapters 4 and 5. Part two follows the remarkable
trajectory of South Korea’s ICT sector to the present and even speculates about
the nation’s future role in cyberspace.
Acknowledgements
Although this book deals with the growth and development of digital communi-
cation networks, it is to individuals and human networks that we owe our greatest
debt of gratitude. In fact, for a book such as this those interpersonal networks
started long ago and have grown so much over time that it is impossible to
acknowledge all of the individuals. Even in naming organizations and groups of
people we risk the omission of some.
Internationally, the work of researchers from such organizations as the World
Bank, the ITU, and the OECD has provided much of the raw material for our
analysis. Also important is the work of younger scholars who have begun to
publish in leading academic journals. We acknowledge their efforts, especially
the continued attempt to better measure the information society through the
specific contributions of ICT to development.
In Korea, the authors gratefully acknowledge assistance from the leadership
and staff of several organizations. They include the Korea Communications
Commission (KCC), Korea Telecom, the Korea Information Society Development
Institute (KISDI), the National Information Society Agency (NIA), and the
Electronics and Telecommunications Research Institute (ETRI). In addition,
Korea Telecom funded an IT forum that met periodically and brought together a
group of researchers from leading telecoms corporations and research institutes
to explore cutting-edge issues in Korea’s ICT sector.
Many individuals from Korea and around the world have specifically encour-
aged and assisted with our work. Some of them were conducting research in
Seoul as visiting scholars at leading universities or research institutes. Interaction
with them and others was facilitated by a series of international conferences, both
in Seoul and in international locations, during the writing of this book.
Our intellectual and personal debt to many organizations and individuals, in
Korea and internationally, will be apparent to those who read this book. To all of
you, we gratefully acknowledge your assistance in making this study possible.
Abbreviations
ADSL – asymmetric digital subscriber line

ASICs – Application-specific integrated circuits
ATM switching systems – a fast packet, connection oriented, cell switching
technology for broadband networks
CDMA – Code Division Multiple Access. A method of digital wireless transmis-
sion that was first commercialized at the national level by South Korea
CMOS – complementary metal oxide semiconductor. The most widely used
integrated circuit design
DACOM – Data Communications Corporation of Korea
DARPA – Defense Advanced Research Projects Agency
DMB – digital multimedia broadcasting. A digital technology for both satellite
and terrestrial multimedia content
DMZ – Demilitarized Zone. A zone established at the 38th parallel when the
armistice ended the Korean war, separating North and South Korea
DOI – Digital opportunity index
DRAM – dynamic random access memory. Commonly used in personal computers,
workstations, and other electronic devices
EPB – Economic Planning Board
ETRI – Electronics and Telecommunications Research Institute
FEZ – Free Economic Zone
FTSE – The Financial Times Stock Exchange
GATT – General Agreement on Tariffs and Trade, a United Nations Agency
preceding the WTO
GDP – Gross Domestic Product. The total market value of all final goods and
services produced in a country in a given year
GNI – Gross National Income. As defined by the OECD, GDP less primary
incomes payable to non-resident units plus primary incomes receivable from
non-resident units
GSM – Global System for Mobile Communication. A mobile communication
standard used widely in Europe and other parts of the world
HCI – Heavy and chemical industries. A sector of the Korean economy given
priority during the latter years of President Park Chung Hee’s presidency
Abbreviations xxi
ICR – Institute for Communications Research. Established in 1985 and the
predecessor to KISDI
ICT – Information and communications technology. In 1998, OECD member
countries agreed to define the ICT sector as a combination of manufacturing
and services industries that capture, transmit, and display data and information
electronically
ICT-OI – ICT opportunity index
IDI – ICT Development Index. An index developed by the ITU to measure the
relative diffusion and use of information and communication technologies in
countries around the world
IFEZ – Incheon Free Economic Zone
IITA – Institute for Information Technology Advancement
IMF – International Monetary Fund
IPOA – IP over ATM
IPPSO – IBT Policy Program for Senior Officials. A program of the Information
and Communications University
IPTV – Internet Protocol TV. Delivery of television using the architecture and
networking methods of the internet
IPv6 – internet protocol version 6
ISDN – Integrated Services Digital Network
ISP – internet service provider
IT – information technology. The branch of engineering that deals with the
use of computers and telecommunications to retrieve, store, and transmit
information
ITA – the Information Technology Agreement, reached in Singapore in
December 1996
ITIF – Information Technology and Innovation Foundation
ITU – International Telecommunications Union. An international telecommuni-
cation standards body that operates under the auspices of the United Nations
KADO – Korea Agency for Digital Opportunity and Promotion
KAIST – Korean Advanced Institute of Science and Technology
KBI – Korea Broadcasting Institute
KCC – Korea Communications Commission
KFTC – Korea Fair Trade Commission, South Korea's anti-trust watchdog
agency
KIEC – Korea Institute for Electronic Commerce
KII – Korea Information Infrastructure
KIICA – Korea IT International Cooperation Agency
KIPA – Korea IT Industry Promotion Agency
KISA – Korea Internet and Security Agency
KISA – Korea Internet Security Agency
KISDI – Korea Information Society Development Institute
KIST – Korea Institute for Science and Technology
KMT – Korea Mobile Telecom
xxii Abbreviations
KOCCA – Korea Culture and Content Agency, more recently Korea Creative
Content Agency
KOGIA – Korea Game Industry Association
KOICA – Korea International Cooperation Agency
KOSEF – Korean Science and Engineering Foundation
KOTRA – Korea Trade and Investment Promotion Agency
KTA – Korea Telecommunications Authority
LCD – liquid crystal display
LSI – large-scale integration, defined as putting between 3,000 and 100,000
transistors on a chip
LTE – Long Term Evolution. A fourth generation wireless broadband technology
considered as a successor to the GSM standard
MEST – Ministry of Education, Science and Technology
MIC – Ministry of Information and Communication, established in 1994
MKE – Ministry of Knowledge Economy
MMOG – massive multiplayer online game
MMORPG – massive multiplayer online role-playing games
Mobile WiMAX – A mobile version of WiMAX
MOC – Ministry of Communications
MOE – Ministry of Education
MOPAS – Korean Ministry of Public Administration and Security
MOST – Ministry of Science and Technology
MOTIE – Ministry of Trade, Industry and Energy
NCA – National Computerization Agency
NGBT – Negotiating group on basic telecommunications. A group formed under
the WTO.
NIA – National Information Society Agency
NIDA – National Internet Development Agency
NIPA – National IT Promotion Agency
NRCS – National Research Council for Economics, Humanities and Social
Sciences
OECD – Organization for Economic Cooperation and Development. An
organization that serves as a meeting ground for thirty of the world’s leading
free-market economies
OEM – original equipment manufacturer
PACST – Presidential Advisory Council on Science and Technology
PSTN – Public Switched Telephone Network. The network of the world’s public
circuit-switched telephone networks. Sometimes called the “plain old
telephone system” or POTS
SAIT – Samsung Advanced Institute of Technology
TDMA – time division multiple access, a digital cellular communication
technology
TDX – Time Division Exchange. The name given to South Korea’s first
electronic switching system
Abbreviations xxiii
UDH – the Ubiquitous Dream Hall
UNCTAD – The United Nations Conference on Trade and Development, a
permanent intergovernmental body established by the UN in 1964.
VLSI – very large scale integration
VOIP – voice over internet protocol. The technology that allows voice calls to be
made over computer networks, using services such as Skype
W-CDMA – wideband code division multiple access
WEF – World Economic Forum
WiBro – Wireless Broadband, a variant of mobile WiMAX technology
developed in South Korea and accepted as an international standard
WiMAX – Worldwide Interoperability for Microwave Access. A wireless wide
area network technology
WIPI – wireless internet platform for interoperability. A mobile communications
standard used in Korea for some years
WTO – World Trade Organization
Introduction
The foundation for South Korea’s remarkable digital development over the past
twenty years was laid in the 1980s. That reality has led many who are familiar
with Korea’s situation to refer to the “telecommunications revolution of the
1980s.” As this book will argue, the breakthroughs Korea made during that
decade, most especially in electronic switching and the semiconductor industry,
were a necessary pre-condition for many ensuing developments. This much can
be inferred from the basic cumulative characteristic of innovation in information
and communication technologies. Economically, information is both an input and
an output of its own production process. This is referred to by economists as the
“on the shoulders of giants” effect.1 Absent the 1980s success in research and
development along with key policies and the development of citizen awareness,
South Korea would be at a different stage of development today.
Our perspective on Korea’s digital development is shaped not only by theory,
but also by practice and experience. The book’s first author was a prominent
leader of the telecommunications sector during the 1980s. He led the shaping of
major policies, the influence of which was felt through the 1990s and beyond.
Those major policies and changes are as follows.2
Reorganization of the Telecommunications Management System

The first major policy change was a fundamental and historic restructuring of the
telecommunications management system. Until 1980, everything in South
Korea’s telecoms sector was handled through the Ministry of Communications
(MOC), a government monopoly. The new framework introduced by Dr Oh and
his colleagues consisted of a policymaking arm, a business operation arm, and
research and development institutes. These three areas comprised a specialized
system in which each organization was assigned specific functions.
The Telecommunications Policy Office, established on January 1, 1982,
was given responsibility for formulating and promoting telecommunications
policies in the public interest. It supervised and supported the public tele-
communications manufacturing and construction industries. In January of 1984
the Ministry restructured the Telecommunications Policy Office into four
divisions, responsible for Telecommunications Planning, Telecommunications
Introduction xxv
Promotion, Telecommunications Management, and Information/Communications.
The purpose of this reorganization was to strengthen the information and
communication sectors.
The business operations in Korean telecommunications were bolstered by the
establishment of the Korea Telecommunications Authority (KTA) and DACOM
Corporation. KTA was established on January 1, 1982, to administer telecom-
munications business operations and pursue profitability based on the public
interest. The government was the sole investor, contributing 2.5 trillion won to
establish the Authority. At the time, a total of 35,225 employees from 153 divi-
sions moved from the MOC to KTA, the largest reshuffling of personnel from
one organization to another in the history of the Korean government. However,
there were few problems during the transition and it set an example for the subse-
quent establishment of the Korea Tobacco Monopoly Corporation.
In an effort to boost the sagging data communications sector, the MOC decided
that a private company needed to administer business operations in that field.
Consequently, on March 29, 1982, it established the Data Communications
Corporation of Korea (DACOM) under a business promotion committee on
which this book’s author served as a commissioner, as Vice Minister of
Communications. In April of the same year, the first value-added telecommunica-
tions service was licensed to provide public data transmission, processing, and
databank services. In 1984, the Korea Mobile Telecommunications Corporation
was established to oversee mobile and paging services. A year later, the Korea
Port Telecommunications Corporation was formed to handle wired and wireless
services relating to Korea’s ports.
The formation of research and development institutes for the telecommu-
nications sector also began during the 1980s. On March 26, 1985, the
Telecommunications Research Institute of Korea was merged with the Electronics
and Telecommunications Research Institute (ETRI). In February of the same
year, the Institute for Communications Research (ICR) was established as a think
tank for policymaking. In January of 1988 it was renamed the Korea Information
Society Development Institute (KISDI).
Resolution of the Telephone Backlog and Nationwide Telephone Automation

A backlog in fulfilling requests for telephone service, as described in more detail
below, was one of the most serious problems affecting Korean society during the
1970s. However, starting in 1981, the government installed an additional one
million lines and made an average annual investment of one trillion won. As a
result, the number of telephone lines exceeded 10 million as of
October 1987, making Korea tenth in the world in terms of the number of lines
installed. This made it possible for every Korean household to be equipped with
a telephone.
In 1984 Korea became the first nation in the world to complete construction of
a digital toll switching network. By 1987 the chronic telephone service backlog
had been completely eliminated by introducing an immediate installation
system.
xxvi Introduction
The year 1987 was also significant for completion of the nationwide telephone
automation system. By June of that year Korea had an automated long-distance
calling service, promotion of subscription in rural areas, and automated telephone
service on islands. Taken together, these projects meant realization of the goal of
a nationwide automated calling system. They allowed callers to receive
direct international call service to 100 countries worldwide as well as immediate
local and toll-call services. Service was provided to a total of 25,000 villages,
each with at least 10 households, in mountainous areas and to 500 island villages
as well.
Development of the TDX Electronic Switching System

In retrospect, the domestic development of the TDX Electronic Switching System
is regarded as the most outstanding achievement in Korea’s telecommunications
sector over the years. Even Daniel Bell expressed his astonishment at Korea’s
early development of an electronic switching system. Korea became the tenth
nation in the world to accomplish the proprietary development of an electronic
switching system and the sixth nation to export such a system to foreign coun-
tries. The development of TDX not only triggered rapid progress in Korean
information and telecommunications technology, but also substantially reduced
the considerable expense associated with importing foreign-made equipment.
Deregulating the Supply of Terminals

Until the 1970s, the Ministry of Communications itself was the only supplier of
household telephone terminals as well as the only lender of telephone sets. This
meant that subscribers did not have the option of owning a telephone or choosing
which model of telephone they received. However, in January of 1981 the MOC
introduced a policy that gave subscribers the opportunity to choose from a variety
of options. On September 1, 1985, the MOC transferred the ownership of 2.27
million telephone sets from the KTA to telephone subscribers themselves.
Consequently, manufacturers began to produce telephone sets with diverse func-
tions and various designs, giving buyers a wider range of choices. At the same
time, terminals for mobile telephones and telex machines were made available to
the public, and complete liberalization of terminal distribution became a reality.
Deregulation of the Public Switched Telephone Network (PSTN)

and Radio Wave Use
In keeping with worldwide trends in digital communications, facsimile machines,
modems, and personal computers began to find their way into offices and homes
throughout Korea during the early 1980s. Prior to 1982 these devices could not
be connected to the PSTN. Instead, they were connected to lines specifically
designated for such devices. However, in March of 1983 the PSTN became
Introduction xxvii
available to the public and provided non-voice telecommunication services for
facsimiles, modems, and computers. It is worthwhile to note that this move
preceded such deregulation of the PSTN in most European countries.
Until the 1970s, private use of radio-wave frequencies had been restricted for
national security reasons. In December of 1982 the MOC introduced a paging
service and, a little later, a mobile communications service, initially only in
metropolitan areas. The use of cordless phones was permitted from September of
1983. Also, integrated management of broadcasting networks was introduced at
the end of 1986, improving their operation and increasing the service coverage
rate from 66 percent in 1980 to 94 percent in 1987.
In addition to the above policies, there were two other related issues dealt with
by the Korean government during the 1980s. They were the introduction of color
television broadcasting and the securing of financial resources for investment in
telecommunications.
The first television broadcast in Korea took place on June 1, 1956. It was not
until October 1980 that, despite fierce opposition, the government decided to start
color television broadcasting. The first color telecast took place on December 1
of that year. This was 29 years behind the United States and 20 years behind
Japan.
The development of Korea’s telecommunications sector required a tremendous
investment. During the formulation of basic plans for telecommunications devel-
opment in the early 1980s two measures were taken to guarantee a stable invest-
ment in telecommunications infrastructure. First, the 1981 revision of the Law on
the Expansion of Information Facilities, first enacted in 1979, encouraged
subscribers to purchase a fixed number of telephone bonds at the time of tele-
phone installation. In Seoul, this cost a new subscriber 200,000 won. Second, the
relatively low telephone charges at the time were adjusted to a more reasonable
level. The local call rate increased from 8 won to 12 won in January 1980. It rose
to 15 won in June 1981 and to 20 won in December of the same year. During the
severely inflationary environment of the times, this measure was thought neces-
sary to secure telecommunications funding.
Chapter 2 will go into further detail on the transformation of South Korea’s
ICT sector during the 1980s and the start of its prodigious efforts to build an
information welfare society. However, the main portion of this book covers
development in the 1990s and the first decade of the new century, concluding
with a glance toward the future.
1 Digital Development as
Korea’s Destiny
Korea is a mountainous peninsula, with mountains occupying over 70 percent of

the land area. The mountain ridges and the rivers that flow through adjacent
valleys form a dense network, clearly visible from space, that has shaped Korean
culture and patterns of human communication from time immemorial. As long
ago as the Chosun Dynasty, smoke and fire beacons were used to speed commu-
nication throughout the nation’s mountainous terrain. Mountains are not just an
indelible part of Korea’s physical world, but of her mentality and consciousness
as well. The influence of mountains is deeply embedded in the emotions,
knowledge, beliefs and values of Korea.3
Today a new, denser set of advanced, digital communication networks weaves
its way throughout the southern half of the Korean peninsula. Less visible to the
human eye, these fiber optic, mobile and satellite networks have propelled South
Korea from a follower in electronics and telecommunications to a world leader in
these fields. One new report suggests its broadband networks are half a generation
ahead of other countries.4 Taking into account both fixed and wireless
services, Korea is now the world’s most digitally networked nation. The claim
frequently appearing in the media that Korea is one of the most “wired” nations
in the world is actually a misnomer, harking back to the day when copper wire
was the heart of the public telephone network.
The mountainous terrain is one factor that led to South Korea’s dense pattern
of urbanization, in which half the nation’s population lives in and around the
capital city of Seoul. The nation’s large concentrations of urban apartment dwell-
ers were one factor that accelerated the expansion of fiber to the home (FTTH)
and other new digital communication networks. Furthermore, these new networks
are continually expanding and evolving, helping to shape one of the world’s
leading information societies.
The primary focus of this book is on the role of digital communication in South
Korea’s remarkably rapid development over the past three decades. No other
country in the world has achieved such success against such odds. As a 2003
report by the International Telecommunications Union (ITU) put it, “Korea is the
leading example of a country rising from a low level of ICT access to one of
the highest in the world.”5 An extensive study by the World Bank of Korea’s
emergence as a knowledge economy came to essentially the same conclusion.6
2 Digital Development as Korea’s Destiny
Given Korea’s mountainous terrain, its relative lack of natural resources,
and the country’s utter devastation in the wake of the Korean War, it seems
that digital development was the nation’s destiny. It represented a course that
could be pursued through education and sustained human effort. That is reflected
in our choice of a title for this book. On a global scale, as Cowhey and Aronson
put it so succinctly, “The networked information infrastructure that blends
computing and communications is the largest construction project in human
history.”7 Even in South Korea, which has a land area approximately equivalent
to the state of Indiana, building digital networks is a process that stretched out
over decades.
Our focus on the role of ICT in development is accompanied by an interest
in identifying those aspects of Korea’s experience that might be most applicable
in the developing nations of the world. However, it would be a mistake to draw
the inference that this book is only of interest and relevance to developing
nations. To the contrary, it is now widely recognized that information and
communication technologies (ICT), epitomized by broadband internet, are at the
core of national competitiveness strategies for developed and developing
countries alike. Accordingly the recent national broadband plan in the U.S.
drafted by the Federal Communications Commission benchmarks certain key
features of Korea’s experience.8
It is equally erroneous to assume, because we focus on Korea, that this
book is aimed only at Asian area specialists or is some sort of narrow area study.
In point of fact, the information revolution is a key defining feature of
globalization and many important aspects of the information society in Korea
touch on matters that are inherently global in scope. Moreover, in many nations
around the world, ICT development is coming to be recognized as a basic
human right.
The Declaration of Principles adopted by the World Summit on the Information
Society in its 2003 meeting in Geneva said, in part:
“We, the representatives of the peoples of the world ... declare our
common desire and commitment to build a people-centered, inclusive and
development-oriented Information Society, where everyone can create,
access, utilize and share information and knowledge, enabling individuals,
communities and peoples to achieve their full potential in promoting their
sustainable development and improving their quality of life, premised on the
purposes and principles of the Charter of the United Nations and respecting
fully and upholding the Universal Declaration of Human Rights.”9
In this introductory chapter we describe the context for Korea’s rapid rise and
some key aspects of its ascent to the vanguard of the global information society.
We also outline our perspective on Korea’s digital development, referring to
several important areas of scholarly literature that bear directly on the subject
at hand. Finally, we conclude the chapter by noting some important historical
antecedents of the revolutionary changes that began around 1980.
Digital Development as Korea’s Destiny 3
The Context
Our choice of a time period is dictated by both the course of the global revolution
in information and communications technology (ICT) and by developments
inside South Korea. In particular, two secular trends in the international political
economy since 1980 helped to shape Korea’s strategic agenda and the restruc-
turing of its telecommunications sector. The first of these was continued, rapid
technological change and convergence in information and communications tech-
nology. The second was mounting pressure on Korea through bilateral and multi-
lateral trade talks to liberalize its ICT sector. Political tumult and social
circumstances within South Korea in 1980, and in the decades that follow,
complete the context for our study.
Technological Change and Convergence

Digital devices, starting with semiconductors, are the engine of the information
revolution. Their constantly growing power, smaller size and lower cost are
expressed in Moore’s Law. His prediction, made in 1965, stated that the number
of transistors on a chip would double about every two years.10 Two other laws
suggest the larger significance of the contemporary revolution in computing and
telecommunications. Metcalf’s Law described the power of the internet, suggest-
ing that the value of a telecommunications network is equal to the square of the
number of connected users.11 McGuire’s Law states that the value of any product
or service increases with its mobility.12
The IT revolution in South Korea, as elsewhere around the world, may be
thought of in terms of four major waves of innovation, three of which are depicted
in Figure 1.1.
The first wave was the telecommunications revolution of the 1980s, which
effectively marked the start of South Korea’s digital development. During that
decade the nation began manufacturing its own electronic switching systems
(TDX), acquired the capacity to make DRAM semiconductors that were compet-
itive in the global marketplace, and completed its first modern digital Public
Switched Network in 1987. Teledensity increased from 7 in 1980 to almost 31 in
1990, the fastest rate of increase of any comparable country in the world.13 As the
chart indicates, teledensity was still increasing as of 1990, but peaked around the
turn of the century and began decreasing. The second and third waves of innova-
tion, respectively, were broadband and mobile telephony, both of which took off
following the Asian financial crisis of 1997–98. The fourth wave of innovation,
not shown in Figure 1.1, is the current drive to encourage convergence and make
South Korea the world’s first “ubiquitous networked society.”
Conceptualizing the information revolution as waves of innovation has the
advantage that the successive diffusion of communication innovations can be
clearly measured and charted, using publicly available and widely accepted
measures. Another, equally important, advantage is that it allows us, throughout
the book, to place the advances in Korean telecommunications in context relative
to other countries around the world.
120
Mobile Subscribers
Teledensity
Internet Usage
100
80
60
40
20
0
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
Figure 1.1 South Korea’s Teledensity, Mobile and Internet Usage Trends (per 100
population).
Source: ITU.
The digitization of communication technologies is largely responsible for

media convergence, as the internet, broadcasting and the print media all converge
to be delivered through a single digital channel. However, convergence is also a
much broader and multilayered phenomenon, involving all major industries and
technologies. Some examples of the convergence of ICT with other technologies
include robotics, nanotechnology, biotechnology, health care, the space industry,
genomics, and all forms of green technology, including Green IT. In any of these
and other emerging technology sectors, South Korea today has the confidence
that it can compete well enough to build future growth engines.14
International Pressure for Market Liberalization

The second major development shaping Korea’s approach to ICT strategy
was mounting pressure from the United States, multinational companies and
eventually the World Trade Organization (WTO) to liberalize its equipment and
service markets. Market liberalization, a major theme of academic literature on
telecommunications policy, implies privatization, government deregulation and
the introduction of free market competition.
The Korean government had pursued export-led development, beginning as
early as the 1960s. If anything, the importance of exports increased under the
so-called “developmental state” of President Park Chung Hee in the 1970s. Even
today, South Korea stands out among the OECD economies for its rather heavy
dependence upon the export of manufactured goods for economic growth.
The growth of Korean exports over the past three decades rather inexorably
increased the salience of the international trade talks, beginning with the U.S.–
South Korea bilateral negotiations. Accordingly, we will note the influence of
international trade negotiations at certain key points on the strategic restructuring
of South Korea’s ICT sector.
Political and Social Change in Korea

Of course, circumstances within South Korea also shaped its approach to digital
development. Many around the world remember 1980 as the year that repre-
sentatives of IBM first met Bill Gates to talk about writing an operating system
for their new, soon to be released, personal computer. For Korea, it is remem-
bered as a politically tumultuous year. Following the assassination of President
Park Chung Hee in October 1979, there was a long period of political unrest.
Accompanying Korea’s political turmoil of 1980, but less well known around
the world, were enormous social problems, including a large backlog in provision
of basic telephone service. The country was then entirely dependent upon
imported technology to upgrade its national telephone network. Even color tele-
vision, then being enjoyed by citizens in more than 100 nations, was unavailable
to South Koreans in 1980.
“Scratches on our Minds”: Misperceptions of Korea

The context for this book also includes international perceptions of Korea.
Although South Korea has begun to make its presence felt on the international
stage, misperceptions and even misunderstanding of the telecommunications
revolution in this country persist. There are several reasons for this.
The first reason for continuing misperceptions of Korea is the reality of
national division, along with North Korea’s missile tests and development of
nuclear weapons. This story line routinely captures a large portion of mainstream
media attention, even in the internet era where blogs and social media join The
New York Times, CNN, BBC and other online sources. Because the Korean War
intensified the long Cold War and was only ended by an armistice and not a peace
treaty, South Korea has a unique status. The DMZ, which crosses the Korean
peninsula at the 38th parallel, exists not only as a military demarcation line, but
also as the world’s single largest digital divide. It divides the world’s most highly
networked nation, South Korea, from North Korea which Reporters without
Borders ranked as the world’s biggest “internet black hole.”15
Although other topics, such as the nation’s broadband internet penetration
and usage, have begun to receive more attention in the international media,
in-depth knowledge and understanding of South Korea’s situation remains in
short supply.
A second factor in misperceptions of Korea is that many of the published stud-
ies of Korea’s experience with broadband or mobile communications fail to
adequately emphasize the historical origins of these developments in the 1980s.
Our account seeks to remedy this by presenting the crucial digital technology
developments of the 1980s and associated policies as essential precursors of later
progress.
A third element that contributes to lack of understanding is the sheer difficulty
of penetrating Korea’s language and culture. On occasion, even some of the best
accounts by international organizations or industry may misinterpret or wrongly
emphasize cultural aspects of the Korean experience. Language and culture play
a dual role in relation to Korea’s emerging information society. On the one hand
they pose a challenge for rigorous and scientific analysis of how Korea’s ICT
development actually took place. At the same time, they exert a powerful shaping
and sometimes limiting influence on the development of Korea’s unique and
dynamic information culture.
Finally, there is an interesting anomaly that underscores contemporary vague-
ness about Korea. Although people around the world now use products manufac-
tured by Samsung and LG electronics, in many parts of the world relatively
few are aware that they are Korean companies. This fact is supported by both
survey research and anecdotal evidence. Until recently, the Korean government
and its large chaebol companies devoted little attention in their promotional
efforts to identifying Samsung, LG, Hyundai and other leading companies
as Korean. It was only in 2009 that the Korean government launched a nation-
branding effort under the Presidential Council on Nation Branding.16
Korea’s Ascent to the Vanguard

In the space of only three decades, South Korea transformed itself from a devel-
oping country into one of the world’s advanced economies. There are at least
three important aspects of this remarkable economic transformation.
First is the sheer speed with which the nation achieved industrialization. From
an economy with 36.9 percent of GDP in agriculture and exports consisting of
primary goods (45.4 percent) and light manufactures (45.4 percent) in 1962,
Korea became an economy with only 4 percent of GDP in agriculture and over
80 percent of exports in heavy and chemical manufactures, and high-tech indus-
tries like electronics, by 2002.
Second, unlike many advanced countries, the importance of manufacturing in
Korea has continued to increase in recent years, accounting for 30 percent of
GDP in 2006, up from 22 percent in 1998. However, Korean manufacturing firms
have reduced employment to increase productivity in response to fierce interna-
tional competition. The services sector has absorbed those who left the manufac-
turing sector, as was very evident during the IMF crisis of 1997–98. However,
the effect of the decline in manufacturing jobs on the labor market is undeniable,
as many university graduates cannot find jobs.17
A third important aspect of Korea’s economic growth is the radical transforma-
tion from a catch-up economy to an increasingly innovative and knowledge-
based economy.18 Our interpretation is that this change was made possible by two
major factors, education and ICT. While education was a necessary prerequisite
for South Korea’s transformation, it was only by tapping into the power of the
ICT revolution that the so-called “miracle on the Han River” could come to frui-
tion. Many argue that globalization, seen as the closer and broader integration of
markets, is at the core of the economic and social transformation of the last three
decades. Our view, shared by others,19 is that the revolution in ICT is a funda-
mental driver of globalization as well as many social and economic changes.
As shown in Figure 1.2, South Korea rose from a per-capita gross national
income (GNI) of just US$79 in 1960 to one of over $21,000 in 2008. In December
of 1996, Korea joined the Organization for Economic Cooperation and
Development, an organization consisting of thirty of the world’s most advanced
economies. In 2008 such organizations as the FTSE Group in London and
Dow Jones publicly promoted South Korea to “developed market” status in their
rankings.20
The curve representing growth in South Korea’s GNI per capita is remarkable
in several ways. First, it shows graphically that the country’s level of develop-
ment began a small takeoff in the late 1970s under Park Chung Hee’s program to
emphasize the heavy and chemical industries (HCI). However, the growth in GNI
per capita had only reached about $2,000 by 1980 and then leveled off. Second,
there is a major inflection point in 1987–88 where the economy took off for a
sustained decade of rapid economic growth. Third, following the IMF crisis in
1997–98 there was a rapid recovery and another decade of sustained growth.
Developments in the ICT industry were main factors in both of those periods of
growth, as well as South Korea’s ability to survive the world economic turmoil
of 2008–2009. The worldwide ICT boom right after the turn of the century
$25,000.00
U-Korea
Master
Plan
$20,000.00
Mobile and
Broadband
Revolutions
$15,000.00
Joined
OECD IMF
CDMA Crisis
$10,000.00 choice
1980s
Revolution
TDX
$5,000.00
4 Mb DRAM
Telephone Service Color TV
Backlog Crisis
$0.00
19 2
19 4
19 6
68
19 0
19 2
74
19 6
19 8
80
19 2
19 4
19 6
19 8
19 0
19 2
19 4
96
20 8
20 0
20 2
20 4
20 6
08
6
6
6
7
7
7
7
8
8
8
8
9
9
9
9
0
0
0
0
19
19
19
19
19
Figure 1.2 South Korea GNI per Capita, 1962–2008: Atlas Method, Current US$.
Source: World Bank <http://data.worldbank.org/country/korea-republic> (accessed 6 July
2010).
proved advantageous for Korea, and export growth was an especially important
factor.21 Finally, although foreign aid played an important role in the decades
immediately following the Korean War, providing for basic necessities, the bulk
of such assistance had already been received well before the digital revolution
arrived in the 1980s. By the time of the 1988 Seoul Olympics direct aid from the
United States had virtually stopped, and only small amounts of other bilateral or
multilateral aid remained. Furthermore, early in the new millennium Korea’s
status shifted from that of an aid recipient to an aid donor. Therefore, while
foreign aid should be acknowledged as one factor in Korea’s emergence as a
developed nation, it is not the major explanatory factor.
There are several forms of empirical evidence to support the argument that the
increases in South Korea’s GNI per capita shown in Figure 1.2 are due in large
part to the information revolution. 22 First, there is an accumulating body of quan-
titative data over time and across many nations that shows a strong correlation
between ICT development and national income. As the latest ITU report on
Measuring the Information Society puts it, the link between ICT development and
income has been well established and most of the indicators included in the ICT
Development Index (IDI) are strongly correlated with GDP per capita. Plotting
the IDI against Gross National Income (GNI) per capita (PPP$) shows a strong
relationship between the two.23
The Strength of South Korea’s ICT Sector

One can also support the argument for information-based or digital develop-
ment by examining the nation’s communications infrastructure. South Korea
embarked on an ambitious plan to build information superhighways in 1995
and by the turn of the century it began attracting international acclaim for
having the highest broadband internet penetration in the world. Over 95 percent
of the households in this nation subscribe to high-speed broadband internet
service, a world-leading percentage. Korea has introduced Internet Protocol
Television (IPTV) service, and use of mobile phones in South Korea is universal.
As this book will show in some detail, Korea began building its digital networks,
both fixed and mobile, years ahead of the United States and many European
countries. When U.S. Vice President Al Gore spoke at UCLA in January of
1994 about the need for America to build “information superhighways,”24
Korea took heed and launched its Korea Information Infrastructure project
the very next year.
Yet another way to assess the impact of the ICT revolution in Korea is to
examine the overall size, performance and growth of the information and
communications technology market. Consider the following measures of the
contribution of ICT to the South Korean economy over time.
• As recently as 1997, the ICT industry accounted for only 5.9 percent of
Korea’s GDP. By 2009 that proportion had increased to 8.3 percent. These
numbers reflect the growing production and export of semiconductor
memory chips, flat panel displays and television sets, mobile phone handsets
and various components for digital electronic devices.
• In 1997 the ICT sector contributed only about 12 percent to the nation’s GDP
growth. By 2003 that percentage had risen to about 40 percent and it remained
substantial through 2009. Data from Table 1.1 underlie these percentages.
• IT investments in Korea facilitated capital accumulation. Such informatiza-
tion-related investments as computers, peripherals, networking and software
increased their share of overall facility investments from 24 percent in 1995
to 39.7 percent in 2001 and, as of 2004, the share was about 34.5 percent.
Significantly, the level of such investment increased nearly 10 percent year-
on-year from 1997 to 1998 as a direct response to the Asian economic or
“IMF Crisis,” as it was known in Korea.25
• From 1999 through 2006, the IT industry accounted for more than two-
thirds of export growth. Notably, over the same period, the annual average
employment in the IT industry grew faster than in the Korean economy as
a whole.26
The main driver of rapid growth in the IT industry was the enhancement of
productivity through continuous technology development. Economists use total
factor productivity (TFP), or growth not accounted for by growth in inputs, to
measure this. A great deal of economic research shows that during the decade of
the 1990s, TFP in the IT industry ranged from 11.5 to 15.6 percent at different
time intervals, compared with TFP growth in non-IT industries that ranged
from –0.7 to 3.2 percent.27 As shown in Figure 1.3, the World Bank looked at
what proportion of the nation’s economic growth could be attributed to total
factor productivity or knowledge accumulation, and compared Korea with
Mexico, which had a higher GDP per capita than Korea until 1985.28
Changes in production, management and organization that accompany IT
investments further improve productivity throughout the economy. This growth
Table 1.1 Contribution of IT to GDP Growth (Unit: Percent).
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
GDP 5.8 −5.7 10.7 8.8 4 7.2 2.8 4.6 4 5.2 5.1 2.3 0.2
growth
IT 10.8 22.6 33.2 34.5 8.7 15.9 13.7 17.1 11.7 12.6 8.7 6.8 5.3
growth
Ratio of 5.9 7.2 7.9 8.7 8.1 8.2 8.3 8.8 8.6 8.5 8.2 8 8.3
IT to GDP
Contribution 0.7 1.3 2.4 2.7 0.8 1.3 1.1 1.4 1 1.1 0.7 0.6 0.4
Source: Bank of Korea (2010)

14,000
12,000 Korea, Rep. of

Real GDP per capital (2000US$)
10,000
Difference in
output due to
8,000 TFP growth or
knowledge
accumulation
in Korea
6,000
Mexico
4,000
Difference in output
due to growth in
2,000 labor and capital in
Korea
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: Author’s estimates.
Figure 1.3 Effect of Knowledge on Korea’s Long-term Economic Growth (1960–2005).

Source: Suh, Joonghae and Derek H.C. Chen, eds., Korea as a Knowledge Economy:
Evolutionary Process and Lessons Learned. Washington, DC: The World Bank, 2007,
p. 6. Copyright International Bank for Reconstruction and Development, The World Bank.
factor is a major reason why Porat29 worked so hard to classify and measure a
so-called “secondary information sector” in the U.S. economy. Failure to
measure the impact of IT on all sectors of the economy dramatically underesti-
mates its influence. If we consider this sort of impact on industry as a whole, not
just IT industries, South Korea’s remarkable economic growth appears to be
fundamentally an information and communications-driven revolution.
Export-led Development
The changing pattern of Korea’s exports also underscores the leading role of
ICT in the nation’s transformation. Led by such well-known companies as
Samsung, LG and Hynix, Korea became the world’s number one manufacturer
and exporter of
• semiconductor memory chips,

• flat screen color displays and television sets, and
• mobile handsets.
Semiconductors receive special attention in our account of Korea’s experience

because they power virtually all consumer and industrial electronic devices,
including electronic switching devices, computers of all sorts, mobile phones
and related devices, to name just a few. South Korea’s growing technological
expertise and strength in the semiconductor industry help to explain its current
global dominance in two other export categories mentioned as examples here:
the display industry, and mobile handsets.
As of 2007, only China, the United States, Japan and Germany exceeded South
Korea’s ICT exports and the OECD reported that South Korea was the number
one net exporter of ICT products in the world. Korea exported ICT products
worth US$97.4 billion in 2007, while importing technology goods valued at
$54.1 billion. Moreover, Korea's ICT trade surplus grew by an annual average of
10 percent from 1996 to 2007. In 1996, Korea earned $10.8 billion in ICT trade.
In that year Korea’s IT exports totaled around $81 billion, placing it in fourth
place among OECD countries.
Along with the leading product categories already mentioned, South Korea is
also a major producer and exporter of electronic switches and components for
fiber optic and mobile digital communication networks. Although less visible
than the consumer items, these exports are the building blocks of today’s digital
networks. One of the latest such products is WiBro (Wireless Broadband)
technology, known internationally as mobile WiMAX, which is on the cutting
edge of new and faster mobile communication networks. Finally, it is noteworthy
that many of Korea’s small and medium size enterprises also participated by
producing and shipping electronic gadgets of all sorts.
The OECD calculates an index of “revealed comparative advantage” to see
whether, as an exporter, the ICT manufacturing industry performs better or worse
than the average of its performance throughout the OECD area. In recent years,
South Korea’s IT comparative advantage, measured as IT exports against the
OECD’s average total export amount, was 2.88, number one among the OECD
nations.30
In measuring trade in the total information and communications technology
(ICT) sector, the OECD and other international organizations look at the follow-
ing five categories of goods:
computer equipment; audio and video equipment; electronic components;

telecom equipment; other ICT goods.
Of particular importance here is the telecommunications equipment category

because it includes mobile phone handsets. In terms of total trade within the
OECD, the telecommunications equipment category ranked third, behind compu-
ter equipment and electronic components. In 2006, it accounted for 19 percent of
all ICT trade. However, overall trade in telecommunications equipment by
OECD economies increased by more than 300 percent between 1996 and 2007,
largely due to increased exports of mobile handsets.31
Mobile phone handsets fall under the sub-category of “transmission apparatus
for radio-telephony, radio telegraphy, radio broadcasting or television incorporat-
ing reception apparatus.” (HS2002: 852520). This category alone accounts for
65 percent of all telecommunication equipment exports. The large increase in the
value of mobile phone handset exports is because they represent consumer goods,
as opposed to products used in building network infrastructure.32
International Measures of ICT Development
With the rapid growth of broadband internet around the world in the late 1990s
and the early years of this century, key international organizations began to pay
attention to measuring ICT development and the digital divide. These organiza-
tions included the International Telecommunications Union (ITU), the World
Bank, the OECD, the World Economic Forum and others.
Korea has ranked at or near the top compared with other nations around the
world according to various indices developed by the ITU and the OECD. The
most recent ITU report on Measuring the Information Society singled out South
Korea for the second year running as a country with a relatively low income level
(in PPP terms) but a high ICT Development Index (IDI). It said “This illustrates
how a strong and targeted policy towards ICT development, as the Korean
Government has been pursuing for many years, can drive the development of the
information society even in countries with relatively low income levels.”33
The existing international measures of broadband internet tend to be of two
types. The first group, as exemplified by the ITU and the OECD measures, look
at population-wide broadband availability, use, capacity and price. The second,
as illustrated by the World Economic Forum’s network readiness index and
Leonard Waverman’s connectivity scorecard, addresses a broader range of
concerns, with particular concern for the business use of ICT. Chapter 5 will
examine all of the major measures and their differences in more detail.
Dimensions of Korea’s Transformation

As shown in Table 1.2, the economic transformation of Korea was very broadly
based. Employment in agriculture declined dramatically, while manufacturing
and service employment increased. Both exports and imports increased more
than tenfold from 1982 through 2005. Illiteracy was almost completely elimi-
nated and the nation achieved nearly universal education through high school,
with over 80 percent of high school graduates proceeding to higher education.
The gross level of expenditure on research and development had reached
about three percent of GDP by 2005.34
E-government
One cannot mention the lively politics of South Korea without also paying some
attention to the positive impact of e-government. Korean citizens enjoy an array
of world-leading e-government services and, not surprisingly, they lead the world
in levels of e-commerce. A Nielsen survey in early 2008 showed that 99 percent
of Korean internet users had used it to shop online and 79 percent of users had
shopped within the last month. For the United States, by comparison, the results
were 94 percent and 54 percent respectively.35
E-government in Korea preceded and in some respects acted as a catalyst
for the development of e-commerce. Government services in Korea were the
Table 1.2 Economic Structure of Korea, 1962–2005.
1962 1972 1982 1992 2005
Population (millions) 26.5 33.5 39.3 43.7 48.1

Economically active population (%) 56.4 57.7 58.6 60.9 62.0
Unemployment rate (%) 8.2 4.5 4.4 2.5 3.7
Absolute poverty (%) 48.3a 23.4b 9.8c 7.6d 6.4e
Macroeconomic indicators
GNP (US$ billions) 2.3 10.7 74.4 329.3 790.1
GNP per capita (US$) 87 320 1,893 7,527 16,413
Industrial structure (% of value
added)
Agriculture, forestry, fishing, mining 63.4 50.5 32.1 14.0 7.9
Manufacturing 7.5 14.1 21.9 26.5 18.6
Services 29.1 35.4 46.1 59.5 73.5
Trade structure
Export (US$ millions) 55 1,624 21,853 76,632 284,429
Share of capital goods exports (%) 4.9 9.8 25.2 37.5 43.9
Import (US$ millions) 422 2,522 24,251 81,775 261,238
Share of capital goods imports (%) 16.5 29.9 25.7 37.7 34.7
Human resources
Illiteracy rate (%) 29.4 12.4 7.2 4.1 2.2
University enrollment after HS (%) 29.2 29.0 37.7 34.3 82.1
Number of university graduates 20,452 29,544 62,688 178,631 268,833
Proportion of science & engineering 34.6 45.7 46.4 40.9 39.4
graduates
Technology indicators
GERD as share of GDP (%) 0.25 0.29 0.96 2.03 2.99
Private enterprise share of GERD (%) 22.2 31.9 50.4 82.4 75.0
Source: Adapted from Table 2.2 in Chung-hae Sŏ and Derek H.C. Chen, eds. Korea as a
Knowledge Economy: Evolutionary Process and Lessons Learned. Washington, DC: The World
Bank, 2007, p. 27.
a = 1961 data; b = 1970 data; c = 1980 data; d = 1990 data; e = 2000 data.
first sector to actively adopt IT. In the 1980s the government digitized informa-
tion into databases and promoted the Administrative Informatization Project.
In the 1990s, when the United States and other countries began looking into
e-government, Korea initiated projects for administrative innovation and increased
efficiency in each area of government. Consequently, Korea is now regarded as a
top-level nation in terms of e-government.
In the United Nations e-Government Survey 2010, Korea ranked number one
in the world on the e-government development index, followed by the United
States, Canada, the United Kingdom and the Netherlands. The index includes
various measures of national online services, telecommunications infrastructure
and human capital (education). The study was the fifth in a series begun in
2003 and has become recognized for providing a comprehensive assessment of
e-government development.36
Korea also ranked number one in the world over the past several years in a
survey of e-government efforts around the world conducted by the Brookings
Institute. That study looked at 1,667 government websites in 198 countries
around the world. To evaluate the state of digital government, the study looked at
eighteen features of websites including the following: publications, databases,
audio clips, video clips, foreign language access, not having ads, not having
premium fees, not having user fees, disability access, having privacy policies,
security policies, allowing digital signatures on transactions, an option to pay via
credit cards, e-mail contact information, areas to post comments, option for e-mail
updates, option for website personalization, and PDA accessibility. The Brookings
index also incorporated the number of online services executable on each site.37
As the 2008 report of the Brookings Institution put it, “Few developments have
had broader consequences for the public sector than the introduction of the inter-
net and digital technology. Unlike traditional bricks and mortar agencies, digital
delivery systems are non-hierarchical, non-linear, interactive and available
24 hours a day, seven days a week.”38 For the past several years, Korea has
ranked at or near the top of international rankings with respect to the introduction
of e-government. These include the Brookings Institution studies and the United
Nations E-government Surveys. Korean citizens today know that their interac-
tions with government, ranging from traffic tickets to taxes to health insurance,
are handled in a fair and transparent manner, in no small part because of modern
computer and communication networks.
Perspectives on Communication in Korea’s Development

Scholars and policymakers around the world have studied the role of communica-
tion in development for well over half a century. This body of research has its
roots in the mass media era39 but is a continuing concern in the information age,
as illustrated by the concerns voiced at the World Summit on the Information
Society.
The considerable scholarly literature on the concept of the “developmental
state,” as introduced by Chalmers Johnson, seems quite relevant to Korea at least
through the era of Park Chung Hee.40 Korea was considered a developing country
by any economic measure and its progress to that point had come under President
Park, who placed great emphasis in the 1970s on the heavy and chemical
industries (HCI).
By the early 1980s the limitations of the South Korean developmental state
were becoming clear. The South Korean government was deeply entrenched in
an economy that was heavily dependent on exports. By the time Kim Young-sam
assumed the presidency in early 1993, the South Korean economy was undergo-
ing a transformation from an export-oriented, newly-industrialized economy to
an advanced industrial one.41
While the developmental state concept helps to explain how Korea reached its
stage of development in 1980, our story is primarily about what happened from
that point onward. The introduction of modern and digital communications in the
1980s helped fuel an almost fourfold increase in Korea’s GNI per capita from
$3,320 in 1987 to $12,190 in 1997. The nation also achieved democratization,
and the success of Korea’s “Northern Policy”, which was intended to establish
diplomatic relations with the Soviet Union, Eastern European Countries, Vietnam
and China in conjunction with the highly successful Seoul Olympics, is a matter
of record. Furthermore, from 1980 to the present, the size and the role played by
the private sector relative to the state grew steadily. To be fair, it was in fact the
Korean government that made the decision to liberalize the economy and unleash
the power of private industry.
The Information Society Concept

As the title indicates, this book explores the Korean experience with building an
information society. Consequently, the scholarly literature on the informa-
tion society provides one point of reference throughout. This literature is impor-
tant for two reasons. First, this concept and approach to understanding the
information revolution is by now well known all around the world, most espe-
cially in South Korea. It has become widely accepted in scholarly circles, as well
as within government and policymaking circles. For example, the World Summit
on the Information Society, organized by the United Nations and held in Geneva
in 2003 and Tunis in 2005, involved most nations of the world. Organizations like
the OECD and the Davos World Economic Forum have adopted the information
society framework. The European Union has a Directorate General for Information
Society and the Media and a web portal devoted to the information society. Even
critics of the information society notion are quick to acknowledge its heuristic
value in an effort to understand some of the social changes experienced in coun-
tries around the world.42
Many of those who led South Korea’s telecommunications revolution of the
1980s, including this book’s author Myung Oh, were inspired by the concept of
the “information society.” During his seven years and seven months as Vice
Minister and Minister of Communications, Oh was an active and highly public
advocate of the “information society” concept, in government, academic and
industry circles.43
In 1987, Korea renamed its main telecommunications policy research institute
the Korea Information Society Development Institute (KISDI).
A second reason that the information society idea appealed to us for this book
is that it is broad enough to encompass the range of concerns we deal with here.
One scholar in the field has suggested that there are at least five different
definitions of an information society:
• technological,
• economic,
• occupational,
• spatial,
• cultural.44
The technological approaches tend to center on innovations such as the semi-

conductor or the computer that began to affect our societies in the late 1970s.
Economic approaches chart the growth in economic worth of informational
activities. Building on the work of Machlup45, Porat 46 distinguished between the
primary and secondary information sectors of the U.S. economy and concluded
that they accounted for almost half of the total economy. Daniel Bell and other
sociologists looked at change in the occupational structure of society, suggesting
that an information society involves a preponderance of information work.
The spatial approach, on the other hand, has its origins in geography. Castells47
argues that, in a network society, constraints of the clock and of distance have
been radically relieved, to the extent that corporations and even individuals can
manage their affairs effectively on a global scale. Finally, the cultural approach
stems from the realization that contemporary culture is more heavily laden with
information than its predecessors, largely due to the internet and associated
digital media.
Although he most frequently used the term “post-industrial society” to describe
this phenomenon, Daniel Bell’s work is one major point of reference for schol-
arly work on the information society. In the Foreword to the 1999 edition of
The Coming of Post-Industrial Society he notes that “We can already see the
shape of the manifold changes. The old distinctions in communication among
telephone (voice), television (image), computer (data) and text (facsimile) have
been broken down, physically interconnected by digital switching, and made
compatible as a unified set of teletransmissions.”48 He clearly saw the convergence
of media that was beginning to take place around the world.
One of Bell’s most important tenets was that technology has no pre-ordained
trajectory. Rather, it may take different forms in different cultural settings.
South Korea is certainly one of the most interesting, if not the most important,
cultural settings for the information revolution to date. This should become
apparent as we explore various aspects of the Korean experience such as mobile
communications, PC “bangs”49 or PC cafes, and massive multiplayer online
games.
Strategic Restructuring of Telecommunications

Although the breadth of the information society concept is needed to convey the
rapid and profound changes in Korea over the past three decades, we also have a
set of more specific concerns. They relate to telecommunications policy.
• What policies did Korea adopt that brought about its transformation into an
ICT power?
• What can other developing countries learn from the Korean experience?
We look at changes in Korea’s telecommunications sector over the past
30 years as a process of strategic restructuring. Wilson’s strategic restructuring
model proves useful for our study, both because it takes the diffusion of ICT
as the dependent variable of interest, and because it focuses on the experience
of developing countries. His model seeks to explain ICT diffusion through the
interaction of four distinct determinants:
• structures (especially social structures, but also economic and political

structures),
• institutions (that is, persistent patterns of roles and incentives),
• politics (especially elite strategic behaviors), and
• government policies (specifically a mix of four policy balances – private
and public initiative, competition and monopoly, foreign and domestic,
centralized and decentralized).50
Wilson’s model takes into account the role of leadership and vision in ICT
diffusion. Also, the four policy balances provide a good framework for interpret-
ing the changes in Korea over the past three decades. We interpret the balance
between domestic and foreign ownership broadly, to include the important influ-
ence that international trade discussions, especially with the United States and
within the WTO, have had on South Korea’s telecommunications policy. The
strategic restructuring framework also acknowledges the important reality that
shifts in these four balances within the ICT sector are highly political, with the
politics determining which societal interests will get to control the richest and
most politically sensitive sector in the modern world.51
Our main research questions throughout the book cluster around four themes
or sets of questions.
1. The nature of government-led telecommunications policy, including the

changing nature of the government–chaebol relationship over time. This area
includes consideration of the four key policy balances that are part of strate-
gic restructuring of the ICT sector: public versus private, monopoly versus
competition, foreign versus domestic, and centralized versus decentralized.
2. The role of education and citizen awareness. These questions include ICT
education, research and development, and public promotion and education
for the information society.
3. Technology acquisition and innovation policy. This theme of our book
emphasizes the manner in which Korea approached the acquisition of
new technology and how the country was transformed from a follower to an
innovator.
4. Globalization and Korea’s role in the new and global information
society. This area looks at how the nature of Korea’s large corporations
and its governmental involvement in world affairs has changed, and how the
change has provided an opportunity to work directly with many developing
nations.
Some Precursors of Korea’s 1980s Telecommunications
Revolution
Our narrative largely begins in the year 1980 with the events described in the
following chapter. However, before getting to that, it is important to provide
some historical context. The first part of the following section touches on several
important historical innovations in Korean communications. Although they
precede this account by centuries, they are directly relevant to our present
concerns, especially in the case of the Han-gul alphabet. Finally, to set the stage
for Chapter 2, we describe the rather miserable state of affairs that characterized
South Korean telecommunications and its electronics sector through the decade
of the 1970s right up until 1980.
Pre-Twentieth Century Developments

In the long sweep of Korean history there have been several important innova-
tions in communication. One of these important developments was the earliest
recorded use of moveable metal type in the history of the world. It is not yet
widely understood or taught in the West that this occurred in Korea long
before Gutenberg's breakthrough in Germany. During the Koryo dynasty in
Korea there is a record of the use of cast metal type for the printing of a book in
the year 1234. Toward the end of the Koryo dynasty in 1392 a National Office
for Book Publication was established and charged with casting of type and
printing of books, thus laying the foundation for moveable type printing to
flourish during the Yi dynasty. Type was cast in great quantities and widely used
in book publication.52
While the use of moveable metal type was undoubtedly an important innova-
tion, the printing of books was initially done in Chinese characters. This situation
continued until 1446 when King Sejong, in his 28th year on the throne, promul-
gated Han-gul. Han-gul literally means “the Korean writing.” The creation of
Han-gul, an indigenous alphabet for the Korean people, ranks as one of that
people's crowning cultural achievements. The king's concern that his people have
a writing system designed to express the language of their everyday speech, along
with a concern that his subjects be able to readily learn and use it, were two
primary motivations for its development.53
In the introduction to his proclamation, King Sejong wrote in part, “... I have
designed 28 letters that everyone may learn with ease and use with convenience
for his daily life. Talented persons will learn Han-gul in a single morning and
even foolish persons will understand it in ten days.”54
Historically, the introduction of Chinese characters to Korea had posed several
difficulties, since they constituted a foreign written language. One was that most
Koreans could not understand the meaning of texts written in Chinese characters,
especially their allusions and metaphors. Therefore, the Shilla Kingdom
(57 BC–935) developed a system for using Chinese characters in which a
Korean word was represented either by a Chinese character having its sound, or
by one sharing its meaning. The system proved to be inadequate for everyday
communication.55
The Han-gul alphabet has twenty-eight characters and is nearly perfectly
phonetic, so recognition and pronunciation can be taught and learned in a matter
of hours. For our purposes in this book, several aspects of the Han-gul alphabet
are noteworthy.
• Together with improved printing techniques, it contributed to a strong tradi-

tion of mass literacy in Korea. In particular it facilitated the drive toward
near-universal literacy in the years following the Korean war.
• It spurred the rapid diffusion of computers, mobile phones and other devices
requiring keyboard input, accelerating South Korea’s uptake of the new
information technologies.
• It contributed to a revolution in the graphics used in outdoor signs and all
print, broadcast and electronic media because its alphabetic character lends
itself perfectly to an endless variety of fonts. Today, the creation and sale of
new Han-gul fonts for use on internet home pages is a major activity. For
example, users of Cyworld, South Korea’s major social networking portal,
say that pretty new fonts enable them to express themselves more freely in
their writing.
We underscore this background because the mainstream press and even more
specialized research tend to gloss over or obscure the real impact of the Han-gul
alphabet. For example, a recent article by The Economist dealt with the ease or
difficulty of typing text messages on mobile phones in different languages, with
attention to the Latin alphabet, Chinese, Japanese, and even Tamil, but no
mention of Han-gul.56 Even ITU researchers, in a widely disseminated case
study on broadband internet in Korea, interpreted the influence of Han-gul
wrongly. Their study contends that language was a factor weighing against
Korea’s success relative to the other Asian Tigers. “Koreans have their own
language. Therefore, the country cannot easily leverage the vast amount of
content developed in more widely spoken languages.”57 Up to this point in their
argument, the ITU research team makes a point that we also emphasize in this
book. However, their report then makes an egregious error, stating that “The
Korean alphabet, known as Han-gul, uses a pictographic font that is not ideally
suited to computerization.”58
In point of fact, as already noted, Han-gul is alphabetic and perfectly suited
to computerization. Furthermore, it expedited and hastened the adoption in
Korea of not only computers, but mobile handsets and any type of device
that used a keyboard for input. Koreans type faster on Han-gul keyboards, on
average, than Westerners who use English keyboards. It was no accident that,
in January of 2010, a team of two young Koreans beat 24 other competitors
from twelve countries in the LG Mobile Worldcup, an international contest to
see who could input text fastest on a cell phone. Contestants texted in their native
languages.59
Another ancient innovation in Korean communication, briefly noted above,
was the network of beacons, using fire at night and smoke during the day, estab-
lished in 1149 to relay communication from one mountain ridge to another
throughout the nation. It was used to quickly inform the capital of military crises
that might occur in the provinces. This system continued to be used throughout the
Chosun dynasty (1392–1910) and was improved and intensified by King Sejong.
At its peak there were 670 signal beacons and the system was very efficient,
precisely because of Korea’s mountainous terrain. Using pre-arranged signals, a
message could be sent over a distance of about 350 miles in 4 hours.60
The history of modern telecommunications in Korea spans more than a century
and is usually dated from the introduction of a telegraph service in 1885. The
telephone came to Korea in 1898, but the first automatic telephone system was
not installed until 1935 under the Japanese colonial government.
During the colonial period, as early as the 1920s, Korea operated telecommu-
nications networks including a wired line that connected Seoul and Incheon, and
its first broadcasting station, the Gyeongseong Station. However, the Korean War
destroyed 80 percent of Korea's existing telephone and telegraph systems. At that
time, the capital Seoul, with a population of 2 million, had only 17,000 tele-
phones.61 This shortage of telephones and the backlog in provision of phone
service continued into the late 1970s when it became a full-blown social crisis,
demanding the government’s attention.
Under President Park Chung Hee in the early 1960s the government recog-
nized the importance of the electronics and telecommunications industries and
began to actively promote them. The government’s first five-year economic
development plan in 1962 allowed an unlimited flow of foreign capital to support
the electronics industry and opened the way for governmental support. To
enhance R&D, the first national research institute, The Korea Institute for Science
and Technology (KIST), was established in 1966. KIST would provide a talent
pool and its division of electronics and telecommunications would later become
independent as the Electronics and Telecommunications Research Institute, the
“Bell Labs” of Korea.62
The 1970s Telephone Backlog Crisis

Although the number of telephones available in Seoul increased greatly in the
postwar years, it came nowhere near meeting the needs of the Korean public. As
the decade of the 1970s came to a close, South Korea had a population approach-
ing 36 million people and its industrial and commercial base was rapidly develop-
ing, yet it had fewer than 2.8 million telephone lines. More than 600,000 of these
lines, approximately one-quarter of the installed capacity, remained on back
order.63 This shortfall in telephone service created enormous social, economic
and political problems.
Ironically, it was the success of Korea’s third national five-year economic
development plan (1972–76) that helped increase public demand for telecom-
munications services, thereby increasing the backlog problem. In those days,
telephone service was regulated and administered by the Ministry of Posts and
Telecommunications. However, the Ministry utterly lacked the capacity to
deliver such service to the majority of Korean citizens.
During the 1970s, the average citizen who applied to have telephone service
installed would have to wait a year and a half for the service to start. Such regular
telephone service meant that a citizen would have a standard blue telephone
installed by the Ministry.
A wealthy person, on the other hand, could order a white telephone, which
came with automatic registration for the immediate start of service, and
commanded a handsome price of US$3,000 or more on the black market. As late
as 1980, kindergarten or grade-school teachers in South Korea could easily find
out which students came from well-to-do families simply by asking those who
had a telephone in their home to raise their hands.64 However, it would all start
to change that year. In the next two chapters, we explain how Korea’s leadership
came to grips with the telephone backlog crisis, overcame the sense of malaise in
the electronics sector as of 1980, and developed a long-term plan to invigorate
that important sector.
2 On the Shoulders of Giants
The 1980s Telecommunications
Revolution in Korea
While the 1970s ended with political crisis and problems in South Korea’s ICT
sector, the 1980s were an epochal decade.1 The revolutionary character of the
changes that took place in that decade and their relationship to today’s develop-
ments are still not adequately acknowledged and understood, especially by many
outside of South Korea and even by some younger Koreans. Our focus in this
chapter is on the giant strides taken in the 1980s that laid the foundation for
subsequent digital development in Korea.
We begin by sketching the situation that existed in Korea in 1980. The second
section of the chapter traces the government’s response to this situation. The next
three parts of the chapter go into some depth in describing the TDX electronic
switching project, the 4MB DRAM semiconductor project and the controversial
decision to begin color television broadcasting. The sixth section shows how
Korea began to privatize telecommunications services. Finally, we conclude
with some comments on the legacy of the 1980s telecommunications revolution
in Korea.
The Starting Point: South Korea in 1980

South Korea in 1980 was in a rather desperate situation in terms of the structures,
institutions, politics and government policies that shape the information and
communication technology (ICT) sector.2 All of these would undergo dramatic
change during the decade, and they serve as useful reference points as we trace
the path of the digital information revolution in South Korea.
Structures
South Korea’s political, social and economic structures were all under extreme
stress in early 1980. Politically, there was turmoil following the October 1979
assassination of President Park Chung Hee that continued into 1980 and under the
government of President Chun Doo-hwan. Although the Chun government was
criticized in many areas, its accomplishments in building new and modern digital
communications networks would eventually help to usher in a lively participatory
democracy in South Korea.
The 1980s Telecommunications Revolution 23
As described in Chapter 1, the decade also began with a major social problem
in the form of a massive backlog in provision of telephone service. In today’s
terms, this would be called a “digital divide,” but it occurred near the end of the
analog era and digital switching was to be part of the solution. To prevent further
exacerbation of the divide, Korea would need to provide nationwide telephone
service, closing the gap that existed between wealthy and poor as well as between
rural and urban as of 1980.
The South Korean economy faced a severe crisis in 1980. On top of the political
turmoil, an unusually cold and damp summer led to a disastrous harvest and agricul-
tural production dropped by no less than 22 percent. The Korean economy suffered
negative growth for the first time in two decades, contracting by 5.2 percent, while
inflation soared to 29 percent in consumer prices and 39 percent in wholesale
prices. The nation’s current account deficit ballooned to over $5.3 billion,3 and
the entire electronics sector of the economy was in a state of growing malaise.
Internationally, South Korea remained separated from China, the Soviet
Union, Eastern European nations and Vietnam by the long cold war. Thirty years
later, all of these nations would be major export destinations for South Korea’s
ICT products, as we shall detail in Chapter 9.
Institutions
Institutionally, the South Korean government in early 1980 was in a period of
transition. The government of President Chun Doo-hwan, like that of President
Park Chung Hee before him, featured a strong centralized bureaucracy with many
well-educated and talented civil servants.
Political power in South Korea flowed from the Blue House (Chong Wa Dae).
Within Chong Wa Dae, the Economic Secretary to the President was one of the
most powerful positions in government. Among the cabinet ministries, the
Economic Planning Board was extremely powerful. It was there that the Stanford-
trained economist Kim Jae-Ik served before being summoned to work in the Blue
House as Economic Advisor to the President.
In the telecommunications sector, all policymaking, regulation and provision
of services were handled by the Ministry of Communications as a government
monopoly. This was a relatively weak ministry and the minister had traditionally
been a political appointee. There was no private telecommunications business to
speak of. Even telephone handsets had to be purchased through the ministry,
leading to the black market in “white” telephones as described earlier.
Politics
The politics of South Korea’s elites in the electronics and telecommunications
sectors were nearly as tumultuous as national politics and the formation of a new
government. For example, there was a protracted and strong political battle to get
approval to begin color television broadcasting. For political reasons, color
television broadcasting was not yet allowed in South Korea, even though more
24 The 1980s Telecommunications Revolution
than 100 other nations already used it. Progress toward manufacturing Korea’s
own electronic switches was also stymied, partly for political reasons.
The changes that began in 1980 and produced epochal change by the decade’s
end all involved political battles and debates. This chapter will outline those
political struggles behind such key projects such as the TDX switching system
and the 4 MB DRAM semiconductor. One of the most controversial decisions
would be to open up the Public Switched Telephone Network for public use upon
its completion in 1987.
Policies
In early 1980 telecommunications in Korea were still a government monopoly.
The public – private balance was strongly on the public side as everything was
handled through a government ministry. In terms of the domestic – foreign
balance in policy, the impact of bilateral trade talks with the United States and
the WTO agreement would come years later. At the start of the decade, Korea
was mainly worried about nurturing its own domestic market so that it might
survive and compete in a world market that was experiencing the transition to
digital communications.
In this chapter, we begin the story of how the nation approached the introduc-
tion of competition into the telecoms market. We will also look at the degree to
which telecommunications policy in South Korea was centralized versus being
distributed among different government and private sector organizations. Of
particular interest here is the shifting locus of power among government minis-
tries. In 1980 the Ministry of Posts and Telecommunications was not a power-
house. A decade and a half later it had been reorganized into the Ministry of
Information and Communication and had become one of the two or three most
powerful ministries.
Each and every one of these circumstances – structures, institutions, politics
and policies – would change dramatically by the end of the decade, in no small
part because of key technology and policy decisions emanating from top levels
of leadership in Korea’s presidential mansion, the Blue House, and in the
Ministry of Communications. The leaders drafted a long-term plan to invigorate
South Korea’s electronics sector. However, success required not only govern-
ment leadership, but the full cooperation of industry and ultimately many indi-
viduals. Elements of the overall plan were difficult, fraught with trial and error,
met with skepticism by critics, and politically opposed. We turn next to the
Korean government’s response to the desperate situation it faced in 1980.
The Government Response

The key policy decisions that set South Korea on its path of rapid digital develop-
ment all emanated from the Blue House and a set of rather remarkable events,
beginning in August of 1980. The following is a first-person account of those
events from the perspective of one of the authors, who was a participant.
Decision-making in the Blue House
During August of 1980 leaders from the Military Academy, members of the
Cabinet, and government department heads were summoned to an emergency
meeting of the Special Committee for National Security in Samcheong-dong.4
The meeting was held in a cafeteria that would later become the offices of the
Special Committee. At that meeting a sub-committee was formed on which this
book’s author was asked to serve. His first responsibility as a member of this
sub-committee was to provide a plan and suggest directions to help energize the
nation’s electronics industry.
About two months later the author received an invitation to have dinner with
Dr Kim Jae Ik, the highly respected Stanford-trained Chief Economic Secretary
to the President.5 Coincidentally, both men had attended Kyunggi High School,
with Kim Jae Ik preceding the author by one year. Consequently, their relation-
ship began on a friendly basis and with a sense of closeness.
The two men met for dinner at a Korean restaurant in Gwanghwamun, near the
center of Seoul. The conversation naturally flowed around Korean science and
technology, with a specific focus on computers, semiconductors and the need for
Korea to introduce electronic switching systems to modernize its telecommunica-
tions system. They touched on the need to begin color television broadcasting,
and on the difficult situation Korea faced in the electronics market because it
was slow to make the transition from an agricultural to an industrial society.
They agreed that with the future merging of computers and telecommunications
in the information society Korea would experience yet another transformation. If
it was late in making this one, it seemed that Korea would remain perpetually a
developing country.
Near the end of this long dinner meeting, which ran until curfew time, Kim Jae Ik
invited the author to come to the Blue House and work with him as a Secretary
to the President for Science and Technology. The invitation was accepted without
hesitation and the two men worked closely together in the Blue House for
the next eight months. During that period they pushed forward with color TV
broadcasting, the privatization of KT, and the establishment of DACOM. One of
the most important outcomes of their work together was the long-term plan to
invigorate the electronics sector.
The Long-Term Plan To Invigorate The Electronics Sector

The long-term strategy to foster Korea’s electronics industry was coordinated by
the Blue House and drafted with the help of academic specialists and government
experts from numerous agencies. The working group that wrote the plan repre-
sented all the bodies and agencies with a stake in the future direction of the elec-
tronics industry. There were representatives from five ministries (the Ministry of
Trade and Industry, the Economic Planning Board, the Ministry of Communications,
Ministry of Finance, and Ministry of Science and Technology); four companies
(Samsung, Goldstar (now LG), Anam and Sanhwa Condenser); and two research
institutes (KIET and KETRI – which were consolidated in 1985 to form the
Electronics and Telecommunications Research Institute, ETRI).
The long-term plan focused on the development of three strategic industries –
semiconductors, computers and electronic switching systems. It called for
the electronics sector of Korea’s economy to more than double in size over a
five-year period.
In the semiconductor field, the plan favored wafer fabrication over “back end”
test and assembly, and identified mass production of memory chips for export,
rather than meeting domestic demand, as the most viable strategy. The plan was
based on the large and growing world market for semiconductors and the fact that
they were standardized. Two crucial assumptions were that chip designs could be
licensed and that the fabrication technology could be bought on the open market,
mainly from Japanese and U.S. firms.
The significance of the 1981 long-term plan for South Korea is difficult to
overestimate, based on two of its characteristics. First, it addressed the entire
electronics sector, acknowledging that it was all being shaped by innovations in
digital technology. More specifically, electronic switching in the telecommunica-
tions sector had a great deal in common with the semiconductor industry. Hence,
Korea could not have success in one without the other. Second, the long-term
plan addressed the question of how invigoration of the electronics sector would
be financed. There were two important aspects of the whole question as to how
the transition in Korea’s electronics sector would be financed.
One was that the plan for development of the semiconductor industry
(1982–86) put pressure on the chaebol to make serious commitments. It called
for a public investment of $400 million, of which 40 percent would be financed
by the National Investment Fund and the remainder by the Electronics Industry
Promotion Fund, which had not yet been created. It envisaged a level of
promotion ten times larger than anything attempted up to then and represented a
new style of government intervention. The heavy-handed HCI (heavy and chem-
ical industrialization) phase was wound back and promotion of the phase for
promoting the semiconductor industry went ahead, in which a new emphasis was
placed on coordination by public agencies with the aim of Korea’s transition to a
knowledge-intensive economy.6
A second factor that helped solve the financial challenge was the manner in
which the government reorganized the public sector telecommunications system.
With the start of privatization, such companies as Samsung, Goldstar and Oriental
Precision Company (OPC) were allocated profitable segments of the telecoms
sector in which to build up specialized businesses and were introduced to such
foreign companies as ITT, Ericsson and AT&T. The profits from the telecoms
activities of these Korean companies provided a secure cash flow while they were
making a huge investment in semiconductor fabrication.
There were many, including government officials, who opposed the long-term
plan and even scoffed at it. They argued that the electronics industry was not a
good investment because its hallmark of rapid technological change would make
it difficult for Korea to catch up. Many argued that Korea should concentrate
instead on strengthening labor-intensive industries. Despite such criticisms, the
“Long-Term Policy” was implemented and within five years the electronics
industry had become the leading industry in Korea.
Installing a Technocrat at the Ministry of Communications

Even with the Blue House mandate provided by the 1981 long-range plan, imple-
mentation of the new policies would require the involvement of the
Ministry of Communications. The problem was that, by tradition, the Minister
of Communications was a political appointee, chosen without regard for techni-
cal background or expertise with regard to the new electronics and digital
communication.
Fortunately Choi Kwang Soo, then-Minister of Communications, proposed to
President Chun that this book’s author move to the Ministry, emphasizing that
since it “... deals with technical matters it would be good if the Vice Minister is
a person who knows and thoroughly understands the technology and its signifi-
cance.” The President accepted his recommendation. It was also supported by
Kim Jae-Ik, who told the author that he should “Go and do the work that is needed!
Truly, if we want to invigorate the electronics industry you must go to the Ministry
of Communications. The core of the electronics industry is telecommunications.
... The [Blue House] Secretariat, while overseeing these matters, will not only
work smoothly, but will have a competent person in charge as Vice Minister
directly under it. Maybe it [the electronics sector] can fly like a bird.” So, although
this book’s author was leaving the Blue House, he would continue to work very
closely with it in a new relationship that would continue throughout his seven
years and seven months as Vice Minister and Minister of Communications.
The appointment of a Vice Minister with professional training directly relevant
to the ongoing revolution in digital communication set a precedent that would be
followed for more than a quarter century. It signaled recognition by the Korean
government of the need to make wise, informed and long-term policy decisions
during a period of rapid technological change in the ICT sector.
Four key choices

As reviewed in Chapter 1, this book’s author helped shape a number of policies
that together propelled Korea’s telecommunications revolution of the 1980s. Four
of those policies led directly to some of the nation’s leading export industries
today. Korea’s leadership decided to
• develop and manufacture electronic switching systems (TDX),

• enter the global semiconductor industry, with an emphasis on DRAM chips,
• begin color television broadcasting, and
• separate the telecommunications business from the government ministry,
including the formation of KTA (the Korea Telecommunications Authority),
predecessor of KT (Korea Telecom). This move, for the first time, allowed
the commercial sale of telephone sets, and marked the start of privatization
of telecommunications.
Looking back at these decisions from today’s perspective, nearly three decades
later, they seem remarkably farsighted. Each decision anchors one part of South
Korea’s strong export-led economic development. The nation is now a major
manufacturer and exporter in each of the four industries affected by the policy
decisions: advanced networks, semiconductor memory chips, flat screen color
television sets and displays, and mobile handsets.
These four industries and their underlying technologies undergird the emerg-
ing global information society in several crucial ways. First, they are technically
closely interrelated and synergistic. Switches are essentially the computers that
make today’s digital networks possible, as epitomized by the internet and cloud
computing. Semiconductors are, of course, an essential component in computers
and a host of other electronic devices, including switches, television sets
and mobile phones. Second, the mobility revolution, sometimes referred to as
“Cutting the cord,” is a pervasive development with profound consequences for
how we all communicate and use the internet, today and tomorrow. Finally, the
contemporary advances in color displays appeal to the all-important human sense
of sight, and promise within this century to allow the more pervasive communica-
tion of visual images, perhaps in three dimensions, along with text, graphics and
other data. As displays become more ubiquitous, so does television, which
remains an immensely popular medium around the world.
“A Telephone in Every Household” – Building the PSTN

The telecommunications policy adopted by Korea in 1980 stated the goal of
universal service from the very beginning. At the time the policy goals were
stated, the nation had an old and completely inadequate telephone system that
favored the wealthy and privileged, who could find ways to get around the reality
of the telephone service backlog. The new policy, stated in the early 1980s, called
for building an “information welfare society”7 in which all Koreans, rural and
urban, rich and poor, would receive the same level of telecommunications serv-
ice. Even more specifically, the government stated the policy goal of moving
quickly toward a single, fixed toll for telephone service nationwide. As of 1980,
there were differential tolls to different parts of the country, based on distance.
Beyond a 100 kilometer radius the toll would increase. So, for example, it was
much more expensive to place a call from Seoul to the Jeju special self-governing
province than to a nearby province. Korean policymakers in the early 1980s even
discussed the goal of moving toward a single toll for voice telephone service
worldwide, making it one of the first countries in which such a long-range pros-
pect was considered. Today the world appears on the verge of achieving that goal,
with the widespread adoption of mobile broadband and VOIP services.
The policy goal of creating an information welfare society meant that, from the
start, there would be no shared-use rural “party lines,” such as those used in the
United States in the mid twentieth century. The early adoption of this goal also
helps to explain why the lively net neutrality debate in the United States and
Europe has not gained much traction in South Korea.
Work toward implementation of the new policy began with construction of the
nation’s first genuinely digital network, with a fiber optic backbone and digital
switches. The PSTN (Public Switched Telephone Network) was completed
in June of 1987. Completion of this network not only eliminated the telephone
backlog in Korea, but allowed callers to receive direct international call service
to 100 countries worldwide, as well as immediate local and toll call services.
The Ministry of Communications (MOC) provided such service to a total of
25,000 villages, each with at least 10 households, in mountainous areas and to
500 island villages as well.8 Completion of the PSTN in 1987 was publicly
acclaimed in South Korea as ushering in the era of “one telephone per house-
hold.” While not widely recognized outside of Korea, it also gave the nation one
of the most modern telephone networks in the world, surpassing such nations as
Japan whose network at that time still included a large number of older crossbar
switches.
By focusing its efforts on building the PSTN, South Korea was acknowledging
the importance of networks in the information age and setting the stage for future
generations of digital networks. As Noam put it, “In the information economy,
information highways are fundamental and benefit everyone. The multipliers are
large for the information sector directly and for the economy as a whole
indirectly.”9 We turn next to a crucial element in construction of the PSTN, the
successful development of the TDX electronic switching system.
The Switch Is On: Korea’s Successful TDX Project

Digital switching can be likened to the brain or nervous system of the internet and
other modern digital networks. The switches and routers that make up digital
networks provide a means of building intelligence into the network. They make
possible cloud computing and are at the heart of the revolution in ICT that is
transforming Korea and the world.
During the 1970s, developments in the electronic switching industry globally,
along with the persistent problem of the backlog in provision of telephone serv-
ice, brought electronic switching technology to the attention of policymakers and
experts in Korea. The individual widely credited with introducing electronic
switching technology as a national priority in Korea was Dr Kim Jae Ik.
The actual announcement was made at a social gathering in February of 1976
by the Economics Minister. That was where he first publicly revealed his decision
that Korea needed to develop electronic switching systems. After some discus-
sion a team at KIST (Korea Institute of Science and Technology) was made
responsible.10 In December of that year an “Electronic Switching System
Development Plan” was drawn up within KIST.
The period from about 1976 through 1981 was a stage of basic research into
electronic switching. However, by 1981 only about US$600,000 had been
invested in the project. Only about ten full-time staff were assigned to the project
over a four-year period. The low level of investment indicated that Korea was not
seriously pursuing the development of electronic switching systems. Most people
at that time doubted the nation’s capacity to develop such systems. Because nine
other countries overseas had developed electronic switching systems, almost
everyone agreed that, in theory, Korea could do the same. But the number of
people who truly thought Korea could develop the technology domestically was
very small. Even among specialists, the most common reaction was to say that
“in actuality this is very difficult.”
The timing of developments in the telecommunications switching industry
worked to Korea’s benefit. Production of electromechanical switches had
required the development of a large and dedicated precision engineering capabil-
ity and a high level of technical skills in manufacturing the multitude of special-
ized components within a switch. However, in the 1980s the switching industry
saw the introduction of microelectronics with fewer moving parts and many more
standardized parts. Switches became more software intensive. These changes in
turn raised the social benefits for countries like Korea. Software engineers that in
the past had stayed abroad to work at Bell Labs or in U.S. universities might now
find employment in Korea.11
The TDX electronic switching project played a crucial role in allowing South
Korea to build a modern telecommunications network and extend phone and
other services to citizens nationwide. It fulfilled the twin objectives of coping
with the dramatically increasing demand for telephone service and developing an
indigenous digital exchange technology. TDX was not only the largest develop-
ment project ever undertaken in Korea to that date. Also, because switching
technology required sophistication in communications, computers and semicon-
ductors, the project had a profound and synergistic effect on the entire electronics
industry in South Korea.
The Debate over Electronic Switching

The Korean government’s announcement of its commitment to developing an
electronic switch manufacturing capability was initially greeted with skepticism.
ETRI, the lead organization for this effort, had little prior experience in digital
switching technology.12 Although some staff within ETRI declared that it would
definitely happen, some employees of the telecommunications companies
strongly voiced a lack of trust in the new technology and underscored the need
for caution. There were several arguments against the TDX project, mainly
coming from telecommunications service providers and the corporations who
would manufacture the switches.
First, the service providers were naturally concerned that any domestically
manufactured switches might not operate reliably and up to international stand-
ards. If they did not, from their viewpoint, which emphasized high-quality
customer service, they would be better off using more expensive imported
switches.
Second, companies like Samsung and Goldstar had invested heavily in foreign
switching systems. They thought it would be difficult to recover their investment
if an indigenous digital switching system came on line too soon.13
A third argument against TDX basically boiled down to concerns about
Korea’s technological capability to succeed. Only nine other countries in the
world at that time were manufacturing electronic switches and all of Korea’s
efforts during the 1970s had yet to bear fruit. Belgium was the largest exporter of
such switches. BTM had a cooperative arrangement with ITT of the U.S. for
export, while AT&T made switches only for the American domestic market.
Besides these countries there were only Canada, Germany, Sweden, France,
Japan and Britain.
In the environment of the1970s, when Korean telephone service was so
woefully deficient, it was difficult for many to imagine how things could be
changed in order to manufacture high-quality telephone switches without defects.
Even Korean companies who worked with international switch manufacturers,
such as Goldstar with the West German company Siemens, argued that electronic
switching technology was not an easy project.
There were also arguments in favor of the TDX development project, which
ultimately prevailed. First, the price of foreign switches was higher than the MOC
expected the price of local switching technology would be. Given the sad state of
the nation’s telephone network as of 1980, the local market for digital switches
was large enough to guarantee that Korea would more than recover its investment
in the project. Although Korea could invite competitive international bids,
there seemed to be no way to reduce the price of switching systems other than
developing its own production capability.
During the early years of the project, the price of TDX switches exceeded the
hopes of some leaders who had thought the cost could be shaved to the lowest
possible price. However, as the government later began to purchase exchanges
for rural farming and fishing villages, the capacity of digital switches was good
and they could be purchased very cheaply. In fact, the cost of central office
switches in South Korea, which had peaked at US$491 per line in 1989, came
back down to about US$237 by 1993.14
A second, closely related argument for the project was the interest in building
South Korea’s own technology capability. From November of 1980 through July
of 1981 Korea sent 40–50 government officials and representatives of manufac-
turing companies to the United States to receive training on the AT&T No. 1A
switch. After that training, they continued making their utmost efforts to develop
a domestic manufacturing capability.
Some of those who opposed the TDX project started to change their opinions
in October 1981 when $24 million was allocated to start full-scale development.
However, doubts persisted in some quarters. In 1982 the Telecommunications
Strategy Department was established within the Ministry of Communications,
and that year marked the formal start of the TDX project which would run
through December of 1995. However, even then the commitment to full-scale
development was still not widely and publicly known.
As Vice Minister of Communications (MOC), this book’s author consistently
emphasized to industry and government colleagues that Korea could develop
electronic switching systems domestically. Despite some risk, the benefits of
the project were so sufficient that it was necessary to push forward with the
development. Because ETRI had made the development plan, he went so far as
to prepare a document containing the names of the people from that institute who
would supervise the project and then stamp the document with his official seal.
In those days, one’s personal or official seal carried far more weight than a hand-
written signature. This stamped and signed document served as official public
notice that the MOC would directly decide everything needed to manufacture
electronic switches, point by point, all the way through to eventual production
operations.15
Secretary Kim Jae Ik and other internationally educated people had to periodi-
cally defend the electronic switching initiative. There was opposition from some
people who were influential in business at the time. However, Dr Kim, who
was an economist by training, was able to blunt such criticism in part because
he received advice from top-notch technical experts. One of these was the
MIT-trained veteran of Bell Labs, Professor Sang-Hyun Kyong of the Korea
Institute of Science and Technology (KIST).
The trials and annoyances associated with the effort to develop electronic
switching technology even extended to the international arena. The presidents of
certain foreign electronic switch manufacturing companies even came to the
Minister of Communications’ office and asked “Do you know how difficult the
development of an electronic switching system is?” Also, they occasionally gave
advice in a manner that seemed insulting. Some foreign company representatives
even commented that “If Korea succeeds in domestic manufacture we’ll have to
reduce our international volumes.” These executives didn’t seem to trust what the
MOC leadership said and were always trying only to market their country’s brand
of switching system. However, three other international manufacturers not only
avoided such comments, but also arranged independently to assist South Korea
indirectly in the development of switching systems.
The Decision to Invest $24 Million in Development16

As Vice Minister of Communications, this book’s author sought out the advice of
Dr Choi Soon-dal, Director of ETRI, regarding the TDX project. He initially
sounded him out during a personal meeting, saying “I’ve just got one thing to
bring up with you today. We need to push for domestic manufacturing of elec-
tronic switches. With our present technology, is this possible?” The research
institute director reacted somewhat skeptically, saying “Although it is relatively
small, this project would require an appropriation of about $10 million.”
Upon hearing this the Vice Minister said “Then if I give you $10 million can
you do the project?” “Please give me some time” Dr Choi responded and imme-
diately after that phone conversation he began full-scale deliberations within the
research institute.
One week later Dr Choi and four ETRI administrators visited the Vice Minister
and said that they required $10 million. They also said that if the work didn’t go
well the supervisors would write letters of resignation. In response, the Vice
Minister advised them that “anyone would write a letter of resignation on the day
that work on a project is ending” and asked them to have confidence! He noted
that “If we can succeed this time in developing TDX, anything will be possible
in the future. If ETRI can become established without problems as a single and
recognized institute, then the technology specialists will have to give their best
performance if they don’t want to be outcasts there.”
With support certain, Director Choi Soon-dal and the research administrators
started to show an enterprising spirit. The papers were formally drawn up, with
the final appropriation boldly set at $24 million. With no objections being lodged,
the Vice Minister approved South Korea’s very first research and development
project of such magnitude. Everybody around him worried about everything.
“How can you so resolutely decide to approve such a dangerous project?”
they asked. The doubters questioned “How can a young, 42-year-old Vice
Minister with no experience make such a decision?” and “How can we later
supervise the expenditure of this much money?” These were among the harsh
criticisms at the time.
However, the young Vice Minister was confident, from the beginning to the
end, that it was an extremely easy project. His prior experience with computer
development in the military convinced him that a $24 million budget would at
a minimum produce some type of electronic switch. If it could be used in
the domestic market, the market would be sufficient to support it.17 Although
$24 million was the initial investment, when all was said and done, the TDX-1
R&D budget actually totaled US$31.6 million.18
The Structure of Technological Innovation

At the heart of the TDX project, ETRI was responsible for the development and
control of major parts of the switching system. This involved high-level design
and system integration. ETRI was assisted in its basic research by a host of public
universities and other government research institutes. The basic technology was
then transferred to four Korean manufacturers: Samsung, Goldstar, Daewoo and
OPC. In fact, the total manufacture of equipment was equally divided among
these four companies.
The main customer, Korea Telecom, provided all of the funds required for the
project and was responsible for program management. It provided user require-
ments and conducted the required qualification tests to ultimately commercialize
the technology.19
In 1982, the same year that it had decided to pursue its own domestic switching
technologies, the government, with the help of Korea Telecom and KIST,
launched a 500-line phone networking pilot project in a post office in Yongin.
Dubbed TDX-IX, it was the first switching system developed with domestic
switching technology.
Building on the skills and confidence gained from this pilot project, ETRI
created a TDX development team and installed 24,000 lines in 24 districts. This
effort enabled Korea to become the tenth country in the world to develop an
electronic switching system.
Through the conclusion of the TDX program in December of 1995, it consisted
of three major versions. The smallest version, TDX-1, could accommodate up to
10,240 subscribers and was designed for use in rural areas and small cities. The
TDX-1B system, which could accommodate up to 22,528 subscribers, was
designed with medium-sized cities in mind. Finally, TDX-10, which is the largest
system and could accommodate up to 100,000 subscribers, was designed for use
in metropolitan areas.
Overall Results of the TDX Project

The TDX project had a development history of 20 years, during which consider-
able improvements were made in the design, based on the shifting technological
frontier. For example, the number of subscriber lines increased from 10,240 with
the TDX 1A to 100,000 with TDX 10.20
Over its first decade of commercial use Korea installed 15 million TDX lines,
which accounted for more than 40 percent of the nation’s telecommunications
network. The bottom line was that Korea’s home-grown telecommunications
industry greatly improved telephone services nationwide, while saving each
subscriber an estimated 40 percent of the cost for this vital service, compared
with the costs that would have been incurred if the system had continued to rely
on non-Korean manufacturers.21
A second and arguably more important result of the TDX project stems from
the sophisticated knowledge of communications, computers and semiconductors
that the project required. As a result, the TDX project paid huge dividends for many
other high-tech industries including the development and manufacture of comput-
ers, consumer electronic equipment and high-tech components for a wide range of
goods and services that relied on semiconductors for improved performance.22
A third benefit of the TDX project was the creation of intellectual property in
Korea. As of 1999, over 500 patents had been registered for more than 500 TDX
system components and 300 TDX software programs. Switching technology, as
with other key technologies in the digital age, is a continually moving target. By
the early 1990s Korean corporations had begun to develop their own versions of
the TDX and to invest more in telecommunications research and development. In
1994, Yang Seung Taek, then President of ETRI, estimated that 20–25 percent of
the microprocessors in the TDX-10 were imported, but the ASICs, which are
critical in differentiating a product, were designed by ETRI. In that sense, the
firms were still very dependent on ETRI for technology. They felt that in the
newer products, such as ATM switching systems, the pace of development was
too slow to keep up with global competition. To accelerate the development of
new products, Samsung and Goldstar began entering into strategic partnerships
with a number of overseas firms.23
Table 2.1 Number of TDX Subscribers Worldwide and Estimated Value of Exports.
Region CIS Eastern Asia South Near East Africa Total

Europe America
Number 1,179,584 288,783 1,935,857 44,500 227,000 17,750 3,693,438

of lines
Amount 328,566,000 130,000,000 176,114,000 37,383,000 27,800,000 9,388,000 709,251,000
(US$)
Source: Adapted from “Switch is On: Korea,” in Sharing Innovative Experiences, Volume I, UNDP,
1999, p. 26. http://tcdc.undp.org/experiences/vol1/content1new.asp
The TDX manufacturers in South Korea also achieved success in exporting the
technology. As of 1999, as shown in Table 2.1, there were TDX exports to more
than 20 foreign countries, including the Russian Federation, the Philippines,
Nicaragua and Iran. The total export value of these switches was estimated at
US$700 million.
The total R&D cost of the TDX project has been estimated at US$213.9
million. In economic terms, the TDX project had a large market creation effect in
that total domestic and foreign sales of the product far exceeded the total R&D
investment. The ratio of domestically produced switches to imported switches
continued to increase and has exceeded unity since 1991.24
Finally, perhaps the most important consequence of the TDX development
project was the confidence that its success instilled in everyone involved. In the
end, the leadership team that developed TDX adopted the following motto: “We
developed it with our brains, we made it with our hands, we teach and learn it in
our language, it matches our reality and we will use it the way we wish! And one
more thing, we planned the design for high product quality and safety!”
Word of the success of the TDX development spread far and wide in
South Korea and it became a prominent symbol of the hope that the nation
could continue to advance through science and technology. With new-found
confidence, South Korea would move on toward successful innovation in the
semiconductor industry, as described in this chapter, and in the development and
commercialization of CDMA technology for mobile communications, which will
be dealt with in Chapter 6.
The Creation of Korea’s Semiconductor Industry

The semiconductor industry is one of the world’s truly global industries in that
production and trade are conducted on the basis of knowledge intensity and
value added, rather than location advantages, volume or freight charges which
dominated earlier industries. One feature of Korea’s semiconductor industry is
that it concentrated relentlessly, from the beginning, on memory chips. The
expansion of the DRAM segment of the semiconductor market was remarkable,
from introduction of the first 1K DRAM in the early 1970s to a market valued at
$40 billion by 1995. Also, the dynamics of competition in the memory chips
sector are extremely demanding, with ultra-short product cycles that call for
expensive investment in new process technology every two to three years. Korean
companies learned to manage these product cycles.25
The creation of a real semiconductor industry in South Korea was a critical
component of the information revolution here because of its relationship to tech-
nological progress in several other key areas. First, digital switching was at the
heart of modern communication networks, whether fiber optic or wireless. The
TDX project simply could not have succeeded without considerable expertise and
sophistication in semiconductors. By the same token, progress in South Korea’s
telecommunications sector helped to fund the large investments in semiconductor
fabrication that were necessary for the country to succeed in the global market.
Second, today’s world-leading display and television industry also depends upon
semiconductors. Not only do high-definition television sets contain semiconduc-
tors, but the manufacturing techniques for LCD displays borrow heavily from
methods used in the fabs that manufacture semiconductors. Finally, semiconduc-
tors comprise the most important components of mobile handsets, as well as
notebook and desktop computers and a host of other electronic devices.
The Historical Roots of Korea’s Semiconductor Industry

South Korea’s semiconductor industry emerged in several distinct stages. The
first stage, prior to 1974, consisted of preparation to enter the semiconductor
market, which was then dominated by the U.S. and Japan.
In 1965, a small American company, Komi, invested in transistor/diode
production facilities in Korea. While that investment itself was rather small, it
had a useful demonstration effect. By the mid-1970s there were nine U.S.-owned
semiconductor facilities and seven Japanese companies operating in Korea.26
President Park Chung Hee took a personal interest in the emerging electronics
industry in the late 1960s. In August of 1967, he summoned Dr Kim Wan-hee, a
professor of electronics at Columbia University, to the Blue House for advice on
how to get an electronics industry started in Korea. After four days of field
study Dr Kim was shocked to note “… that the top factories and companies in
Korea were built on top of red soil, in the farm and on unpaved ground. There
were electronic products being put straight on that soil!” This, of course, was in
striking contrast to the clean rooms in modern electronics plants.
At that first meeting, President Park asked Dr Kim to help Korea develop an
electronics industry. Dr Kim became influential in convincing the CEOs of
Samsung, Goldstar and eight other companies to begin work in the electronics
industry. Over the decade following his 1967 Blue House visit he exchanged
about 150 letters with President Park Chung Hee.27 Dr Kim became one of the
earliest U.S.-educated leaders to introduce the electronics industry to South
Korea.
In addition to foreign investment by U.S. and Japanese companies, another
important development was the establishment of technical and engineering
institutes in South Korea. In 1966, the Korea Institute of Science and Technology
was founded. The institute at once provided a focus for advanced technical
training and also increased the nation’s capacity to absorb high technology.
Korean research institutes doing research on semiconductors and computers
were located mainly in and around Gumi in North Gyeongsang Province, which
by no sheer coincidence happened to be President Park Chung Hee’s hometown.
However, the electronics technology research institutes needed to attract capital
funds from international banks, which strongly opposed moving the research
institutes to Gumi.28
In 1974 a second stage in the development of Korea’s semiconductor industry
began with the founding of a Korean chip operation called Korea Semiconductor.
It was the first plant to produce CMOS Large Scale Integrated (LSI) chips in
South Korea. Because of financial problems, it was soon sold to Samsung and
was renamed Samsung Semiconductor in 1978.29 This marked the emergence of
a genuine semiconductor industry under Korean control.
By the late 1970s there were four private companies involved in LSI semicon-
ductor manufacturing. Along with Samsung, they comprised Goldstar, Daewoo
and Taihan. At the start of the 1980s these four firms were operating in the semi-
conductor wafer fabrication industry. However, they were still using LSI technol-
ogy while the Americans and the Japanese had moved on to VLSI (Very Large
Scale Integration – with between 100,000 and one million transistors per chip).
In 1982 the Korean semiconductor industry entered a third stage as the Chun
government was eager to see Korean electronics companies take the plunge into
VLSI semiconductor production. Huge capital investments would be needed for
this project, on the order of hundreds of millions of dollars. The government’s
role was to spread and reduce risk as much as possible by arranging finance and
guaranteeing loans.
The Role of the Chaebol in Technology Development

The promise of government support, along with direct government prodding,
prompted Samsung, Hyundai and Goldstar to announce in 1982 that they would
make major investments in production of chips at the VLSI technology level,
particularly MOS (metal oxide on silicon) memory chips such as DRAM
(Dynamic Random Access Memory) chips. Although the government played an
important role at this critical stage in the development of South Korea’s semicon-
ductor industry, its emergence was led by three large industry groups. Unlike the
TDX project, government attempts to coordinate the efforts of major industry play-
ers were somewhat futile as each of these groups adopted a different strategy and
competed with each other to gain market share in the semiconductor industry.
In February 1982, Lee Byung-Chull, the founder and chairman of Samsung,
famously announced that Samsung intended to become a world player in memory
chip production. Moreover, he was prepared to put up 100 billion won – an aston-
ishing $133 million – to back his assertion. In effect, he was betting the future of
the company on semiconductors.30
For Samsung, as for the other leading Korean companies, the road into the
global semiconductor industry and mainstream chip production led through
Silicon Valley. It was the location of many world-renowned semiconductor firms
which employed U.S.-trained Korean–American engineers who could be hired by
the Korean chaebol at attractive salaries by appealing to their national pride.
Silicon Valley was also home to many capital-starved startup firms, some with
excellent chip design know-how but no manufacturing capacity. Korean compa-
nies offered these small U.S. design houses good terms for the manufacture of
their chips in return for the right to license their designs. And so it was that small
firms like Mosel, Vitelic, Micron and others became the source of Korea’s new
technology.31
The announcement by Samsung’s Chairman Lee was followed by similar
announcements from Goldstar, Daewoo and Taihan. Then Hyundai announced
that it intended to enter the semiconductor field and industrial electronics gener-
ally, backed by an investment commitment of 300 billion won ($400 million)
over a five-year period, the largest commitment to that date. Hyundai’s announ-
cement led Samsung and Goldstar to announce increased commitments of
their own.32
One estimate is that the four major players in Korea’s semiconductor industry
invested more than $1.2 billion between 1983 and 1986, ten times the scale of
investment in Taiwan’s semiconductor industry over the same period. Furthermore,
from 1983 through 1989 their total investment is estimated at approximately
$4 billion. The push into VLSI semiconductors not only took the industry to a
new level of technological sophistication, but also to new heights of financial
leverage. The investment initiative now lay with the firms themselves, more so
than with the government.33
In December of 1983 Samsung announced that it had produced a good working
version of a 64K DRAM, which was then a state-of-the-art product in the
semiconductor industry. However, by the time production was under way,
the Americans and Japanese were already producing the next generation
256K DRAM. The chaebol made Herculean efforts to establish new VLSI chip
fabrication plants in 1983 and 1984, but by the time marketable products were
available the semiconductor industry was heading into a cyclical recession. Not
surprisingly, early sales in the U.S. market were dismal.
The 4MB DRAM Project

These developments prompted a furious debate within government and business
circles. The influential Economic Planning Board, backed by banks, argued that
Korea had no future in this risky business. The Ministry of Trade and Industry,
on the other hand, argued that the setbacks were cyclical and the Ministry of
Science and Technology became a major proponent of state support for Korea’s
long-term transition to a knowledge-intensive economy.
As of 1986, the major firms in Korea’s nascent semiconductor industry were
still not competitive globally and they lacked both the money and manpower to
undertake the next stage of development. Also, at that time, Samsung alone did
not have the capacity to develop the 4MB DRAM. However, the government, in
a special effort to develop the new technology quickly and increase its economic
impact, recommended to Samsung that it work together with other companies
on the 4MB DRAM. In those days the government saw that at least three compa-
nies were needed for the Korean semiconductor industry to be competitive in
the international economic battles. In terms of technology development, it
suggested using the method that had been successful in the TDX electronic
switching project. Based on this sort of government recommendation, Samsung,
Goldstar and Hyundai together achieved the development of the 4MB DRAM,
and ETRI brought together teams from these three companies and coordinated
the research.
Several studies of Korea’s entry into the semiconductor market make it clear
that the role of the government was supplementary to the already-established
DRAM trajectory of the major companies involved. Nevertheless, the govern-
ment played an important role. One study concluded that, although Samsung
could have developed the 4MB DRAM without it, the consortium project helped
Samsung to shorten its development time, an extremely important factor in the
DRAM market. It narrowed its gap with the market leaders to only six months.
The project was even more useful to the follower firms, Hyundai and Goldstar,
who benefited from Samsung’s more advanced knowledge despite a real lack of
cooperation.34
In 1987, Japan and the U.S. settled their trade differences in the Semi-
conductor Trade Agreement, limiting Japanese access to the U.S. market and
setting a floor price for semiconductor products. Both these aspects of
the agreement favored Korean producers and in 1987, with the boom in
personal computers, Korean firms were able to sell all the chips they could
produce.35
In the 1990s semiconductors became South Korea’s largest export item and
remained so even after the 1997 Asian financial crisis. Also, as touched on earlier,
the global semiconductor market experienced a major shift in the geography of
industrial activity from the U.S. and Japan to other nations of East Asia, including
Korea.
At first36 there were people who asked why, if we manufactured telecom-
munications equipment, we should proceed all the way to semiconductor
manufacturing. The TDX development naturally turned into manufacturing.
After developing the TDX, it turned out to be a superior switch with competitive
strength. However, some argued that this scenario would be unlikely to occur
with semiconductors.
Nevertheless, because the question of making good equipment for use in tele-
communications involved semiconductor research, telecommunications manu-
facturing naturally involved managing semiconductors. Without semiconductor
development, telecommunications construction would naturally run up against
physical limits. In this respect Moore’s Law has had a tremendous impact not
only on the semiconductor field, but on telecommunications.
The Start of Color Television
Back in the 1960s and 1970s, it was hard for visitors not to form a predominantly
black and white image of the country. At that time, Korea was indeed a war-torn,
developing nation, whose mountains were lacking trees and vegetation.
In those days all of the road signs and signs on buildings were in the distinctive
hangul script, but they were all in black and white. This was the situation through
1980. At that time, if someone had conceived of a giant electronic television
screen on the side or top of a high-rise office building, there would have been no
color television content for it to convey. Although over 100 other nations had
started color television broadcasting, South Korea was not among them.
Goldstar, the predecessor of today’s LG Electronics, came out with Korea’s
first black and white television set in 1966, through an agreement with Hitachi of
Japan. In 1977, the first color TV came off a Goldstar assembly line. However,
Korean companies manufactured nothing but the box, while all of the compo-
nents inside it were imported, mostly from Japan. Moreover, even if a wealthy
Korean family purchased a color television, there was no color telecasting, so
they were limited to watching color videotapes.37
Why had the color television industry not developed? First, the government
had forbidden both the sale of color television sets and color television broad-
casting. Government restraint was a major reason that the color television indus-
try did not develop in South Korea before 1980. At the time, it seemed that the
remaining electronics industries also died together with it.
A second factor was the strong opinion that color television would further a
sense of incompatibility between Korea’s cities and its rural villages. In those
days only black and white television had spread to the rural regions of Korea. In
the midst of these conditions, if color television broadcasting had begun, rela-
tively the citizens in rural regions would inevitably have been aware of falling
behind and of their relative poverty and deprivation. For this reason, President
Park Chung Hee in those days thought the promotion of color television would
be a burden.
The very first concrete undertaking assigned to this book’s author as a member
of the Special Committee for National Security was to see that the sale of color
television sets was initiated. However, even though this measure was put in force,
color television sets did not sell well. The reason was simple. They didn’t sell
well because there was no color broadcasting.
Although the government eventually insisted upon color television broadcast-
ing, the decision involved a lot of friction with other members of the committee.
Under President Park Chung Hee, the issue of color television broadcasting had
been a source of dissension among citizens. It is a historical fact that, as of 1980,
color television was simply not a question to be brought up for discussion. Many
people held fast to that view. Even some members of the Special Committee for
National Security said without hesitation that color TV sales were unacceptable
and broadcasting in color even more unacceptable. Both, it was argued, would
foster social divisions. The issue remained highly politicized and divisive, despite
the fact that more than 100 other countries around the world were already
broadcasting in color. Some people even took pride in arguing that “Even though
our country ranks lower than 100th in the world we are a country that doesn’t
permit it!”
Despite the continued debate, color television broadcasting was introduced to
South Korea in 1980. As later chapters of this book will make it abundantly clear,
this decision was a key element in invigorating the electronics industry and it led
to the development of color television sets and displays as one of the nation’s key
export sectors in the 21st century.
The Legacy of the 1980s Telecommunications Revolution

In the space of a decade, it seemed that South Korea had caught up with interna-
tional trends in digital communications. Also, South Korea’s social, political and
economic structures were all back on a solid footing. Economic progress had
accompanied political democratization and the export-led economy was taking
off, benefiting from the positive exposure provided by the Seoul Olympics.
Institutionally, the Ministry of Communications had established itself by the
decade’s end as one of the most powerful governmental ministries. It was affili-
ated with an array of new organizations, public and private, that had not existed
in 1980. Both the Blue House and the country’s leading economic bureaucrats
now acknowledged the importance to Korea of skilled policy and technical
advice in the ICT sector.
In terms of policy, over the course of the decade, the balance swung rather
decisively from public to private as the nation created new companies and began
the process of privatization. The balance of policy also began to move away from
monopoly toward competition. The approach to policy remained largely central-
ized rather than distributed. Throughout the 1980s, the focus was largely on
strengthening Korea’s domestic market and technology capacity, but there were
glimmers that this would begin to change.
While there were many criticisms of the Fifth Republic on other matters, most
observers acknowledged and approved of the government’s build-up of the tele-
communications sector. The Blue House’s Economic Secretariat played a very
large role in those epoch-making developments. It played the role of an orchestra
leader while each government ministry or office provided its specific services.
During the 1980s the technical skills of government offices were woven into the
work of supervising economic plans.
On reflection, the “telecommunications revolution” of the 1980s in Korea had
several important results. First and foremost, this revolution led to the develop-
ment of greater citizen awareness. The country’s leading telecommunications
policymakers came to believe that the free flow of information promotes the
public welfare, and consequently they focused a great deal of energy on raising
citizen’s awareness.
A second result of the revolution was to convince the nation’s economic
bureaucrats of the importance of telecommunications networks. Leaders in the
MOC and the telecommunications sector stressed that they were not just
expanding simple phone service. Instead they were resolutely pursuing a
strategy of investing the earnings from the first network development in the cities
and universally opening up the PSTN (Public Switched Telephone Network).
This opening meant that facsimile machines, computers and other terminals
could be connected to the network. It took about a year and a half, creating some
degree of debate and disturbance, to get mutual agreement from all the relevant
government organizations on this strategy, but it brought increased institutional
power to the Ministry of Communications, a trend that would continue into
the 1990s. After this action, facsimile companies became the rage and all kinds
of electronic terminals, including the EasyCheck terminals to check credit
card transactions, spread rapidly, contributing to a big growth in the electronics
sector.
A third result of the revolution grew out of the determination to promote
“domestic manufacture,” and was exemplified by the TDX-1 electronic switching
system. In a single stroke Korea became only the tenth nation in the world to
manufacture electronic switching systems. The timing of this development,
coming just before the 1988 Seoul Olympics, offered an exceptional opportunity
to make the level of Korean scientific and technology exports much more widely
known around the world. After TDX came successful development of the 4 MB
DRAM which, more than any other accomplishment, showed the strength of
South Korea’s technology.
The fortuitous timing and influence of the 1988 Seoul Olympics should be
underscored. There are three major considerations in this regard. First, the
Olympic Games, as of 1988, were perennially the world’s largest planned media
event. This meant that state-of-the-art media and communication systems were
needed to successfully host the games, and also that the Olympics offered an
unequaled opportunity to promote Korea’s ICT development and the possibility
of future exports.
Second, the Olympic Games were successfully used by the Korean govern-
ment, under President Roh Tae-woo, to bolster the “northern policy” of opening
up diplomatic, economic and cultural relationships with the former Soviet
Union, China, and other socialist nations including Vietnam and Eastern
European countries.
The third consideration is timing. To the extent that Korea had achieved
successes in digital development before the Seoul Olympics, it was able to
maximize the impact of the global exposure provided by those games.38
Finally, we should note that the Korean government itself made the decision to
begin liberalization of the IT sector in 1980. It was government-led and discre-
tionary liberalization in which the Korean government itself made the major
decisions, such as how many entrants to allow and how strong these entrants had
to become to compete with the vertically integrated incumbent.
All told, the remarkable developments of the 1980s in South Korea illustrate
the characteristic of information that economists call the “on the shoulders of
giants” effect. Without the epochal developments of the 1980s, it would have
been nearly impossible for younger generations of engineers, scientists and
government officials to achieve what they did in the 1990s and in the first decade
of this new century. Not only was the crucial store of information about electronic
switching, semiconductors and the like transmitted to subsequent generations, but
also the confidence to carry on with a vision that inspired them! That is the story
we tell in the remaining chapters of this book.
3 Government-led ICT Development
in South Korea
The concept of leadership is frequently invoked to help explain the successful

use of information and communication technologies in the service of national
development. As Wilson put it, “Without local political leadership the informa-
tion revolution cannot move forward. Leaders must be willing to press changes
in the face of institutional rigidity, technological backwardness and political
resistance. ... Without politics and political leadership, the information revolution
simply does not occur.”1
South Korea is now widely acknowledged to be a model case of government-
led telecommunications development.2 The World Bank’s extensive study of
Korea as a knowledge economy stated that “... the Korean government assumed
the very necessary proactive leadership role of supporting the market and provid-
ing an environment that would foster and sustain the transformation.”3
Korean government leadership under Park Chung Hee and through the HCI
reforms in the late 1970s resembled the developmental state that had propelled
development in Japan and in other newly industrializing East Asian economies.
However, beginning in 1980 under the leadership of individuals such as Kim
Jae-ik, Korea took a decisive turn toward economic liberalization, including
liberalization of the telecommunications and electronics sectors as a development
strategy. That government-sanctioned liberalization is what propelled Korea,
within a decade or two, from being a follower in the world telecommunication
market to one of the global leaders.4
Other chapters describe major projects through which the Korean government
built new digital networks, used its purchasing power to encourage new ICT
products and services, and coordinated vast public education efforts. In this chap-
ter we look at changes in government institutions, restructuring policies and laws.
To put a human face on leadership processes, we introduce several influential
leaders of the 1980s telecommunications revolution. Our goal is to describe more
fully the key aspects of leadership in the Korean case.
Patterns of Institutional Change

Korea has a long history of centralized political power.5 In contemporary
Korea, the apex of political power is found in the Blue House, the nation’s
presidential office and residence.
Government-led ICT development 45
The scope of political change in South Korea from 1980 to the present is
breathtaking, encompassing political liberalization and accompanying changes in
the press and media. With respect to the increasingly important matter of tele-
communications policy, one of the salient changes was the growth in influence of
the Ministry of Communications, which grew from being a weak ministry in
1980 to become one of the leading ministries.
Creation of ICT Sector Institutions

One aspect of the growing influence of the Ministry of Communications was the
creation and strengthening of several other key institutions in the telecommunica-
tions sector. They included the following.
• The Information Communication Training Center, founded in 1984,

was reorganized as the Information Culture Center in 1988 and today
is known as the Korea Agency for Digital Opportunity and Promotion
(KADO). KADO is the principal Korean government agency whose mission
it is to reduce the digital divide, both inside Korea and, increasingly, in other
countries, through training programs with representatives from developing
nations.
• The National Computerization Agency (NCA) was established in January
1987. One of its early assignments was construction of the National
Administrative Information System (NAIS). In 2006 the agency’s name was
changed to the National Information Society Agency (NIA). In 2008, the
agency’s major government counterpart was changed from the MIC to the
Ministry of Public Administration and Security (MOPAS).
• KISDI, the Korea Information Society Development Institute, was
founded in 1988 to conduct telecommunications policy research in support
of the government’s effort to build an information society. In January of
1999 KISDI changed its affiliation to the National Research Council for
Economics, Humanities and Social Sciences under the umbrella of the office
of the Prime Minister.
• KCC, the Korea Communications Commission, was created in 1991.
Modeled after the U.S. FCC, it approves common carriers, conducts
reviews to ensure fair competition, and recommends policies. It took over
functions formerly handled by the Telecommunications Policy Office within
the MOC.
In addition to the institutions affiliated with the MOC (later MIC), there
were two important institutes associated with the Ministry of Science and
Technology.
• ETRI, The Electronics and Telecommunications Research Institute,

was founded in 1985 under the Ministry of Science and Technology through
a merger of KIET and KETRI. Beginning with the TDX project, ETRI
would play a key role in technology development and innovation that
46 Government-led ICT development
boosted Korean telecommunications and led to ETRI’s current international
recognition as a major telecoms research institute. The increasing revenues
from telecommunications services and the legal requirement that 3 percent of
profits be invested in research and development helped ETRI enormously. In
2002 the mandatory annual contribution from service providers to R&D was
reduced from 3 percent of sales to 0.5 percent.6
• Korea Institute of Science and Technology was founded in February of
1966. After being integrated with the Korea Advanced Institute of Science,
it was renamed the Korea Advanced Institute of Science and Technology
in 1981.
The Ministry of Culture and Tourism has traditionally also had control over the
content side of telecommunications, particularly the game industry.
• The Korea Game Industry Agency (KOGIA) was established in 1999 as

the Integrated Game Support Center. In 2007 the agency name was changed
to The Korea Game Industry Agency.
• The Korea Institute for Electronic Commerce (KIEC) was established in
1991 as the Korea EDIFACT Committee (KEC). In August of 1999 it was
renamed the Korea Institute for Electronic Commerce. It operated under the
Ministry of Commerce, Industry and Energy.
• MIC, the Ministry of Information and Communication, was created in
1994. The Kim Young-sam administration, with its overall emphasis on
segyehwa, quite naturally had a politically driven focus on IT development.
In 1994 it further strengthened the Ministry of Communications as the lead
bureaucracy for telecommunications policymaking. It expanded the power,
jurisdiction and functions of the MOC and renamed it as the Ministry of
Information and Communication (MIC). The MIC was given sole respon-
sibility for the IT sector, absorbing the industrial policy functions from
the Ministry of Trade, Industry and Energy and the Ministry of Science
and Technology. A series of politically driven policies – the “Basic Act on
Informatization Promotion” in 1995, and an “Information Promotion Fund”
in 1996 – strengthened MIC’s legal and financial tools to guide IT policy.7
In contrast to Japan’s MPT at the time, Korea’s Minister of Information and
Communication, appointed by the President, was always a distinguished
expert in IT, facilitating decisive policymaking and strengthening the legiti-
macy of the MIC’s policies.
Of course, by 1994 the role of ICT in Korea was so pervasive that it was
impossible to completely separate ministerial responsibilities. For example, the
Ministry of Culture and Sport still had some major responsibilities for media
content. Likewise, the Ministry of Science and Technology remained involved in
research and development, as did the Ministry of Education. Obviously, the
Ministry of Trade, Industry and Energy retained many concerns with key industry
participants in Korea’s telecommunications sector.
• The Informatization Promotion Committee was established in 1996 and
President Kim Young-sam declared informatization a top national priority.
The committee included representation from all government ministries and
agencies and was headed by the Prime Minister. The successive “Master
Plans” for informatization that were announced in 1995 (Basic Act on
Informatization Promotion), 1999 (Cyber Korea 21) and 2002 (E-Korea
Vision 2006) all benefited from President Kim’s elevation of their efforts to
that of a top national policy priority.
The National Science and Technology Council has been the highest decision-
making body of the Korean government on science, technology and innovation
issues since 1999. In that year the President took over the chairmanship of the
NSTC in an effort to strengthen it and eliminate program overlap and duplication
among ministries, which had occurred in the 1980s and 1990s. The Presidential
Advisory Council on Science and Technology (PACST) also plays an important
role in policymaking in Korea. It was established under the Constitution in 1991
to advise the President on science and technology policy and developments. It
consists of 30 members representing industry, academia and government research
institutes. Members are appointed by the President for a one-year term. It meets
monthly and presents recommendations to the President at least twice yearly. In
practice, the President and the Prime Minister use the PACST to listen to the
voices of the private sector and the diverse science and technology sector.8
The 2008 Government Reorganization and Streamlining

As the new administration of President Lee Myung-bak took office in 2008 there
was a sweeping streamlining and reorganization of government, with dramatic
immediate effect and probable long-term consequences for policymaking in the
ICT sector. The reorganization replaced the MIC-centered framework with a new
one9 in which ICT would be combined with the functions of each ministry. At the
ministerial level, it included the following key changes.
• The Ministry of Information and Communication (MIC) was eliminated.

• The offices of Deputy Prime Minister for Science and Technology and
Deputy Prime Minister for Education and Human Resources Development
were abolished. Also, the Ministry of Science and Technology (MOST)
and the Ministry of Education and Human Resources Development (MOE)
were merged to form the Ministry of Education, Science and Technology
(MEST).
• The world’s first Ministry of Knowledge Economy (MKE) was created,
merging the former Ministry of Commerce, Industry and Energy with
elements of the Ministry of Information and Communication, the Ministry
of Science and Technology, and the Ministry of Finance and Economy.
The parts of MOST that were merged into the MKE included those concerned
with the Daedeok Innopolis and other cluster programs.
• The Ministry of Public Administration and Security (MOPAS) assumed the
MIC’s former responsibilities for national informatization.
• An expanded Korea Communications Commission (KCC) was formed to
deal with the convergence era and handle the core functions of the former
Korean Broadcasting Commission and the telecoms policy section of the
Ministry of Information and Communication.
The significance of the above changes can only be fully understood with a
reference to historical context. Specifically, during the Roh Moo Hyun adminis-
tration, the Ministry of Science and Technology was elevated to the Deputy
Prime Minister level. Until that promotion of its status, science and technology
(S&T) strategy was generally spread throughout the whole government.
Under the Roh administration S&T-related industries, manpower, regional
innovation strategies and other related microeconomic policies came under the
umbrella of the Deputy Prime Minister for Science and Technology. They
were brought together in a newly formed organization called OSTI (Office of
Science and Technology Innovation). OSTI was installed within the Ministry of
Science and Technology (MOST), which was at Deputy Prime Minister level.
This was done because the Roh Moo Hyun administration determined that the
establishment of a science- and technology-led society would be a main goal of
its national administration. So, after the elevation of MOST and the creation of
OSTI, the Deputy Prime Minister for Science and Technology could exercise
administrative power over microeconomic policies similar to the manner in
which the Deputy Prime Minister of Finance and Economy governed macroeco-
nomic policies of the administration.
At the same time, to more efficiently carry out microeconomic policy, the func-
tion and authority of the National Science and Technology Council (NSTC) was
strengthened. The government established an S&T-related Ministers’ meeting as
required by law, which gave the Deputy Prime Minister for Science and
Technology a new role. Once this kind of S&T strategy and governance structure
was put in place it attracted positive interest even from overseas. James Gordon
Brown, at that time the Finance Minister of Great Britain, said that Korea’s Deputy
Prime Minister for Science and Technology would provide the most ideal test for
that sort of science and technology administrative structure. It was also reported at
the time that Finland was benchmarking South Korea’s R&D structure.
Although it was a relatively short time from the launch of this structure in
October 2004 until the inauguration of the Lee Myung-bak government, the new
administrative structure for science and technology yielded substantial changes.
The activation of the S&T-related Ministers’ meeting created an atmosphere for
furthering the field of science and technology; there were world-class R&D
results and expansion of investment revenue sources. There were also creative
efforts to construct a positive structure for producing scientific and technological
talent. And it created a supportive atmosphere in which government-sponsored
research institutes could yield productive outcomes from their research. The
purpose of establishment of the Deputy Prime Minister structure, “to nurture the
creative possibilities for continued growth,” was generally evaluated as being well
accomplished after roughly three years of the Deputy Prime Minister system.
It was this sort of direction that was interrupted when the Lee Myung-bak
government discontinued the Deputy Prime Minister system. In addition to the
abolition of the Deputy Prime Ministers for Science and Technology and for
Education and Human Resources Development, the integration of the Ministry of
Science and Technology with the Ministry of Education and Human Resources
Development left many people surprised and disappointed.
Beyond the top level and ministerial changes introduced by the Lee Myung-
bak administration, the streamlining and reorganization made itself felt at all
levels of government. In particular, there was consolidation of the government
organizations responsible for informatization, ICT infrastructure, ICT industry
and content, as follows.
Informatization
The National Information Society Agency and the Korea Agency for Digital
Opportunity and Promotion were merged into a single organization which
kept the same name in English. In Korean, it became the Chong-bo Munwha
Jin-heung-won, or Information Culture Development Agency. The purpose of
this merger was to allow a comprehensive approach to the promotion of informa-
tization, the expansion of information culture, and efforts to deal with adverse
effects of informatization under MOPAS.10
ICT Infrastructure
The Korea Internet Security Agency (KISA), the National Internet Development
Agency (NIDA) and the Korea IT International Cooperation Agency (KIICA)
were combined to form the Korea Internet and Security Agency (KISA).
ICT Industry
To support the IT industrial policies of the MKE, the Korea IT Industry Promotion
Agency (KIPA), the Institute for Information Technology Advancement (IITA)
and the Korea Institute for Electronic Commerce (KIEC) were merged to form
the National IT Industry Promotion Agency (NIPA).
Contents
Five agencies with responsibilities for content were merged. The Korea Culture
and Content Agency (KOCCA), the Korea Broadcasting Institute (KBI), the
Korea Game Industry Agency (KOGIA), along with the Cultural Contents Center
and Digital Contents Division of the Korea IT Industry Promotion Agency
(KIPA), were combined to create the Korea Creative Content Agency (KOCCA)
under the Ministry of Culture, Sports and Tourism.11
The publicly announced purpose of President Lee Myung-bak’s changes and
consolidation of ministries was to further his drive to reduce the size of govern-
ment and the number of ministries in the executive branch. As such, it could not
be interpreted as a verdict on the operation or performance of any individual
ministries. Indeed, as it related to the ICT sector, the creation of the Ministry of
Knowledge Economy and the increased stature given to an expanded KCC were
evidence of a continued commitment to building an information society in Korea.
In any event, informatization and the goal of becoming the world’s first ubiqui-
tous network society were already written by law into the governmental agenda
at the highest levels. However, we must note that the elimination of the Ministry
of Information and Communication took place against a long history of its rivalry
with the Ministry of Commerce, Industry and Energy (MOCIE), and in a manner
that appeared to favor the MOCIE.
In terms of telecommunications policy, the new government of Lee Myung-bak
argued that its creation of the KCC was intended to accelerate convergence in
communications and encourage competition, innovation and growth in this impor-
tant sector. However, it goes without saying that the elimination of two such influ-
ential ministries in the latest government reorganization was a controversial move.
As this book goes to press, it is still too early to assess the long-term effects of
President Lee’s sweeping reorganization of government on telecommunications
policy and information society development. However, two things seem to be
clear. One is that governmental reorganizations are a fact of life in South Korea.
The second is that not all leaders within the nation’s telecommunications sector
agree with the changes.12
Prior to President Lee Myung-bak’s reorganization, there were four main
ministries involved in Korea’s research and development spending, if defense
spending is excluded. They included the Ministry of Science and Technology and
the Ministry of Commerce, Industry and Energy, with very similar levels of
spending. The Ministry of Education and Human Resources Development had
less than half the spending of MOST, and the Ministry of Information and
Communication had about one-third of its level.13
Following the sweeping reorganization of 2008, science and technology
administration in the Korean government involved a National Science and
Technology Council reporting directly to the President. The three most powerful
ministries were the Ministry of Knowledge Economy, the Ministry of Education,
Science and Technology, and the Ministry of Strategy and Finance. All three
reported to the President through the Prime Minister’s office.
Decentralization and the Increased Role of the Private Sector

A second important feature of the institutional changes occurring in South Korea,
especially since the turn of the century, is decentralization. The promulgation of
laws and national plans has traditionally been an important means to coordinate
national science and technology policy and innovation in Korea, including the
all-important telecommunications policies. However, in recent years Korea has
faced a growing multi-actor landscape and an expanding list of policy options.
This has made top-down direction setting more difficult and has necessitated the
use of complementary system-wide approaches.
The Vision 2025 report by the Presidential Advisory Council on Science and
Technology (PACST) in 1999 recommended the following fundamental shifts in
Korea’s science and technology policy:
• from a government-led and development-oriented innovation system to a

private industry-led and diffusion-oriented innovation system;
• from a closed R&D system to a globally networked R&D system;from a
supply-dominated investment enhancement strategy to an efficient utilization
and investment distribution strategy;
• from a short-term technology development strategy to a long-term market-
creating innovation strategy; and
• towards establishing a science and technology-led national innovation system.14
In mid-2004 an implementation plan for the National Innovation System was

launched, with the goal of moving from a catch-up to a creative innovation
system. This reflected the government’s view that Korea had reached techno-
logical frontiers in several areas, most notably in the ICT sector. While the
government plan designated the Minister of Science and Technology as a Deputy
Prime Minister and gave MOST overall responsibility for Science and Technology
policy, it recognized that governments alone cannot implement national innova-
tion systems. Today, they depend upon the actions of a constellation of
actors, both public and private, and the linkages among them. There is a clear
move toward decentralization, while the role of the government moves from
leader, as in the developmental state, to that of an orchestra-conductor in the new
21st century environment.
A third broad aspect of institutional change in South Korea over the past three
decades has to do with the increasing role of the private sector in the nation’s
digital development. One good indicator, as shown earlier in Table 1.2, is that the
private sector’s share of gross expenditure on research and development rose from
22 percent in 1962 to 75 percent in 2005. As of 1980, it was only at 50 percent.
Without question, the large chaebol enterprises, led by Samsung, LG and
Hyundai, have come to symbolize the growing role of the private sector. To
younger generations around the world, Samsung Electronics, LG Electronics and
Hyundai automobiles represent the new Korea. However, the developments
chronicled in this book have also greatly increased the number of small and
medium-size companies in South Korea who act as suppliers and manufacture
parts and components for the giant electronics companies.
Government Policies to Restructure Telecommunications

The policies enforced by the Korean government in the ICT sector from 1980
onward were aimed at protecting Korean companies until they were strong
enough to compete with international telecoms entities. The government itself
initiated privatization and the introduction of competition into the marketplace,
but on a basis that would allow its own companies to thrive in a growing global
marketplace rather than remaining dependent on imported electronics compo-
nents. One central concern was to develop the ability, in Korea, to manufacture
and export key electronics technologies.
After providing basic telephony to its general public in the 1980s, Korea began
more actively to deregulate and restructure its telecommunications market in the
1990s. The Korean government, acting as policymaker, regulator and largest
stakeholder in the dominant service provider, Korea Telecom, played a central
role in the restructuring. However, another major factor in the restructuring was
the pressure for market opening that originated in trade talks, initially through
bilateral talks with the U.S., and subsequently the multilateral GATT and WTO
negotiations. At the very least, trade negotiations provided a means for Korean
policymakers to effectively manage pressure against opening the market.15
While the government tried to manage international pressures, the influence
of international developments was undeniable. There were bilateral trade talks
with the United States and WTO negotiations. As Korea’s ICT exports rather
dramatically increased, so did its stake in international trade negotiations.
A Chronology of Major Reforms

The following chronological review of the Korean government’s evolving tele-
communications policy takes all of these factors into account. It shows how, at
each historical stage, the policy balance shifted between public and private initia-
tive, monopoly and competition, domestic and foreign ownership, and centralized
versus decentralized administration.
Wilson interprets the domestic–foreign balance in telecommunications policy
largely in terms of property rights and ownership.16 Here we broaden that point
to include also the foreign influence on South Korea’s telecommunications policy
that was exerted by bilateral trade talks with the United States and the WTO
agreement on telecommunications.
The 1980s Restructuring

As noted in Chapter 2, the truly revolutionary changes that were needed to
restructure telecommunications in Korea began in the 1980s. They included the
establishment of KTA and a Telecommunications Policy Office within the MOC.
The major instruments of telecommunications policy included the authority to:
• grant licenses to new telecommunications service providers;set guidelines

for rates to be charged for telecommunications services;
• establish regulations governing use of the electromagnetic spectrum;
establish guidelines for the sharing of facilities, as in so-called “local loop
unbundling;” and
• generally propose laws regarding all aspects of telecommunications service
provision.
This considerable policymaking and regulatory authority remained centered

within the Ministry of Communications and later the Ministry of Information and
Communication until 2008, when it was transferred to the Korea Communications
Commission as part of a drastic government restructuring and streamlining.
It was precisely the success of South Korea’s telecommunications policy in the
1980s that brought increased pressure from U.S. trade negotiators, who saw a
growing and thriving market.17 In January of 1990, the Bush administration
announced that it would not “retaliate” for the trade restrictions of either Korea
or the EU, but would instead continue negotiations.18
The pressure of these negotiations brought about the first of four major govern-
ment-driven restructures in the 1990s. The first three of these were closely related
to the bilateral negotiations with the United States and the multilateral negotia-
tions of the Uruguay Round trade talks.19 The fourth was a direct response to the
1997 IMF crisis.
The 1990 Reform Package

In January of 1989, just over a year after Korea had completed the PSTN and
satisfied nationwide demand for telephone service, the United States designated
it as a priority foreign country, under the Omnibus Trade and Competitiveness
Act of 1988, with the intent of opening up Korea’s telecommunications services
market. The European Union was designated along with Korea for possible sanc-
tions because they restricted imports of telecommunications products. Such a
designation raised the possibility that tariffs could be imposed if talks aimed at
settling the problem were not successful.
Some members of Congress and the U.S. business community claimed that
Korea’s restrictions denied the U.S. billions of dollars in telecommunications
exports. The American exports involved included large digital-switching devices,
value-added networks that provided such services as message storing, and
hundreds of other products in which the United States reportedly had a competi-
tive lead. The Korean market was estimated at $1.3 billion in 1985 and was
projected to grow to $1.8 billion by 1990. Because of Korean policies that
encouraged domestic purchases, the United States recorded practically no sales
in South Korea.20
Liberalization of the value-added services market was a major agenda item in
the Uruguay Round of international trade talks, which took place alongside the
talks with the U.S. The Korean government, after a series of bilateral talks with
the United States, decided to carry out structural reform of its telecommunications
market in July of 1990. A key feature of the reform was to divide service providers
into three categories, general, specific and value-added, as shown in Table 3.1.
General and specific service providers were differentiated from value-added by
virtue of having their own facilities. As shown in Table 3.1, each category had
Table 3.1 Classification of Service Providers in the Early 1990s Reform
Category General service Specific service Value-added service

provider provider provider
Facilities Own facilities Own facilities Leased facilities

Subservices Fixed telephony, Wireless services: Database, data processing,
telegraph, telegram, cellular, radio paging, data accumulation and
private leased TRS, wireless data transmission, EDI, e-mail,
circuits transmission CRS registration
Market entry Designation Licensing Registration
condition
Foreign Not allowed Up to 1/3 of the total Up to 100%
ownership shares (not allowed
to be the largest
shareholder)
Source: Ministry of Information and Communication.
different entry requirements and different leeway for foreign ownership. This
allowed Korea to resolve the external trade issue by opening the value-added
services market and part of the mobile market. The strategy treated foreign entry
differently according to the degree of pressure for market opening.21
The major consequence of the 1990 reform was that the Korean government
reluctantly introduced competition into the telecommunications field. A duopoly
was introduced in international telephony service, with DACOM entering the
market in 1991. Ten regional paging services and the second cellular mobile
service (Shinsegi Telecom) entered the market in 1992 and 1994 respectively.
Also, value-added services were opened to full-blown competition. According to
Choi Byung Il, a member of the Korean delegation to the U.S.–Korea bilateral
telecommunications negotiations, Korean bureaucrats thought that complete
opening of the value-added services market would have no major impact on the
domestic industry because of poor local demand.22
The 1994 Restructuring

Prompted by successful conclusion of the Uruguay Round of trade negotiations,
this reform removed line of business restrictions, extended the scope of value-
added services and deregulated the carriers’ business operations. Consequently,
DACOM was granted a long-distance service license in March 1995 and PCS,
TRS and wireless data services were licensed in 1995 and subsequent years.23
The 1995 Restructuring

The advent of the WTO and its Negotiating Group on Basic Telecommunications
(NGBT) provided a motive for this reform. In 1995, while under continued
pressure from the United States, Korea decided to earnestly liberalize its
domestic market. Information and Communication Minister Sang-hyun Kyong
said the new policy was designed “to improve the competitive edge of the domes-
tic industry three full years ahead of a full-scale market opening under the new
world order of the WTO.”24 Actually, the WTO came into being in 1995 as the
successor organization to the General Agreement on Tariffs and Trade, which
had been established in the wake of the Second World War. The WTO is a
membership organization, based in Geneva. In 2009 it had 153 members,
accounting for over 97 percent of world trade.
The restructuring replaced “proper” competition under the government’s inter-
vention with full-blown competition for most telecommunications services,
allowing the market mechanism to work. As a result there were more than 30 new
entrants into the market in 1996 and 1997 across a wide range of telecommunica-
tions services.25
In December of 1996 another landmark agreement in trade negotiations, the
Information Technology Agreement (ITA), was reached in Singapore. At a
gathering of 127 nations, 35 countries that accounted for nearly 94 percent of
global trade in information technology products signaled that they would back
the abolition of import duties by 2000 in the $500 billion per year sector. The
accord covered 300 products including computers, software, semiconductors and
telecommunications equipment.26
The IMF Crisis and 1997 Restructuring

Korea was among the first group of countries in the ITA, demonstrating that by
1996 it was well on the way toward opening up its telecommunications sector.
However, the 1997 financial crisis and IMF-directed reforms in South Korea
would have an even greater influence on restructuring.
During the autumn of 1997, several of the chaebol industrial conglomerates
went bankrupt, investors lost confidence in the economy, and capital fled the
country. Within just a few days the Korean won lost half of its value, tumbling
from 900 to 1900 won to the dollar. The government’s foreign currency reserves
dropped to $4 billion, an amount insufficient to carry the country through another
day. In December of 1997, barely a year after joining the Organization for
Economic Cooperation and Development (OECD), Korea turned to the IMF for
economic assistance. That same month, Kim Dae-jung was elected President of
South Korea.
South Korea and the IMF agreed to a $58 billion support package. In return,
Seoul agreed to tighten its fiscal and monetary policies and to engage in far-
reaching, market-oriented reforms of its financial and corporate sectors. By
the year 2000, the nationalization program had brought about one-third of the
banking industry’s assets into government hands, and state ownership of
the banking sector formed the crux of a major trade dispute with the U.S. and the
European Union. In the dispute, state-controlled banks were accused of illegally
subsidizing Hynix Semiconductor, the world’s third largest producer of DRAM
semiconductor chips. However, by the spring of 2004, sales of many formerly
state-owned banks had given foreign companies collectively a major stake in
South Korea’s financial sector.27
The 1997 telecommunication reforms introduced a new class of telecommuni-
cation service providers called Special Telecommunication Service Providers
(STP), for which only a registration with the Ministry of Information and
Communication was required for market entry. The STP class consisted of voice
resale, internet phone service, international call-back service and premise-
network service providers. The Asian financial (or IMF) crisis, which began in
1997, led to the privatization of Korea Telecom and the Korean Electric Power
Company and broader market access from abroad. Foreigners invested $2 billion
in the information and telecommunication industry in 1998, which was 23 percent
of the total foreign investment that same year.28
U.S.–Korea Trade Negotiations after the IMF Crisis

Following the financial crisis of 1997, there were several main characteristics of
U.S. trade disputes with South Korea.
First, given the disparities in size and economic dependence, it is not surprising
that the U.S. typically set the agenda of U.S.–ROK trade talks.
Second, U.S. exporters and trade negotiators identified a “lack of transpar-
ency” of Korea’s trading and regulatory systems as the most significant barrier to
trade with Korea in almost every major product sector. They complained that
Seoul continued to use government regulations to discriminate against foreign
firms in politically sensitive industries, such as automobiles and consumer
electronics.
Third, a 2004 report noted that telecommunications had recently emerged as
one of the most contentious trade issues between the United States and South
Korea. Korean government efforts to set mandatory, single technology standards
for wireless telecommunications services led the U.S. Trade Representative to
name South Korea as a “key country of concern” in its annual report under
Section 1377, which requires the USTR to assess U.S. trading partners’ compli-
ance with international telecommunications agreements. Specifically, for two
years USTR negotiated with the South Korean government over its plan to
require all cellphone services to use only the so-called wireless internet platform
for interoperability (WIPI) for downloading information from the Internet.
The WIPI requirement would have excluded users and developers of other oper-
ability platforms, such as the platform developed by Qualcomm, which was used
by a leading Korean cellular service provider. In April 2004, Seoul and
Washington announced they had reached a compromise that allowed the MIC to
implement WIPI, but also permitted cellular phones to be made compatible with
other standards.
Korea also had several major complaints in its bilateral trade negotiations with
the U.S. One of these was against the United States' use of anti-dumping and
counter-vailing duty (CVD) laws. According to one study, in July 2000 the five
CVD and 18 anti-dumping orders against South Korean exports covered
approximately $2.5 billion or over 7 percent of U.S. imports from South Korea
in 1999. Moreover, these tariff hikes tended to be concentrated in a handful of
Korean industries –semiconductors, steel, televisions and telecommunications
equipment – all of which have considerable political influence in Seoul. By 2004
South Korea had become more assertive in using the WTO to challenge such
United States trade practices.29
Privatization and Introduction of Competition

The main focus of activity in South Korea’s telecommunications sector in the
1980s was on building the public switched telephone network (PSTN) and
extending it throughout the nation to farming and fishing villages until the nation
had “one telephone per household.” To implement this policy, Korea’s leadership
determined that the public good required private sector initiative. Hence, the
government began to privatize telecommunications.
First, in a breakthrough measure, the government established the Korea
Telecommunications Authority (KTA, later renamed Korea Telecom) in order to
separate telecommunications policy from the management of telecoms services.
As a result, a telecommunications policy department was established within the
MOC and management responsibility for services was given to KTA. KTA was
established on January 1, 1982. The government was the sole investor, contribut-
ing 2.5 trillion won, and a total of 35,225 employees from 153 divisions
moved from the MOC to the KTA.30 This change would be a test of whether
telecommunications could be smoothly managed by an organization outside of
the supervisory ministry.
KTA started out as a government-owned corporation. Government ownership
had been reduced to 59 percent by the end of 2000. However, it would not be until
August of 2002 that it would be declared a fully-privatized company. Nevertheless,
its creation and separation from the Ministry was the first critical step in the South
Korean privatization process.
Table 3.2 shows how the private–public balance in the telecommunications
sector began to shift perceptibly toward the private sector. It also shows that
market liberalization, or the shift from monopoly to competition, began during
the 1990s.
While South Korea is often referred to as a case of government-led develop-
ment, it is probably more accurate to call it development through a government–
industry partnership. A 2003 case study of broadband internet in Korea by the
ITU noted that “Korea’s high level of ICT adoption is no accident. It is the result
of years of government policies, planning and financial support for targeted areas.
A high level of cooperation between government and the private sector has
assured success.”31
During the critical years from 1981 through 1988, South Korea’s Ministry of
Communications was in the process of separating itself from the telecommunica-
tions business through privatization. As a matter of course, there was friction
Table 3.2 Privatization and Market Liberalization in Korea.
Privatization Liberalization
Establishment of the KTA (1981) Gradual introduction of competition

Separation of specialized service in basic telecom services:
operators from KTA • International (1991)
• DACOM (1982) • Mobile (1994) Shinsegi Telecom
• Korea Mobile Telecom (1983) given second mobile (CDMA)
• Korea Port Telephone (1995) license
• Long distance (1995)
Privatization of KMT (1994) • Local service (1999)
Privatization Act (1997)1 (Act on
improvement and management of Full liberalization of value-added
public enterprises and privatization) service (1990)
Full privatization of KT (2002) Three PCS operators allowed to enter
mobile market (1996)
Resale (1997)
Foreign ownership limit increased to
49% including KT (2001)
Source: Various Korean government documents.

1
Law 5387 of August 28, 1997 repeals the Korea Telecommunications Corporation Act. It converts
the Korea Telecommunications Corporation into a stock company under the Commercial Act as
of October 1, 1997, according to the government's privatization policy for public enterprises; the
conversion enables the reduction of government regulation under new management by specialized
managers; subject to the newly enacted Act on the Improvement of Management and Privatization of
Public Enterprises until its complete privatization. (7 articles; pp. 93–95).
between the Ministry and people in business circles. However, although it

required a great deal of work and preparation, the sense of partnership between
business and government increased greatly during the 1980s.
In those days the Ministry’s stance was that it would work constructively to
help business circles whenever the means were available to do so.
Telecommunications development could not be accomplished by the Ministry of
Communications alone. Instead, it became possible through a collaborative part-
nership with the business community, and healthy growth of business was an
important part of that development. High-level officials in the Ministry were
known to think that major telecommunications service providers should drasti-
cally and even unreasonably cut the price of some of their well-known products
and services. Despite this, the Ministry of Communications did not receive criti-
cism from the business community. The ability of government to work closely
with the business sector in South Korea stands in stark contrast to the situation in
other developing countries where government officials often see business inter-
ests as the enemy, rather than a collaborator.
The privatization of Korea Telecom has been studied in depth and provides an
illustration of the political and economic factors involved in the privatization
process. First announced in 1987, the privatization of KT was finalized only
fifteen years later in May of 2002. The plan to privatize KT was announced in
response to both international and domestic pressures. Internationally, the U.S.
government and later the World Trade Organization and the International
Monetary Fund brought the pressure. Domestically, the large Korean chaebol
were pressuring hard to enter the telecommunications services market.
The major stakeholders in the privatization of Korea Telecom included the
Korean government, the large Korean chaebol conglomerates, and international
players. Internationally, the U.S. government, transnational corporations and
international organizations had significant roles in the privatization.
The Korean government directly controlled the process of privatization,
including the method and timing for selling the government’s share of the
company. However, while pushing the telecom market toward privatization, the
government wanted to preserve its main role as the regulatory agency over KT
because it needed the company in order to implement important telecom policies,
such as universal services. The change in Korean government policy, in keeping
with the global trend toward market liberalization and privatization, can be dated
from about 1994 and the push for segyehwa by the administration of President
Kim Young-sam. The inauguration of the WTO system in 1995 gave added
impetus to the privatization process.
In 1994, the Korean government enacted the “Act on Promotion of Private
Investment in Infrastructure” and, in 1997, it enacted the “Act on Improvement
of Management Structure of Public Enterprises and Privatization” (also called
“the Special Act on Public Enterprises”). However, it was the Asian Economic
or “IMF” crisis in 1997–98 that brought a great turning point in the Korean
government’s efforts at privatization, including that of Korea Telecom and other
telecommunications firms.
The Korean chaebol expressed an interest in entering the telecommunications
industry as suppliers, service providers and equipment manufacturers, beginning
in the 1980s. Hyundai, Samsung, LG and Daewoo gained a foothold in the market
when they started to produce the TDX electronic switching system. Several of the
chaebol groups felt that privatization of KT would give them a great opportunity
to invest in the lucrative local phone service business.32
Major Telecommunications Laws

Over the time span covered by this book there were literally hundreds of laws and
amendments passed in order to provide the appropriate legal basis for promotion
of informatization and many other telecommunications policy goals.33 For this
reason, we present the following description of some of the most important laws.
Most of them have been amended many times, in response to the media and tech-
nology convergence that we deal with in this book.
There are four major laws that have traditionally governed the telecommunica-
tions industry in South Korea. Each has been amended many times.
• The Basic Act on Telecommunications (December 30, 1983) provides the

general legal framework for the provision and operation of telecommunica-
tions services in Korea.
• The Telecommunications Business Act (December 30, 1983) governs opera-
tions, regulations, user protection and other related matters in the telecom-
munications business. For example, this act establishes the requirements that
must be met before a company can provide telecommunications services in
Korea, and specifies the ratio of foreign ownership that is permitted in any
service category.
• The Radio Waves Act governs effective management of radio wave
resources.
• The Act on Promotion of Utilization of Information and Communications
Network (May 12, 1986) aims to promote the use of information and commu-
nications networks, protect the personal information of users, and build a
sound information and network environment.34
In addition the following laws were passed.
• The Software Development Promotion Act (December 4, 1987). The purpose

of this law was to provide for building and promoting the software industry
in South Korea. The initial version of the law called for the MIC to draft
a medium to long term plan that would address infrastructure, support for
software startup businesses, training of software specialists and other matters
relating to the industry.
• The Basic Act on Informatization Promotion (August 4,1995) (ITU Broadband
Korea case study) was followed by numerous laws. Between August of
1995 and April of 2001 a total of 154 laws were enacted or amended. That
included 79 laws related to informatization of the public sector and 75 laws
related to promoting informatization in the private sector.35
In July 2009 three media-related bills were passed which were revisions to the
Broadcasting Law, the Newspaper Law and the IPTV Law. These were enacted
some seven months after being first submitted to the National Assembly and were
passed by a unilateral vote of the ruling GNP. Opposition to the bills was largely
based on concerns that they would allow Korea’s three conservative daily news-
papers to gain a greater hold on public opinion by allowing them to enter the
broadcast market.36
• The Basic Act on National Informatization, May 2009. When the Lee
Myung Bak administration took office in February of 2008, MOPAS began
to revise the Basic Act on Informatization Promotion. The new law, which
went into effect in May of 2009, made several major changes in the national
informatization framework. First, the level of the Informatization Promotion
Committee was upgraded from being under the Prime Minister’s office to
being under the President. Reflecting this change, its title was also changed
to Presidential Council on Information Society (CIS). Finally, the new struc-
ture expanded the participation of the private sector in an effort to establish
a governance framework for government–private sector collaboration.
The roles of the new CIS included deliberation on informatization policies,
writing the master plan or action plans, designating knowledge information
resources, fostering information culture and setting priorities for closing
the digital divide. The committee has an associated CIO Council made up of
directors from all relevant ministries, an Executive Committee, and specialized
sub-committees of experts. As shown in Table 3.3, it is co-chaired by the Prime
Minister and a private sector expert and has 35 members, drawn from the private
sector, government, academia and citizens’ groups.37
Aspects of Leadership in the Korean Context

What were the key aspects of government-led restructuring of South Korea’s ICT
industries over the past three decades? Our treatment of the topic in this chapter
highlights several of them.
First, the nature of leadership shifted noticeably away from the heavy-handed
government leadership of the developmental state under Park Chung Hee, toward
market liberalization and a government–business partnership in the 1980s, and an
ever-greater role for the private sector in the 1990s and the early years of the the
twenty-first century. We might refer to this, following Jho, as the rise of network
governance.
In the face of rapid technological change, state authorities around the world
began looking at how to shift from top-down government to more decentralized
governance mechanisms. These emphasized the use of partnerships and network
transactions with global firms as well as the local private sector. This focus on
networks and the interdependence of the state and private sector was a central and
vital element of governance in Korea from 1980 onward. This development
posed a difficulty for adherents of the developmental state concept. Namely, that
concept tended to conceptualize the global economy as the context in which
local production and innovations take place. However, as Jho notes, the global
economy is “… no longer a context for developmental strategies, but rather a
constitutive element of them.”38
However, some scholars might still propose a statist explanation for Korea’s devel-
opment. Along with Jho, we reject this. Korea’s shift to new governance in the ICT
sector did not evolve as in other countries, such as the liberal governance in the U.S.
Instead, it transformed into a “… state orchestrated network of institutions and
mechanisms in which various interests of the state, local actors and the global econ-
omy are represented and coordinated.” The economic governance in Korea was based
on a “steering” network that allowed for effective coordination between the state and
private actors with connections to global technology and business networks.39
It was natural that some of the key leaders of telecommunications policy in the
1980s would come out of the military academy, for that was where the nation’s
leaders were trained in that era. Along with economic development, the broad
political and social structures of South Korea changed dramatically over the
course of three decades. Political liberalization and democratization, with a key
turning point in June of 1987, was one such issue.
Table 3.3 Roles of the National Informatization Strategy Committee and the CIO Council.
Structure Roles
National Informatization • Co-chairs: Prime Minister and private [Deliberation]

Strategy Committee sector expert Deliberates on issues related to national informatization promotion
• Secretary: Minister of MOPAS • Deliberates on master plan and implementation plans on national
• Members: Ministers and private sector informatization
experts (35 members) • Coordinates national informatization policies
• Members are from constitutional • Provides feedback on national informatization plans (in terms
institutions, central government of budget)
administrative bodies, local governments, • Designates critical knowledge information resources
private sector experts, etc. • Deliberates on project plans for closing digital divide
Executive Committee for • Co-chairs: Second Vice Minister of [Preliminary deliberation]
National Informatization MOPAS and private sector expert Deliberates on agenda items to be presented to the committee
Strategy • Secretary: CIO of MOPAS and on agenda items commissioned by the committee
• Members: Directors of ministries and
private sector experts
Subcommittees • Chair: Appointed by co-chairs of [Support for Executive Committee deliberation]
Executive Committee • Provides support for agenda deliberation as bodies under
• Members: Government officials and executive committee
private sector experts • Support in fostering information culture, closing digital divide,
managing knowledge information resources, etc.
Chief Information Officers’ • Chair: Minister of MOPAS [Coordination]
(CIO) Council • Members: Directors of ministries • E-government policies
• Administrative information sharing
• Information Technology architecture
• Information resource management
• Regional informatization
Source: 2009 Informatization White Paper, National Information Society Development Agency, Seoul, Korea: October 2009, pp. 15–16.
Second, the Ministry of Information and Communication, with numerous
associated government agencies and research institutes, emerged as the clear
leader of South Korea’s telecommunications and informatization policies. This
leadership continued to strengthen until the massive government reorganization
of early 2008, instituted by the new administration of President Lee Myung Bak.
Of course, the political structures in South Korea place the Blue House, Korea’s
equivalent of the American White House, at the top of the governmental power
hierarchy. The Prime Minister’s office also plays a powerful and important role
in government, and as of 1996 it officially took charge of the nation’s efforts to
further promote the information society.
A third important aspect of government-led restructuring in South Korea over
the past three decades is its consistent planning and re-investment. From the days
of Korea's early industrial development under President Park Chung Hee, the
South Korean government made use of five-year economic plans. However, long-
term planning alone was not the secret behind the telecommunications revolution.
It also had to do with consistent implementation and even strengthening of policy
over time. Here, we refer explicitly to the legal requirement that providers of
telecommunications services re-invest three percent of their profits into research
and development. Without such steady and sustained investment in R&D, it is
difficult to imagine the successes of TDX, the semiconductor industry or
commercialization of CDMA, in the face of continued global technology change
and competition.
Underlying the long-term consistency of Korea’s policies is an approach that
stressed consensus-building. For example, on one occasion the MOC delayed a
decision for about one year in order to assemble support for it. That was the deci-
sion to allow facsimile machines and various electronic devices to be freely
connected to the newly completed PSTN.
A fourth aspect of the Korean government’s role in strategic restructuring is
promotional leadership.40 Starting in the 1980s, the whole government, together
with the private sector and educational institutions, took on the task of promoting
information culture in Korea, a pan-national effort that continues to this day. For
example, although some of the key leaders were educated in electrical engineer-
ing or related technical fields, they understood the information society from
political and economic perspectives as well. They believed fervently that infor-
mation and communications technology would not only provide convenient
services for the public, but would eventually serve as the driving force behind
economic development. The author of this book, in particular, was also confident
that “genuine democratization could be achieved through the modernization of
communication and the privatization of information.” His dedication to spreading
“information society thought” knew no bounds. Among other things, he lectured
on the information society at almost every graduate school in Seoul with a
specialty in this field.41
A fifth element in Korea’s government leadership has to do with technical
expertise. Starting in the 1980s, the Minister of Communications was no longer
a political appointee, but was expected to have a technical or professional
background in telecommunications. By the same token, the expertise in telecom-
munications and digital electronics that some of the MOC staff possessed helped
increase its stature among government ministries. With the successes of TDX and
the 4 MB DRAM, people could see that the nation’s electronics industry had
received the breath of new life and was on the verge of a sustained expansion.
Consequently, the power and influence of the Ministry of Communications was
greatly enhanced. Wilson speaks of “four main gears” –technical, commercial,
institutional and political – which together make up an information revolution. As
he notes, they can also block a revolution if they are not present, well oiled and
closely coordinated.42 The addition of technical expertise to leadership at the
MOC helped greatly to facilitate Korea’s digital information revolution.
Finally, a sixth element, although less tangible, may be equally important. The
Korean word chollian, chosen by DACOM as the name for one of its first internet
services, literally translates “the eye that can see a thousand li” with li being a
common measure of distance in Korea. However, the real non-literal meaning of
the word is clairvoyance. Whether we call it vision or clairvoyance, the ability to
imagine the future or look far into the future seems to be a defining characteristic
of Korea’s leadership in the information revolution.
4 Korea’s Broadband Revolution
The 1990s brought sweeping political, social and economic change to South
Korea, along with a new emphasis on segyehwa or “globalization.” In 1996 the
nation joined the Organization for Economic Cooperation and Development
(OECD), a sure sign that it had become one of the world’s advanced economies.
However, the decade also included the searing experience of the Asian economic
crisis in 1997–98, better known as the “IMF crisis” in Korea.
Over the same time span, Korea experienced two more closely interrelated
waves of digital development and innovation, in the form of the broadband and
mobile revolutions. Although they are neatly separable only for analytical
purposes, this chapter takes up the topic of broadband and the next chapter will
deal with developments in mobile communication.
Our goal in this chapter is to describe the broadband internet revolution in
South Korea, situating it within the nation’s political, social and economic
context as well as relative to global developments. We also seek to identify some
of the major factors behind Korea’s broadband revolution, including the manner
in which the massive Korea Information Infrastructure (KII) fiber optic network-
ing project from 1995 through 2005 was built upon technology, expertise and
confidence gained in the 1980s. Government and private sector efforts to promote
informatization, the popularity of PC Bangs and continued restructuring of
Korea’s telecommunications sector are also part of the story.
South Korea in the 1990s: From segyehwa to IMF Crisis

South Korea elected civilian presidents in 1992 and again in 1997, marking a
clear-cut change from earlier governments. Longtime opposition leader Kim
Young-sam was the first of these and from early on he made segyehwa or globali-
zation the self-styled hallmark, even the litmus test of his administration.
President Kim’s thinking on globalization was expressed in a January 1995
televised speech to the nation: “Fellow citizens: globalization is the shortcut
which will lead us to building a first-class country in the 21st century. This is why
I revealed my plan for globalization and the government has concentrated all of
its energy in forging ahead with it. It is aimed at realizing globalization in all
sectors – politics, foreign affairs, economy, society, education, culture and sports.
To this end it is necessary to enhance our viewpoints, way of thinking, system
and practices to the world class level … we have no choice other than this.”1
The Kim administration touted globalization not as a matter of choice, but
as a necessity. It was either globalize or perish. While the term globalization
is interpreted by some as simply economic liberalization, segyehwa in Korea
was a more comprehensive term embracing political, cultural and social open-
mindedness.2 Of course, information and communications technology are a major
part of globalization, so the specific initiatives taken by the Kim Young-sam
administration should be interpreted in light of its overarching emphasis
on segyehwa.
The 1990s began with impressive annual rates of economic growth that contin-
ued unabated until the Asian economic crisis struck. The crisis created high levels
of unemployment that in turn posed both social and political problems for Korea.
The crisis not only affected the outgoing administration of Kim Young-sam,
who left office with low public approval ratings, but also shaped policies of the
incoming administration. What is most significant for our purposes is the manner
in which the nation responded to this crisis. Although economic growth dipped
in 1997–98, it resumed its upward trajectory on the strength of a renewed govern-
ment and private sector commitment to the ICT sector and to the long-term task
of building an information society.
In December of 1997, Kim Dae-jung was elected president. In his inaugural
speech he made it clear that he, like his predecessor, would push for further
development of Korea’s information society. “The world is now advancing from
industrial societies where tangible natural resources were the primary factors of
economic development into knowledge and information societies where intangi-
ble knowledge and information will be the driving power for economic develop-
ment. The information revolution is transforming the age of many national
economies into an age of one world economy, turning the world into a global
village.”3
Although the KII plan had begun in 1995, the 1997 economic crisis was a
major reason that the government targeted broadband internet as a new opportu-
nity for economic growth. The new government of Kim Dae-jung saw broadband
as an axis of development in the new knowledge-based economy. As noted in the
previous chapter, the government therefore undertook a massive program to
provide IT training to millions of citizens, beginning with those who lost their
employment in the IMF crisis.4
Defining and Measuring Broadband Internet

The term broadband is shorthand for “broad bandwidth.” Bandwidth generally
refers to the transmission capacity of an electronic communications device
or system. As we use the term “broadband” in this book, it has at least three
important dimensions.
First, “broadband” refers to the speed of one’s connection to the internet.
However, as a recent study notes, speed is only a rough measure of capacity, for
Korea’s Broadband Revolution 67
two reasons.5 One is that absolute speed, as measured in kilobits or megabits
per second, does not necessarily translate into equivalent user experience or
value. The second is that governments and policymakers around the world until
recently differed widely in their definition of speeds required to qualify as
“broadband.”
In the United States, the Federal Communications Commission in 2009
described broadband in terms of speeds ranging “…from as low as 200 kilobits
per second (kbps), or 200,000 bits per second, to six megabits per second (Mbps),
or 6,000,000 bits per second. Some recent offerings even include 50 to
100 Mbps.”6 Other organizations around the world define broadband to include
what seem like very slow speeds. For example, the OECD’s broadband subscriber
criteria specify download speeds of at least 256 kbits/second.7 To much of the
world today, including virtually all internet users in Korea, such slow speeds are
a thing of the past.
Fransman suggests that broadband may be thought of as access to the internet
at speeds significantly higher than those used by the traditional method, namely
narrowband or dial-up. His analysis identifies the period from 1996 to 2000 as the
narrowband era in the evolution of the internet.8
A second consideration in using the term “broadband” is availability. A broad-
band connection to the internet, in contrast to the old dial-up or “narrowband”
connections, is always on. As distinct from speed, the always on characteristic of
broadband defines a fundamentally different user experience. Broadband, as
compared to the dial-up experience that preceded it, is relatively seamlessly
integrated into a user’s life, at home, at the office or in the PC Bang. This helps
to explain why social networking in Korea via Cyworld preceded Facebook in
the U.S. by four years.
In addition to speed and availability per se, a third dimension of broadband
internet is greater computing and communications power, which translates into
potential value. Robert Metcalf, the inventor of Ethernet,9 expressed this as a
law which states that the power of a telecommunications network increases with
the number of connected users of the system. Gilder refers to it as Metcalf’s law
of the telecosm showing the magic of interconnections: connect any number “n”
of machines – whether computers, phones or even cars – and you get n-squared
potential value.10 As the Berkman Center study puts it, broadband internet can
be defined in terms of the anticipated applications (and their value) rather than
speed or availability alone. Korea’s IT 839 program provided an explicit example
of this way of thinking. It was an ambitious plan calling for a network to support
eight services, three infrastructures and nine growth engines.11
Associated with the challenge of clearly defining broadband internet is the
need to accurately measure it. Measures of broadband internet within and among
the countries of the world assume increasing importance as the significance of
broadband to economic and social development becomes more widely apparent.
The OECD and the ITU were among the first international organizations that
attempted to measure and quantify broadband, but over the years, others have
joined the effort, as described below.
The OECD Broadband Portal
The OECD identified the following five main categories as important in assessing
broadband markets around the world:
• Penetration
• Usage
• Coverage
• Prices
• Services and speeds
On the first measure, that of penetration, the OECD tracks the number of inter-
net subscribers per 100 population. Usage is measured by the percentage of
households that have access to broadband internet. To measure coverage, OECD
statistics compare population density with broadband penetration. Prices are
measured by average broadband monthly price per advertised Mb/second.
Finally, the OECD data use average advertised download speeds as a measure of
internet service and speed.
The ITU’s Digital Indices

The International Telecommunications Union has gone through several stages in
developing indices to measure digital development. In 2003 it developed a
Digital Access Index which was presented to the first phase of the World Summit
on the Information Society. This measure included five categories: infrastructure,
affordability, knowledge, quality and actual usage of ICTs. It was calculated for
178 economies and was published once.12
At the 2005 meeting of the World Summit on the Information Society a
preliminary version of the digital opportunity index (DOI) was launched, side by
side with an ICT Opportunity Index developed with Orbicom. A full version was
published in 2006 and an update in 2007. The main purpose of the DOI was to
measure a country’s potential to benefit from ICTs. It utilized eleven indicators
in the three categories of opportunity, infrastructure and utilization.13
The digital opportunity platform was a multi-stakeholder initiative of the ITU,
UNCTAD and the Korea Agency for Digital Opportunity and Promotion
(KADO), with the support of Korea’s Ministry of Information and Communication.
The index has been compiled for 62 leading economies from 2000 through 2006
and for a larger group of 181 economies from 2004. In recent years South Korea
has ranked number one in the world, according to the digital opportunity index.
With publication of both the ICT-OI and the DOI, discussions began in
2006 about the utility of having two different indices. The result of these discus-
sions and subsequent work was the creation of a new single index, the ICT
Development Index (IDI). The IDI incorporated elements of the two previous
indices and was broken down into three sub-indices: access, use and skills, as
shown in Table 4.1.
Table 4.1 ICT Development Index: Indicators and Weights
ICT access Reference Percent Proportion

value of IDI (%)
1. Fixed telephone lines per 100 inhabitants 60 20

2. Mobile cellular telephone subscriptions 170 20
per 100 inhabitants
3. International internet bandwidth (bit/s) per 100,000∗ 20 40
internet user
4. Proportion of households with a computer 100 20
5. Proportion of households with internet access 100 20
at home
ICT use
6. Internet users per 100 inhabitants 100 33
7. Fixed broadband internet subscribers 60 33 40
per 100 inhabitants
8. Mobile broadband subscriptions per 100 33
100 inhabitants
ICT skills
9. Adult literacy rate 100 33
10. Secondary gross enrollment ratio 100 33 20
11. Tertiary gross enrollment ratio 100 33
Note: *This corresponds to a log value of 5, which was used in the normalization step.
Source: ITU.
Korea ranked third in the world on the IDI in 2002, following Sweden and
Iceland, and second in the world in 2007, following only Sweden.14 In 2008
South Korea dropped down to third place, mainly because of how the ICT access
sub-index was computed. Part of the ITU report dealt with how the limitations of
international data affected both Korea and Japan on two measures. First, as of
2008, Korea had a mobile penetration of 95 percent, which placed it relatively
low in international comparisons since many other nations, including developing
countries, had passed the 100 percent mark. The reason for this is that Korea had
very few pre-paid subscriptions, with those generally being reserved for tourists
and visitors. Therefore, it was rare to find multiple SIM cards in Korea. Second,
South Korea was weak on the “International Internet Bandwidth per User” indi-
cator that was part of the access sub-index. Unlike most other countries, Korean
internet users rely mainly on their abundant and relatively low-cost national
bandwidth. Koreans preferred to surf ‘at home’ on Korean-language websites
hosted within the country, not abroad. In fact, as of 2006, the top twenty most
popular Korean websites were all hosted in Korea. A similar situation existed in
Japan, which had low international bandwidth and a large amount of local
content. The ITU report concluded its treatment of this matter as follows. “While
including data on international Internet bandwidth penalizes certain countries,
such as the Republic of Korea and Japan, it is an essential indicator for measuring
ICT-related developments.”15 The important role of language in shaping the use
of the internet and new communication technologies was introduced earlier and
will be visited again in Chapter 8.
Finally, we offer a cautionary note about the interpretation of international
data. The ITU’s report Measuring the Information Society 2010 notes that Korea
“… was one of the first worldwide to adopt mobile broadband third generation
technologies and by the end of 2008 the country had over 35 million mobile
broadband subscriptions for a population of about 49 million people.”16
Furthermore, mobile broadband subscriptions forms part of the ICT use sub-
index in the IDI. Indeed, a very large proportion of Koreans used 3G CDMA
phones long before they became common in other countries. However, what the
ITU report neglects to mention is that actual use of the broadband capabilities of
these phones for data services remained extremely low in Korea until as late as
2009 because of high data rates and other circumstances, contributing to the great
“iPhone Shock” that came at the end of 2009.
World Economic Forum’s Networked Readiness Index

In 2001 the World Economic Forum began publishing an annual Global
Information Technology Report together with INSEAD. That report includes a
networked readiness index. In 2002 South Korea ranked 14th in the world, and it
then dropped to 20th and 24th over the next two years, returning to rank 14
in 2005 and dropping to 19th in 2006. In the 2007–8 rankings, Korea rose to a
score of 5.43 which placed it 9th in the world. In 2008–9 it dropped to 5.37 and
a ranking of 11th.17
The networked readiness framework measures
• the presence of an ICT-friendly and conducive environment, by looking at

a number of features of the broad business environment, some regulatory
aspects, and the soft and hard infrastructure for ICT;
• the level of ICT readiness and preparation to use ICT of the three main
national stakeholders – individuals, the business sector, and the government;
and
• the actual use of ICT by the above three stakeholders.
In addition to the above measures and indexes, there are others.
The Economist’s E-Readiness Rankings

Since 2000, the Economist Intelligence Unit has assessed the world’s largest
economies on the quality of a country’s ICT infrastructure and the ability of its
consumers, businesses and government to absorb information and communica-
tion technology and use it for economic and social benefit. Their report is now
called an “e-readiness index.”
The e-readiness index utilizes over 100 separate criteria, quantitative and
qualitative. These are evaluated by analysts at the Economist Intelligence Unit
in cooperation with the IBM Institute for Business Value and its Center for
Economic Development.18
Korea’s e-readiness score in 2008 was 7.81, and it ranked 19th in the world.
In 2007 it ranked 16th with a score of 8.08.
The Information Technology and Innovation Foundation (ITIF)

Broadband Rankings
Other international organizations have taken issue with some parts of the OECD
approach to the measurement of broadband. As noted in a report by the
Information Technology and Innovation Foundation (ITIF), one of the principal
limitations of the OECD broadband data is that they measure penetration on
a per capita rather than household basis. Also, the OECD does not aggregate
broadband penetration, speed and price data into a single composite indicator
of national broadband performance. Using data from the OECD surveys, the
ITIF developed just such a composite measure. According to this measure,
South Korea ranked number one in the world in broadband internet performance,
and the United States ranked fifteenth.19 In the 2008 rankings both countries
maintained the same rank. Korea was followed by Japan, Finland, the Netherlands,
France, Sweden, Denmark, Iceland, Norway and Switzerland to round out
the top ten.
Oxford, Universidad de Oveido, Cisco Broadband Quality Score

Other organizations have come up with different ways to assess broadband. In
one of the more recent efforts, the Said Business School at the University of
Oxford, Universidad de Oveido and Cisco Corporation have developed a broad-
band quality score. This index combines key performance parameters in order to
measure the quality of a broadband connection. A basic premise of this study is
that broadband is moving through two waves of development. The current
wave, with emphasis on social networking and more use of video, requires
greater bandwidth or “quality” and the next wave of ubiquitous networking will
require even higher speeds and quality.
A broadband quality score is computed using measures of download through-
put, upload throughput and latency. Download throughput is the net bit rate of
downstream data that traverse the network and the broadband connection. Upload
throughput is the net bit rate of upstream data that traverse the network and the
broadband connection. Latency is the time taken for a packet of data to travel
from source to destination.
South Korea ranked number one in the world in 2009 with a broadband
quality score of 65.99. It was followed, in rank order, by the following nine
nations: Japan, Hong Kong, Sweden, Switzerland, the Netherlands, Singapore,
Luxembourg, Denmark and Norway.20
Where Korea Stands on Multiple Measures
A recent study by the Berkman Center at Harvard criticized what it called the
“horse race approach” to international rankings for two main reasons. First, there
has been too much emphasis on one measure, internet penetration per 100 inhab-
itants. Second, there has been too much emphasis on where particular countries,
such as Korea or the United States, rank, as opposed to defining a range of
metrics that would allow meaningful benchmarking of certain countries in order
to learn from their success or failure. Also, we agree with their suggestion that
rankings and quantitative analysis must be supplemented by qualitative analysis
of detailed conditions and practices, along with market, social, geographic and
regulatory-political determinants.
The Berkman Center study noted that there were two main clusters of interna-
tional rankings. The first one consisted of the OECD and ITU rankings. The
second cluster included the Connectivity Scorecard, created by Leonard
Waverman at the University of Calgary, and the Network Readiness Index of the
World Economic Forum.
The main difference between these two clusters of international rankings is not
their methodological quality, but rather their focus. Namely, the OECD and ITU
measures are focused on internet, broadband and telecommunications specific
measures of performance. They look at specific, measurable outcomes in terms
of population-wide broadband availability, use, capacity and price.21 By contrast,
the WEF network readiness index and the Waverman connectivity scorecard
capture a wide set of indicators, addressing a broader range of concerns, not only
in science and technology, but especially in the business environment. The
Berkman Center study notes that “If one is interested more specifically in broad-
band policy – understood as policy aimed at supporting ubiquitous high capacity
access to all Americans at affordable rates – the measures that influence standing
in this [WEF] index sweep too broadly to provide meaningful guidance.”22
Waverman’s study noted that, although the U.S. ranked lower than many other
countries, it had benefited more from ICT than most nations. To the extent that one
is concerned with business use of ICT, the WEF and Waverman research show
that the U.S. is in good condition. However, if the concern is with wide dispersion
of broadband to consumers, including underserved areas of a nation, and the provi-
sion of ubiquitous access, these two studies provide less insight, and where they
do cover similar ground they do not contradict the OECD or ITU data.23
In addition to exclusive reliance on a single measure, another common critique
of the OECD penetration rankings is that population density affects the ranking,
giving an advantage to such countries as South Korea. OECD data include a
comparison of internet penetration to the proportion of a nation’s landmass occu-
pied by 50 percent of the population. Not surprisingly, only Iceland scores higher
on this measure of population density than Korea. However, the Berkman Center
conducted several quantitative tests that tended to disprove this criticism. Their tests
determined that, in each case, countries like Korea, the Netherlands and the Nordic
countries outperformed what their level of urban concentration would predict.24
The Berkman Center study concluded its analysis of internet penetration
by noting that with a combination of measures it is possible to identify some
models for observation and learning. These measures included household pene-
tration, to emphasize the importance of home access to policy; per 100 inhabit-
ants, to capture some small and medium enterprise use; mobile, and to some
extent nomadic access. They concluded that, as shown in Table 4.2, South Korea
Table 4.2 Country Rankings on Various Penetration Measures
Country Penetration Household 3G Wi-Fi Weighted

per 100 penetration penetration hotspots average
(OECD) (OECD) (GC) per 100000 ranking
(Jwire)
1 South Korea 6 1 2 7 3.15

2 Iceland 5 2 4 27 5.85
3 Sweden 7 7 6 1 6.1
4 Denmark 1 4 18 10 8.05
5 Finland 8 9 8 15 9.05
6 Japan 17 5 1 29 9.2
7 Luxembourg 9 10 9 12 9.65
8 Norway 3 6 17 19 9.85
9 United Kingdom 11 11 10 3 9.9
10 Switzerland 4 13 15 2 10.25
11 Netherlands 2 3 25 13 10.35
12 Australia 16 17 3 17 12.55
13 Belgium 12 12 20 8 14
14 Germany 14 15 13 14 14.05
15 France 13 18 14 4 14.15
16 Canada 10 8 26 20 15.1
17 United States 15 14 19 9 15.25
18 Spain 20 19 7 16 15.35
19 Austria 19 16 12 18 15.75
20 New Zealand 18 20 11 11 15.9
21 Italy 22 27 5 21 18.55
22 Ireland 21 22 22 5 20.05
23 Portugal 25 23 23 6 21.8
24 Slovak Republic 27 26 16 25 23.15
25 Hungary 24 21 27 24 23.85
26 Czech Republic 23 25 24 23 24
27 Greece 26 28 21 22 24.8
28 Poland 28 24 28 28 26.6
29 Mexico 30 29 29 26 28.95
30 Turkey 29 30 30 30 29.75
Source: Next Generation Connectivity: A review of Broadband Internet transitions and policy from
around the world. The Berkman Center for Internet and Society at Harvard University, Final Report,
February 2010, p. 53.
was a leading performer across all measures: leading household penetration,
second on 3G, in the top quintile for per 100 inhabitants, and 7th for Wi-Fi
hotspots. Japan had lower results on per 100 inhabitants and was very low on
hotspots.25
The Berkman study also looked at several measures of speed (what it calls
capacity). These included latency, average advertised download speed, and the
results of multiple actual speed tests. Latency is the measure of the degree to
which a packet of data is likely to be delayed in arriving. In some applications,
such as e-mail, it is irrelevant. However, in others, including VOIP, it is very
important.
On the basis of their combined measures of internet speed, Japan ranked
number one and Korea a close second, ahead of the Netherlands, several Nordic
countries and France. Here note that Akamai’s quarterly State of the Internet
reports, based on data from its servers worldwide, has consistently ranked Korea
number one in the world in terms of average connection speeds, with Japan in
second place. For the fourth quarter of 2009, Akamai reported that Korea had an
average connection speed of 11.7 Mbps, followed by Hong Kong with 8.6 Mbps
and Japan with 7.6 Mbps.26
Finally, the Berkman study looked at measures of the price of broadband inter-
net. The measurement of price for purposes of international comparisons
presented a more complex challenge because it needed to be measured at differ-
ent levels of speed. Korea came in 9th in the world on this measure. In the final
aggregate rankings that combined penetration, capacity and price, Korea came in
fourth, behind Japan, Sweden and Denmark, in that order.27
The Diffusion of Broadband Worldwide and in Korea

In order to place Korea’s experience in the global context, we look back at the
invention of the World Wide Web and the arrival of the broadband internet era,
beginning with global developments and then describing Korea’s experience.
The Arrival of the World Wide Web and the Internet Era
Searching for information on the internet, use of e-mail and interaction
through social networking sites are so commonplace today that it is easy to lose
historical perspective. In fact, the worldwide web only recently turned twenty
years old, having been proposed in a 1989 research paper by Tim Berners-Lee.
It is well to remember that Korea’s telecommunications revolution of the 1980s,
culminating in the highly successful Seoul Olympics, all took place in the
pre-internet era!
Although the structure of the World Wide Web was proposed in the late 1980s,
its full impact was not widely understood until the mid 1990s. The first web
browser, Netscape, was only released in 1994. As of 1995, Netscape Navigator
was the dominant web browser in use around the world, but by the year 2000,
Microsoft’s Internet Explorer had captured 80 percent of the market.
In 1994 U.S. Vice President Al Gore gave his UCLA speech calling for
the construction of information superhighways. On May 26, 1995, Bill Gates
sent his now-famous memorandum to Microsoft executives based on the
increased speed and computing power of the internet, what we’ve been discuss-
ing as broadband. The subject heading of the memo was the “Internet Tidal
Wave.” The first paragraph stated that “Our vision for the last 20 years can be
summarized in a succinct way. We saw that exponential improvements in compu-
ter capabilities would make great software quite valuable. Our response was to
build an organization to deliver the best software products. In the next 20 years
the improvement in computer power will be outpaced by the exponential
improvements in communications networks. The combination of these elements
will have a fundamental impact on work, learning and play.” The memo went
on to describe Netscape with its Netscape Navigator as a “new competitor ‘born’
on the Internet.” The memo outlined Microsoft’s failure to grasp the importance
of the internet, and in it Gates assigned “the Internet this highest level of
importance" from then on.28 Gates's memo received scant public notice at the
time, least of all in South Korea, which was well on its way to becoming
heavily dependent on Microsoft software for its computing needs, what many
would later label a “Microsoft monoculture.” Even more significantly, the memo
was sent before the formation of Google, which got started only in January
of 1996.
By the mid 1990s, searching for information by looking for key words among
the mounting number of pages on the internet was returning more and more irrel-
evant content. The founders of Google came up with a big insight to help solve
this problem. In 1996 Larry Page was a PhD student at Stanford University in
search of a dissertation theme. He considered, among other things, exploring the
mathematical properties of the World Wide Web, understanding its link structure
as a huge graph. His supervisor encouraged that idea, so Page focused on the
problem of finding out which web pages link to a given page. He had the role of
citations in academic publishing in mind and thought that the number and nature
of such back links would be valuable information about any given page. He was
soon joined in the research by Sergei Brin, a fellow Stanford PhD Student, and
his web crawler began exploring the web in March 1996, setting out from Page’s
own Stanford home page as its only starting point. To convert the back link data
that it gathered into a measure of importance for a given web page, Brin and Page
developed the PageRank algorithm.
Convinced that the pages with the most links to them from other highly
relevant web pages must be the most relevant pages associated with the search,
Page and Brin tested their thesis as part of their studies, and laid the foundation
for their search engine. The domain name google.com was registered on
September 15, 1997, and they formally incorporated their company, Google, Inc.,
on September 4, 1998 at a friend’s garage in Menlo Park, California.
Eventually, Google’s success gave a major boost to so-called “cloud comput-
ing.” Most simply, cloud computing is internet-based (“cloud”) development and
use of computer technology. The cloud is a metaphor for the internet, based on
how it is depicted in computer network diagrams, and is an abstraction for the
complex infrastructure it conceals.
According to the founder of the worldwide web, Google’s success shows that
the web needs to be understood and that it needs to be engineered. “The web is
an infrastructure of languages and protocols – a piece of engineering. The philos-
ophy of content linking underlies the emergent properties, however. Some of
these properties are desirable and therefore should be engineered in. For example,
ensuring that any page can link to any other page makes the Web powerful
both locally and globally.”29 On the other hand, other properties should be
engineered out – such as the ability to build a site with thousands of artificial links
generated by software robots for the sole intention of improving that site’s search
rankings – so-called link farms.
The Origins And Growth Of The Internet in Korea

Prior to the 1990s, the internet in South Korea, as in other countries, consisted of
small-scale experiments by scientists and engineers. These developments were
not widely known to the public. Korea’s first Internet system was called the
System Development Network (SDN) and, in the early 1980s, connected comput-
ers at Seoul National University, the Korea Institute of Electronics Technology
and the Korea Advanced Institute of Science and Technology (KAIST), using
TCP/IP protocols.30
In May 1984, DACOM began its commercial e-mail service through DACOM-
net. A series of other critical events occurred in the mid-1980s that allowed Korea
to meaningfully participate in the global Internet. In July 1986, the first IP address
(128.134.0.0) for Korea was assigned. In 1986, rules for second and third level
domains under the .kr domain were established and the country code top level
domain to represent Korea, .kr, was formally put in operation.31
In 1992, the Korea Network Information Center was established in order to
provide a network information management system within South Korea. Up to
that point, the registration of domain names on the internet and administration of
network information had been performed on an individual network basis.
However, because of tremendous growth in domestic internet use and because
there was a global trend for establishing network information centers within
continents and individual nations, the Korea Network Information Center was
founded.
As already noted, establishment of the World Wide Web completely trans-
formed the internet. In Korea the first web site, cair.kaist.ac.kr, was set up and
operated at the Center for Artificial Intelligence Research (CAIR) at KAIST in
1993.32
South Korea adopted broadband internet on a massive scale earlier than any
other nation on earth. To place Korea’s broadband diffusion within the larger
global context, Figure 4.1 shows Korea’s performance next to that of two histor-
ical OECD leaders in broadband internet penetration. Although based on penetra-
tion, a measure of subscribers per 100 population, rather than usage, the two
40.0
Korea
35.0 Denmark
Netherlands
30.0 OECD
25.0
20.0
15.0
10.0
5.0
0.0
99
00
01
02
03
04
05
06
07
08
09
19
20
20
20
20
20
20
20
20
20
20
Figure 4.1 Broadband Penetration in Korea and Leading OECD Countries, 1999–2009.
Source: OECD Broadband Portal, adapted from graph of data for five countries
(those included here plus Norway, Switzerland, and Iceland).
measures together show the overall pattern. Korea moved ahead of other nations
in the world in both internet penetration and usage levels before the start of the
new century. It held that lead until 2005, when several European countries, led
by Denmark and the Netherlands, overtook it.
For Korean broadband penetration, the classic “S” curve that characterizes the
diffusion of innovations neared its peak and began to level out before a few other
countries caught up. By 2002, as noted in an ITU report, Korea had emerged as
a world leader in terms of fixed line telephone subscribers per 100 population,
internet users per 100 population, internet penetration, and broadband penetra-
tion.33 By 2004 the U.S. journalist Thomas Hazlett noted that 78 percent of
Korean households subscribed to broadband, twice the percentage in the United
States. Furthermore, by that point in time “… the apartment dweller in Korea
enjoys the same level of internet service as the largest corporate customers in the
U.S. All this in a country of 48 million which, in 1979, had just 240,000 phone
subscribers.”34
On the measure of price, in an October 2007 comparison by the OECD, Korea
had the fifth least expensive prices, measured by average broadband monthly
price per advertised Mb/second. In US$ PPP, Korea’s figure was $5.96, compared
with lower figures in the United Kingdom, Italy, France and Japan which had the
least expensive service at $3.09. The same survey put the U.S. price at $12.60 and
prices ranged up to $29.30 in Greece, and to orders of magnitude higher amounts
in Mexico and Turkey.
Building Korea’s Information Superhighways
Former U.S. Vice President Al Gore is well known for his advocacy of
the internet and in particular a 1994 speech at UCLA in which he called atten-
tion to the need for “information superhighways.” South Korea has now
become well known as the first country in the world to actually build those
superhighways.
The global telecoms industry started to move from copper to fiber optics in
1993 and fiber took off in 1994. Many countries, including the USA and
EU nations, used pure government funding and academic institutions to create
and pilot fiber networks to test the technology. The Korean government, by
contrast, decided that a fiber ATM backbone running nationally was essential for
economic development. It therefore supported a pilot project on a national scale,
for its own usage as the first customer, with US$1 billion in grants. Private
companies built the backbone, and their first task was to connect all government
offices. Using such an approach, the government eliminated the start-up risk
which private industry would not have been able to fund.35 Korea’s answer to the
ideas advocated by Gore was formally announced as the Korea Information
Infrastructure (KII) plan in March of 1995. The purpose of the KII plan was
to build an information superhighway that would provide advanced IT services
to the public and promote informatization in every sector of society. Even
more specifically and ambitiously, its purpose was to “… provide various
multimedia communications anywhere, anytime and to anyone, and also to turn
South Korea into one of the top ten advanced countries in the IT industry by the
year 2002.”36
Several factors explain why the KII project marked a big advance over the
networking projects of the 1980s. First, it involved a massive government–indus-
try partnership, with the private sector playing the major role. Second, it came
just as the internet and the World Wide Web were becoming available globally.
Third, it would provide state-of-the-art infrastructure for broadband internet
approximately 4–5 years before most of the other advanced economies in the
world. As one study noted, the KII project “... might have been the most promi-
nent example worldwide for governmental activities in furthering broadband
deployment.”37
The original goal of the KII project was to construct a high-speed and
high-capacity “information superhighway” by the year 2015.38 As it turned out,
the project was an unqualified success and achieved all of its original goals
by 2005, years ahead of schedule. There were two major reasons for early
completion of the KII project. The first was continued technological improve-
ments in switching, which will be discussed in our outline of the project.
The second was the enthusiastic response of the private sector and competition
in a race to build out the public portion of the information superhighway. The
KII project was divided into two parts: the government portion was called
New Korea Net-Government (NKN-G) and the public portion New Korea
Net-Public (NKN-P).
Government-led Competition in Broadband
The Korean government did not have a single master plan for the introduction of
broadband. However, its policies strongly shaped service providers and their
strategies and the government was able to foster “facilities-based” competition.
The KII project provided a variety of backbone-building and R&D facilitation
programs. MIC also offered financial support, granted preferential tax treatment
to participants and directly underwrote loans to service providers who were
building their networks.
President Kim Young-sam’s administration had initiated the KII project and
greatly strengthened the nation’s informatization program. His successor Kim
Dae-jung announced in his inaugural speech the national vision of transforming
Korea to a knowledge and information society based on digital equality. The new
Minister of Information and Communication picked up on this theme by empha-
sizing informatization of Korean society. He recognized the importance of
constructing a broadband local access network, based on the success to that date
of the Korean Information Infrastructure-Government (KII-G) project. Officials
at the MIC, in collaboration with ETRI, at that time identified three alternative
technologies for broadband service: ISDN, cable modem and ADSL.39
To choose from among these three alternatives, MIC officials applied three
criteria: the possibility of export, bandwidth and investment costs. ISDN and
cable modem were not good candidates for export because they were already
commercialized in advanced countries. ISDN was limited in speed compared to
the other two alternatives. However, Korea Telecom had introduced ISDN in
1993 to cope with an explosive increase in demand for data communications and
had developed a corporate commitment to it. The required investment cost was
about the same for all three technologies. Consequently, the Ministry favored
ADSL as the best alternative technology. However, in the wake of the IMF crisis
in 1997, the Ministry knew that there was little possibility of securing a large
government budget. So it concentrated instead on initiating a dialogue with the
private sector to induce a commitment to ADSL.40
Hanaro decided to import ADSL equipment from Alcatel, located in Belgium.
Local equipment providers including LG and Samsung Electronics had tested
ADSL equipment at the laboratory level and were positive about the MIC’s
vision for ADSL service, but they thought the market was not ripe for committing
their resources as of 1997–98. Given the difficult financial situation at the time,
the MIC provided R&D funds to the providers. The ministry speculated that if the
chip sets could be produced domestically, their price would decline and it would
then be possible for ISPs to provide internet service at an affordable price. The
MIC provided matching funds to Samsung Electronics, which had already begun
development of universal ADSL chip sets.41
In the wake of the IMF crisis, issues of pricing and demand forecasting for
ADSL service proved to be a huge challenge. Estimates by KISDI, KT and the
National Computerization Agency diverged widely. There was fundamental disa-
greement about how demand for ADSL service might develop. At this time there
was a heated confrontation between the MIC and ISPs about the appropriate ADSL
service fee. The MIC initially proposed a fee between US$40 and $55 per month,
with a potential market size of 2 million subscribers by 2002. This was later
revised to $27, given the estimated GDP per capita in 2002. In this confrontation
the MIC did not compromise. Instead, it offered a series of very attractive, low-
interest loans to the ISPs (US$65 million at 6.5 percent in 1999 and at 7.25 percent
in 2000) and approximately US$100 million at 6 percent in 2001. While KT
could afford to do business without this preferential loan, Hanaro benefited signifi-
cantly, using it to install optical cables in 4,700 high-rise apartment complexes.42
The MIC also decided to push its informatization goal with demand-side
policies. The government made computer education in schools mandatory and in
October of 1998 proposed testing of computer skills for the college entrance
exams as part of the Korean Scholastic Aptitude Test. From that point onward,
all schools in Korea began designing curricula for computer education programs
and preparing computer classrooms. The government also provided educational
opportunities for adult citizens by establishing the “General Plan for Citizen
Informatization Education” in March 1999.43
In July of 1998, when disagreements about the proper level of service fees
were still being aired, Thrunet suddenly volunteered to deploy broadband service
at US$25 per month using cable modems. The consortium realized that the MICs
backing of ADSL was a threat and so it decided to enter the emerging broadband
market in advance of KT and Hanaro Telecom. Thrunet had been created after it
was announced that the government would license one firm to lease out cable
infrastructure. Of the 100 or so companies that joined the Thrunet consortium, the
largest shareholder was KEPCO (Korea Electric Power Company), the state-
owned energy company. When Thrunet commenced services it leased additional
capacity from KEPCO.
As early as 1980, KEPCO had installed fiber throughout its network, gambling
that once it had the infrastructure, the government would be forced to allow
KEPCO to use it more productively. This was interesting, given that KEPCO was
fully government-owned and under the jurisdiction of the Ministry of Commerce
and Industry (MCI). At the same time, KT had created its own fiber networks
with government support, partly financial. A dispute ensued when both KEPCO
and KT applied for a license to lease fiber to telecom carriers. Purely from a
capacity standpoint, KT’s infrastructure was sufficient, while KEPCO’s was
redundant. This situation pitted the MCI against the Ministry of Information and
Communication, but they could not engage in a public battle because that would
have revealed that MCI had allowed KEPCO to take matters into its own hands
with taxpayers’ money.44
To further strengthen demand for ADSL, the MIC initiated a building certifica-
tion system for broadband internet. It certified three classes of buildings, depend-
ing upon the internet connection speed. This allowed construction firms to
advertise that their buildings had access to state-of-the-art broadband internet.
The MIC also moved to reduce prices of personal computers, recognizing that
they served as the primary terminal for broadband internet at that time. The Ministry
approached several medium-sized PC manufacturers to form a consortium and
supply Pentium II class PCs at a price below US$667. It also offered 3-year
financing to help consumers of the consortium’s PCs, which were called
“People’s PCs.”
Given the competition from Thrunet, Hanaro Telecom could no longer delay
entering the market. Its entrance is often considered the start of South Korea’s
broadband explosion. Hanaro was formed in 1997 after the MIC had announced
a year earlier that it would license exactly one competitor in the local telephony
market. However, on commencing local telephony services, Hanaro quickly
found that it was like David against the Goliath, KT. In an effort to compete,
Hanaro began offering DSL services. In April 1999 the company commenced
broadband service, offering both DSL and cable, leasing cable capacity from
Powercomm, a subsidiary of KEPCO and KT. It matched Thrunet’s price of
$25 per month. Furthermore, Hanaro bundled broadband with its basic telephone
service for only about $40 per month, including free installation. With such
aggressive pricing, it acquired more than a million subscribers within 18 months.
At about this same time, Star Craft became immensely popular among middle
and high school students, who came home late at night after playing the game in
PC bangs. Hanaro Telecom picked up on this phenomenon and focused its adver-
tising on the fact that, with its ADSL service, they could play the game at home.
This appeal to parents was so successful that the waiting list for Hanaro Telecom’s
ADSL service reached 500,000 and stayed at that level for a long time.
Later in 1999, KT entered the ADSL market on a limited scale and Korean
equipment manufacturers began to produce ADSL equipment. However, it was a
full year before KT launched its own full-scale ADSL-based internet service. At
that point it realized that ADSL, rather than ISDN, represented the future for
broadband internet service in Korea.45
The Government Part of the KII Project

The goal of the government portion of the KII project was to connect government
and public facilities, such as educational and research institutions, in a fiber
optic, ATM-switched network, as illustrated in Figure 4.2. The National
Computerization Agency (now the National Information Society Agency) was
designated as the lead agency and Korea Telecom and DACOM were designated
as the companies to provide the NKN-G networks.
The NKN-G portion of the KII project would provide a suitable network plat-
form for certain e-government and public functions, but would itself have fallen
far short of the goal of universal service to private residences, including the famil-
iar high-rise apartments in urban areas and the houses in small rural villages and
mountainous areas. Note the tenor of the following objectives of the information
society, as stated by the government.
• To make an efficient government with improved services for the public

through electronic data interchange and joint use of information.
Figure 4.2 Composition Map of NKN-G (First Phase).

Source: Informatization White Paper 1996, National Computerization Agency, Republic
of Korea, p. 16.
• To use internet and remote learning as a new educational tool, and enable
all Koreans to access academic and research information from within the
country and from the world at large;
• To promote electronic commerce and increase the provision of start-up and
corporate information for stronger industrial competitiveness;
• To spread access to information services across the nation so that people in
regional areas benefit from it equally.
• To create pleasant living conditions by improving medical services, the
environment, and safety management.46
By the year 2000 high-capacity and high-speed optical transmission networks

had been extended to 144 regions around Korea and high-speed internet and
multimedia services were being provided at a low cost. Through government
direction, Korea had built what it could call “the world’s best broadband infra-
structure.” By December of 2001, 7.8 million people subscribed to high-speed
internet services and 56.6 percent of the population used the internet – a world
leading rate of usage.47
Between the start of the project and 2000, 51.2 billion won was invested in
testing and developing next-generation network technologies, required equip-
ment and application services.48
A key point made in the ITU’s Broadband Korea report is that “The rapid
take-up of broadband has radically altered conventional network thinking
and evolution.” Faced with intense competition from broadband service
providers, KT abandoned ISDN as its strategy for data communications over
circuit-switched networks, moving instead to ADSL.49
The Public Segment of the KII Project

The goal of the NKN-P public portion of the National Information Infrastructure
NII project was to provide an interactive, broadband and digital multimedia
information service to users in the private sector by wiring offices and
homes with fiber-optic cables. It was originally intended for completion in 2015.
“By launching the multi-dimensional information superhighway that also
encompasses satellite and undersea fiber-optic cables, the nation aims to
place itself at the center of international telecoms in the coming information
society.”50
One of the real success factors in the project was that the companies who built
the fiber networks, principally KT and DACOM, manufactured two to three times
as much fiber51 as was required by the government-network plan, and began to
compete with each other to lay fiber to private businesses and residences. The
backbone sections of the national network were made available by the govern-
ment to KT and DACOM for interconnection with their private fiber networks.
But essentially the role of the government was to invest in a high-speed public
and government network while encouraging competition to extend that network
out to private households and businesses, rather than one of directly subsidizing
the entire network.
The KII project included a variety of pilot projects, the aim of which was to
prove the value of the network by demonstrating the difference the information
superhighway would make to people’s lives. These pilot projects included,
among others, remote medical treatment, remote primary school education,
remote agricultural technical instruction, teleconferencing between central
administrative agencies and a pilot tele-court project.52
From 1995 to 2003, Korea’s government made seed money investments of
KRW 750 billion to induce a total investment of KRW 20.5 trillion including
KRW 19.8 trillion from the private sector. By 2000, the laying of fiber optic
networks connecting 144 localities nationwide was completed, and 1,400 rural
areas had access to broadband networks.
These investments made broadband information and communication services
available to 30,000 public agencies, 10,000 schools and 11.18 million house-
holds. Internationally, with the dawn of a new century, Korea began to receive
more attention as the OECD, the ITU and the international media singled out
Korea as a highly successful instance of building a broadband network.53
Advancing Network and Switching Technologies

New network and switching technologies continued to rapidly evolve while the
KII project was under way. In 1992, with the experience gained in the develop-
ment of TDX switching systems, ETRI began developing asynchronous transfer
mode (ATM) switching systems. The ATM system development program was a
major aspect of the broadband ISDN program and was carried out as part of the
nationwide technology promotion program.
The Highly Advanced National/B-ISDN project, completed in the late 1990s,
utilized ATM switching and became the next link in ATM's large-scale commer-
cial switching system. Such a system was planned to provide a central switching
node for the infra-network in Korea’s information superhighway of the
21st century, in which digital media would play many different and important
roles. It was intended to become the core means of providing new working,
shopping, and leisure environments.
One of the major challenges faced in the KII project was that, as more advanced
services emerge in the telecommunications market, demands change accordingly.
In particular, as the project got underway, demand for fixed line telephone
services was almost saturated while demand for high-speed internet services was
getting ready to take off.
Because of these dramatic changes in demand, the government prepared a
staged strategy so that KII-G could accommodate more convenient high-speed
internet services. This included temporary reliance on an overlay network, with
the eventual goal of having all traffic on the integrated network. In the first phase,
an ATM permanent virtual circuit (PVC) connects routers. In the second phase,
by the year 2000, both the ATM backbone network and router network would be
integrated using IP over ATM (IPOA) services. For the third and final phase, after
2001, an integrated network based on ATM with Multi-Protocol Label Switching
(MPLS) was planned.54
Demand Magnification: Government-Led Promotion of Informatization

Citizen education and public promotion of the information society was a major
element in Korea’s telecommunications revolution of the 1980s.55 These promo-
tional efforts helped to ensure that there would be sufficient demand for services
on the new information highways. In fact, one study of the introduction of broad-
band in South Korea refers to these as “demand magnification” programs.56
When the KII project was started in 1995, the nation required a strengthened
legal basis for its drive to create an information society. This was created by a
sweeping new law, the Basic Act on Informatization Promotion (BAIP).
Informatization is a term that originated in a French publication about the infor-
mation society by Simon Nora and Alain Minc,57 and refers to the spread of
information use into each social sector as a result of the evolution of information
and communication technology (ICT).
With the passage of the BAIP, the government declared that its long-term
objective was to achieve an information society to a substantive degree by the
year 2010, and to become an advanced nation in the twenty-first century.58
In May of 1996, at a meeting of the Presidential Council on Science and
Technology, President Kim Young-sam declared informatization a top national
priority. A Korea Informatization Promotion Committee embracing the entire
government apparatus was set up, to be headed by the Prime Minister, and a new
post of presidential secretary with responsibilities for informatization was created
for the oversight of information-related matters at the Blue House.
Passage of the Basic Act on Informatization Promotion in 1995 was a signifi-
cant milestone, in particular because it stipulated the drafting of specific measures
and the setting-up of an organizational structure for their implementation. The act
was composed of seven chapters, 20 articles and supplementary provisions.
Taken together, they made it very clear that informatization would from that time
forth be a top national priority.
• National and local autonomous governments were to be actively involved.

• The promotion of informatization and info-communications industries would
henceforth be given top priority in implementing plans for specific measures
and in allocating budgets.
• An informatization promotion committee was established at the interminis-
terial level as the top policymaking body for resolving and deliberating key
issues and policies concerning the promotion of informatization. Headed
by the Prime Minister, the committee included the most relevant ministers,
representatives from the National Assembly, and the Court Administration.
• An Informatization Promotion Fund was set up to foster info-communica-
tion-related enterprises, promote informatization, and implement informa-
tion infrastructure projects (KII).59
Beginning in June 2001, ten government agencies including the Ministry of

Information and Communication co-founded the “Internet Education for 10
Million Citizens (2000–2002) which was targeted at the information-alienated
class which included housewives and the disabled. Such government efforts to
narrow the digital divide achieved some improvements across regions, incomes
and gender, but the problem persisted. In September of 2001 the government
created a comprehensive plan that 14 agencies, including MIC, would promote
over the ensuing five years.60
Another strategy pursued by the government was to deeply embed computer
literacy into Korea’s ultra-competitive university entrance examinations, making
a home personal computer a necessity for any seriously education-minded parent.
All Koreans immediately know what is meant by the term “education parents.”
Broadband access thus became part of the package needed for computer literacy,
driving subscriptions for households with school age children.61
The 2009 study by the Berkman Center at Harvard noted that the most system-
atic and extensive demand-side program among all of the countries it looked at
was in South Korea. In other countries of the world, it found only bits and pieces
of the Korean program.62
Broadband and Progress in Strategic Restructuring

The broadband revolution in South Korea began in the 1990s, amid hints that it
was coming in other countries around the world. However, Korea was almost
half a decade ahead of most other industrialized nations in providing fast and
efficient broadband service to the majority of its population. As the following
summary underscores, its broadband revolution was decisively shaped by the
strategic approach of the government and industry toward restructuring of the
telecommunications sector.
Structural Changes
The arrival of broadband internet in South Korea coincided with sweeping
changes in the nation’s political, social and economic structures. Politically, the
nation’s first two democratically elected civilian presidents, Kim Young-sam and
Kim Dae-jung, embraced and promoted broadband internet and the nation’s
continued informatization.
Economically, the country experienced unprecedented growth until 1997.
In that year the Asian economic crisis, known as the “IMF crisis” in Korea,
forced the incoming administration of Kim Dae-jung to make some difficult
choices. One of them was the decision to intensify and broaden efforts at
informatization.
The social changes and stresses associated with such rapid economic growth
and political change included continued urbanization, a growing “education
exodus” as more and more students opted for study abroad, and a recognized
problem with “internet addiction,” to name a few.
Institutions
The power and influence of the Ministry of Information and Communication
(MIC), which had begun in the 1980s, continued to increase throughout the
1990s. It was the leading ministry in helping the government introduce broad-
band internet. Although rivalries with other key ministries did not disappear, the
role of the MIC became increasingly prominent during the 1990s and into the
new millennium.
Another major change relating to government institutions in the 1990s was that
informatization and the building of Korea’s “information superhighways” was
clearly elevated to the level of a national priority. Accordingly, the Blue House
and the Prime Minister’s Office became directly involved with virtually all key
activities.
As we have recounted in this chapter, the role of the private corporations was
also significant in the introduction of broadband to Korea, and it became
more influential as market certainty increased. In particular, the competition
among ISPs, each with a different strategy, helped to accelerate the diffusion of
broadband.
Thrunet entered the market early, taking advantage of an existing CATV
network. Consequently, Hanaro Telecom could not avoid offering unprecedented
ADSL-based broadband service. KT could delay entering this market because of
its monopoly status, but when it did enter, this triggered explosive growth, by
leveraging its already installed telephone network and inducing the entry of
numerous equipment manufacturers.63
Politics and Policies in South Korea’s Broadband Revolution

The politics of telecommunications policymaking were as lively as ever during
the 1990s, especially in the midst of and immediately following the IMF crisis.
Different government and industry organizations made widely varying estimates
concerning the pricing and likely market evolution of broadband internet.
There was ample debate. The end result was so successful that quite a large
number of studies have addressed the role of government policies and other
factors in South Korea’s rapid adoption of broadband internet. Korea drew atten-
tion not only from other developing countries; for example, European experts
looked at Korea because a wide penetration of broadband services was seen as a
key for developing Europe into an information society.64
A Shift Toward the Private Sector

Although the government continued to play a vital leadership role, the policy
balance on the dimension of private versus public initiative swung toward the
private sector. By not imposing any strict regulation on broadband, government
policy encouraged multiple carriers to enter the market and compete with each
other. This competition reduced prices, which in turn helped the companies to
obtain a critical mass of customers within a short period of time. The major
broadband service providers competed not only on price, but also in terms of
other marketing activities.
Korea’s policy also showed the value of allowing the private sector to shoulder
the burden. During the 1990s, owing to a distinctive set of domestic and interna-
tional pressures, the policy balance in Korea swung further away from the
government and toward the private sector. However, government and industry
continued to work hand in hand.
The rapid diffusion of high-speed broadband internet in South Korea showed
the viability of what some analysts have termed “managed competition” or
“strategic liberalization.” In this nation, the government’s leadership in managing
this competition was exerted primarily through a strong lead bureaucracy, the
Ministry of Information and Communication.
Price and Facilities Competition

Broadband internet service was initially classified by the Korean government as
a value-added service, and therefore was free of regulation regarding entry and
pricing. This encouraged several full service providers to enter the market; setting
retail prices at levels low enough to encourage dial-up users to switch to broad-
band. In addition, facility-based competition encouraged the expansion and
upgrading of fiber optic access networks, which would be essential to advancing
the information society.65
As already noted, prices for broadband internet services in South Korea
were among the lowest in the world. Stringent price competition with
Korea Telecom has been identified as one of the factors that forced the new
service providers, Hanaro Telecom and Thrunet, to adopt a disruptive pricing
strategy. The strategy was disruptive in the sense that they initially set prices so
low that they could not recover short-term marginal costs. As a result of
their pricing strategies, both Hanaro and Thrunet ran into serious financial
difficulties.
Although KT’s new rivals were denied the opportunity to use KT’s network to
deliver their services “the last mile,” they scrambled for efficient alternatives.
They used fiber capacity leased from the Korea Electric Power Corporation, cable
TV lines and new transmission facilities built from scratch. Competing networks
emerged and broadband took off.66
Of course, Korea’s high population density is one factor that allowed broad-
band providers to lower their costs. In any event, competition, especially price-
and facilities-based competition, is clearly one of the success factors in South
Korea’s rapid deployment of broadband internet.67
It is noteworthy that South Korea achieved broadband internet success
without local loop unbundling. One study notes that Korea is a fascinating
example of broadband deployment because “... it has moved so far ahead
of all other countries in broadband penetration without any wholesale regulation
of the incumbent telecommunications carrier, Korea Telecom.”68 The fact
that the Korea Electric Power Corporation’s (KEPCO’s) fiber optic network
reached most of the nation’s high-rise apartments, in which a large portion
of the population lived, meant that competitive suppliers could readily gain
access to transmission facilities. Thrunet, Hanaro and other carriers were
able to compete aggressively with Korea Telecom. For this reason, competition
in Korea did not depend upon mandated unbundling or the provision of
wholesale broadband services by the incumbent carrier. Korea did introduce
local loop unbundling in 2003, but for other reasons than to achieve broadband
penetration.69
Foreign versus Domestic Influences
Arguably, foreign influence on South Korea’s telecommunications policy reached
a zenith during the IMF crisis in 1997–98. Faced with the possibility of a national
default without IMF assistance, the government had every reason to introduce
measures to liberalize the economy, and that included the telecommunications
sector. The economic adjustment was painful and many employees of large
companies lost their jobs during the crisis.
However, Korea also turned inward toward its own domestic sources of
strength during the IMF crisis. It viewed the economic readjustment as an oppor-
tunity to carry out computer literacy and informatization training on a scale that
was at that time unprecedented. The country’s leaders proclaimed, in effect, that
education for the new information era was the only road forward for Korea if it
wanted to get out of the economic crisis and, more importantly, resume its
progress toward becoming an advanced nation.
Decentralized Policy: Demand Magnification

Along with the introduction of facilities-based and price competition and a larger
role for the private sector, the growth of broadband internet in Korea saw the
policy pendulum swing from centralized toward more decentralized policies.
Government policy contributed to the demand side of information society
development in at least three ways. First, in 1996 informatization was elevated to
the highest levels of national policy. Second, the e-government program was
systematically promoted for all government agencies. This helped to ensure that
government expenditures on infrastucture and informatization would go toward
building an information-based society. Finally, there was a continuation and
strengthening of the broad national campaign to build an information society that
had started in the 1980s. It involved public and private institutions at all levels
throughout the nation.
In terms of the strategic restructuring model, the national fervor for and pride
in building an information society provided strong evidence that the policy
pendulum was swinging toward decentralization of telecommunications policy.
This meant putting the power of new digital technologies in the hands of the
people and encouraging their involvement.
5 The Mobile Revolution
Early Innovation and the
“iPhone Shock”
“A mountainous country like Peru needs WiBro technology.” – President Lee

Myung Bak’s comment to Peru President Alan Garcia, November 21, 20081
The mobile revolution in Korea started earlier than the overall global trend
and had a large impact on the nation’s digital development. However, two
seemingly contradictory aspects of this revolution reveal much about both the
country’s strengths and its relative weaknesses in building its part of the global
information society. On the one hand, its hardware and networks quickly became
cutting-edge technology of a sort, with South Korea becoming the first nation
in the world to introduce nationwide CDMA networks, mobile television, and
mobile WiMAX (WIBRO). On the other hand, Korea ironically lagged about two
and a half years behind many other countries of the world in the actual adoption
and use of mobile broadband, compared with what people in other nations were
doing with the iPhone, Android phones and other smart phones. This created
what has been variously referred to as the “iPhone shock” or “smart-phone
shock” in South Korea, beginning in November of 2009.
This chapter will tell the story of Korea’s unique experience with the diffusion
of mobile communication, and will place it in the context of global developments.
As in earlier chapters, we look at key policy debates and how they affected
Korea’s approach to strategically restructuring its telecoms sector. The chapter
concludes with a look at the integral role mobile communications are playing in
Korea’s efforts to build the ubiquitous networked society.
The Diffusion of Mobile Telephony Worldwide

and in South Korea
To place the revolution in mobile telephony in perspective, just think for a
moment of the mobile handsets that were in use at the time of the 1988 Seoul
Olympics. They were manufactured by Motorola and were large, heavy,
brick-like hand units that in fact required two hands to operate. Today’s typical
mobile phones would fit within the keyboard apparatus of those bulky
devices.
The Mobile Revolution and iPhone Shock 91
Since that time telephone customers around the world have “cut the cord” in a
mobile communication revolution. The transformation draws much of its strength
from the “law of mobility,” which states that the value of a product increases with
mobility. A simple measure of mobility is the percentage of time that the product
is available for your use.2
Mobile communication seems an especially powerful and natural complement
to interpersonal communication in Korea, where the culture is homogeneous and
each person is expected to be properly oriented toward other members of the
family, local community, school classmates and other important social reference
groups. All over South Korea today, young and old, students, farmers, fishermen,
secretaries and salaried men communicate with their mobile phones. Watching
television or video is not only common on cellphones, but on car navigation
devices and iPod-like portable media devices. At certain times of the day, more
Koreans today watch television via these mobile devices than on conventional
television sets in the home, school or office.
Mobile communication seems not only well suited to the Korean mind-
scape, but also to its mountainous landscape.3 On balance, the infrastruc-
ture requirements for mobile telecommunications are well suited to the
mountainous terrain of not only the Korean peninsula, but also many developing
countries in Latin America and Asia. Although mountains naturally create
coverage holes and shadow areas, they also provide good sites for cellular
transmission and reception towers because of their higher elevation. Moreover,
remote mountainous areas greatly increase the cost of laying copper or fiber
optic cable.
Statistically, an important milestone occurred in South Korea and worldwide
when the number of mobile phone subscriptions exceeded those for landline
phones. In 1999 the number of mobile telephone subscribers in South Korea
overtook the total of fixed line subscribers, as shown in Figure 5.1. This made
Korea one of the first fifteen economies in the world to make this important tran-
sition.4 Worldwide, the number of mobile subscriptions exceeded total landlines
worldwide by 2001, marking a momentous year for the telecommunications
industry. Underlying those numbers was the remarkable progress mobile teleph-
ony had made in reaching people who lived in the developing nations of Africa,
Asia and Latin America.
However, simply comparing the relative penetration of mobile versus fixed
telephony in Korea with the worldwide averages is less than satisfactory because
every country, whether developed or developing, had different starting points
and diffusion curves for both fixed and mobile communication. Therefore, in
Figure 5.1 we present data for Korea, the United States and China, during the
ten-year period in which each of those nations experienced the crossover point at
which mobile subscriptions exceeded those for land lines.
Mobile telephony was introduced to South Korea in 1984 by Korea Mobile
Telecommunications Corporation (KMT), which started out as a subsidiary of
Korea Telecom. KMT provided service based on AMPS (Advanced Mobile
Phone Service), a first-generation analog mobile standard developed by Bell Labs
92 The Mobile Revolution and iPhone Shock
120
Phones/Subscribers per 100 population

100
80
Korea fixed
Korea mobile
60 U.S. fixed
U.S. Mobile
China fixed
40 China Mobile
20
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Figure 5.1 Teledensity and Mobile Subscribers in Korea, the U.S. and China, 1999–2009.
Source: ITU.
in the U.S. It relied almost exclusively on Motorola and AT&T for infrastructure
and handsets.
Subscriber numbers developed in a very sluggish fashion and by 1993 the
country had a mobile phone penetration rate of only 1.1 subscribers per
100 inhabitants.5 For the next eleven years, through 1994, KMT enjoyed a
monopoly and adoption of mobile telephony was slow, reaching only two
subscribers per 100 inhabitants by 1995. In 1994, KMT was sold to the SK Group
and since then has operated as S.K. Telecom.
As shown in Figure 5.1, Korea reached the transition point at which it had a
larger number of mobile than fixed telephone service subscribers in 1999, three
years before China and a full four years before the United States. However, all
three of these countries had rather dramatically different starting points for the ten
years of data represented in the figure. The United States started with a very high
teledensity of 66.6 in 1999, and a rather low mobile subscription rate of 30.24.
South Korea, on the other hand, had a lower teledensity and relatively high
mobile penetration in 1999, so that it was close to the transition. Finally, China
started with lower numbers on both measures in 1999.
Another factor that helps to explain Korea’s relatively rapid adoption of
mobile communication is its decision to adopt CDMA as a national standard. The
six-year period between 1995 and 2002 represented the strong years of CDMA
diffusion in South Korea.6
Finally, although Korea was the first country in the world to commercialize
CDMA technology and to achieve near-universal use of broadband-capable
phones, it is important to underscore that this did not mean near-universal use
of mobile broadband! The ITU report Measuring the Information Society 2010
contains statements that could easily be misinterpreted by those not familiar
with the Korean market.7 For example, Korea was one of the first countries
“… worldwide to adopt mobile broadband third generation technologies and
by the end of 2008 the country had over 35 million mobile broadband
subscriptions for a population of about 49 million people.”8 Mobile broadband
subscriptions per 100 inhabitants is one of the three sub-indexes of ICT use in
the ICT Development Index, so Korea benefits on this measure. However, it
is important to stress that subscriptions, especially in the Korean case, did
not equate to use. In fact, usage rates were very low compared to many other
countries.
Early Innovation in Korean Mobile Communication

South Korea began the mobile era with a series of important innovations. The first
of these was a somewhat risky and bold decision to adopt code division multiple
access (CDMA) technology as its standard for mobile communication. This deci-
sion made Korea the first country in the world to commercialize CDMA and to
use it nationwide.
A Bold Decision to Adopt CDMA

The mobile communications revolution in South Korea built upon the nation’s
experience in the 1980s in several ways. The strategic, long-term decision to
develop CDMA technology took into account the future likelihood of success not
only in the Korean market, but for CDMA exports. Notably, the same key people
who had guided the TDX and 4MB DRAM projects in the 1980s were still in
top-level decision-making positions. In short, the CDMA project was a classic
example of government-led innovation.
As with the TDX project, there were four main actors in the innovation system
for the mobile telecommunications industry. They were the Ministry of
Communications, the government research institute ETRI, the local equipment
manufacturers and the mobile telecommunication service providers.
By the late 1980s, both international and corporate pressures on Korea’s
mobile telecommunications sector were building up. One set of pressures came
from continued change in digital computing and communications technologies.
The other arose from bilateral trade talks with the United States and multilateral
talks involving other countries, urging Korea to liberalize its telecommunications
market. Korean government officials had taken note that monopoly keeps prices
high and encourages poor management, deterioration of service, and inefficiency.
Within the MOC, there was a growing sense that the ministry itself could benefit
from growth in the mobile sector.9
The story of how the Korean government came to the decision that CDMA
would be its standard for mobile telecommunications is a tour de force of the
politics of telecommunications policymaking in South Korea.
The Politics of Liberalization in Korea’s Mobile Telecom Sector
The liberalization of Korea’s cellular market came in the early 1990s and
involved political struggles between industrial and bureaucratic interests and a
turf war between two powerful ministries. There was also a scandal involved, but
the end result of all this was a strengthened commitment to deploy CDMA. That
choice of technology ultimately had an enormous impact, not only on mobile
communications in South Korea, but also on its exports and role in the global
marketplace.
A bureaucratic turf war over control over the emerging cellular sector occurred
between Korea’s Ministry of Communications (MOC) and the Ministry of Trade,
Industry and Energy (MOTIE). The struggle revolved around three main issues:
the level of chaebol involvement in telecommunications services, the timing of
entry for new competitors, and the choice of the CDMA standard.
The introduction of cellular competitors to KMT pitted the MOC, which
wanted to limit chaebol influence in the sector, against MOTIE, which was inter-
ested in boosting the manufacturing base of the conglomerates. The chaebol had
been interested in directly operating telecommunications services for some time,
but the MOC, fearing chaebol dominance of the services market, had continually
rejected their attempts to enter. The MOTIE, which oversaw high-tech manufac-
turing and exports, disagreed, contending that chaebol participation in telecom-
munications services was critical to their technological competency. The political
battle between the two ministries came to a head in 1991, reaching the level of
the Prime Minister’s office and the powerful Economic Planning Board. The
MOC tried, unsuccessfully, to engage the incumbent Democratic Liberal Party to
weigh in on its side, but was forced to agree to the licensing of a chaebol as the
cellular competitor to KMT.
MOC and MOTIE also clashed over the timing of entry for the new mobile
competitor. The MOC wanted to introduce a second carrier soon, by 1994, to
encourage competition. However, MOTIE wanted to delay for one or two more
years, allowing time for domestic manufacturers to develop competitiveness
in infrastructure and equipment, thus decreasing reliance on imports. Foreign
companies joined the MOC’s side in this debate and Motorola tried to
alleviate MOTIE’s concerns by promising it would transfer technology to
Korean firms. However, the EPB weighed in on MOTIE’s side. One issue that
all the participants in the debate agreed upon was the strict limitation of
foreign participation in the cellular market. The MOC stipulated that foreign
interests could join consortia led by domestic firms, without management
rights.10
The final issue in the debate between the MOC and the MOTIE was that of a
standard for mobile telecommunications. In the early 1990s mobile telecommu-
nications were evolving from an analog to a digital system. Korean firms were
faced with two options. They could either adapt to the new digital technology by
importing the products of TDMA-based companies, or they could try to commer-
cialize CDMA on their own.11
The close government–industry cooperation in the CDMA development
project at ETRI was one factor that sparked a major conflict between MOC and
MOTIE over the choice of CDMA as a mobile standard. By the early 1990s
MOTIE’s status was declining as the chaebol gained international competitive-
ness and required less government support. Yet MOTIE had an institutional
prerogative to retain its institutional jurisdiction over manufacturers. In 1993 it
published a report critical of the MOC’s plans for CDMA, arguing that TDMA,
the basis behind the globally popular GSM standard, had more potential to
become internationally dominant. By contrast, CDMA showed potential, but was
as yet unproven. MOTIE even went so far as to launch TDMA research programs
and encourage manufacturers to join.
Naturally, the MOC immediately opposed MOTIE’s efforts, pointing out that
CDMA was technologically superior and more flexible in its future applications.
The bureaucratic turf war between the MOC and MOTIE led the MOC to
strengthen its plans for CDMA. It moved the date for deployment of commercial
CDMA ahead by two years. More significantly, it used all of the jurisdictional
authority at its disposal to promulgate CDMA as the sole domestic digital
standard.
An interim outcome of the political debates was the awarding of a license in
1992 to the DaeHan Telecom (Greater Korean Telecom) consortium, backed by
the Sunkyong chaebol group. It was a second license for analog mobile teleph-
ony, rather than CDMA. However, allegations of favoritism arose over President
Roh Tae Woo’s close relationship with the Sunkyong Group, given the govern-
ment’s high level of discretion in granting the license. A political firestorm
ensued, forcing DaeHan Telecom to return its license. The MOC was then
forced to wait for a change in political leadership to conduct a second round of
licensing.
In 1993, before the next round of licensing, the government announced that the
standard to be adopted would be CDMA rather than the analog license that had
been granted to DaeHan Telecom. Thus, a long and heated debate ended with the
decision to adopt the U.S.-invented CDMA as Korea’s wireless standard, even
though most of the world was dominated by the GSM standard. The second
license was granted to Shinsegi Telecom, a consortium led by the steel company
POSCO. Shinsegi Telecom had wanted to build a GSM network, since CDMA
was not yet commercialized, but the MOC rejected that option.
The MOC’s use of this trump card was bolstered by a 1993 decision of the U.S.
Telecommunication Industry Association that it would recognize CDMA. In the
end, the MOC strategy had a decisive effect on the manufacturers, who found it
made more sense to them than following the MOTIE line. If they developed
TDMA, their exports would be limited to markets in which they were newcom-
ers, and they would be closed out of the domestic market. On the other hand,
CDMA offered them access to a rapidly growing domestic market and a chance
to develop high levels of competence for entering global markets.12
After the MOC–MOTIE debate was settled, there was a second round of
research to commercialize CDMA. It was conducted largely by industry in
partnership with Qualcomm, under a task force of Korea Mobile Telecom
(the mobile division of KT, which had been spun off in 1988). The government
subsidized approximately $6.7 million from the Information Promotion Fund. In
1994 KMT contracted LG to provide base stations and handsets, and Shinsegi
selected Samsung in 1995. These moves cemented the close carrier–manufacturer
R&D relationships in the Korean mobile industry.
Development of the market in South Korea was promoted through massive
entry. Two licenses for digital mobile telecommunications via CDMA technol-
ogy were assigned in 1995, one to SK Telecom and the other to Shinsegi
Telecom. At the same time, three PCS licenses based on CDMA technology in
the 1800 MHz range were awarded to Korea Telecom Freetel (KTF), LG Telecom
and Hansol. The entry of four new firms and the establishment of a nationwide
standard led to very rapid expansion in the number of subscribers until 2000.
Then there was a slowdown and a wave of consolidation in the industry. SK
Telecom merged with Shinsegi Telecom and KTF merged with Hansol.13
The Commercial Development of CDMA Technology

The government decided to give the Electronics and Telecommunications
Research Institute (ETRI) a lead role in developing CDMA technology. At that
time ETRI had 1800 scientists and engineers, but, most importantly, it had
proven its capabilities through the successful TDX and 4MB DRAM projects in
the 1980s.14
For ETRI, CDMA represented a major strategic direction for the lab and
for its innovation capability. In fact, most of the world had already opted for
GSM. However, at the time TDMA systems such as GSM and Digital AMPS
were perceived to be maturing technologies that were approaching their perform-
ance limits. CDMA, on the other hand, was a future technology with greater
possibilities.15 At that time, the United States telecommunications industry was
wary about CDMA as an expensive, complex and unproven technology. Until the
Korean government decision, CDMA existed only as a theoretical concept in
which Qualcomm, a small American company, had patents.16
With the knowledge that they needed to move ahead into digital technology for
mobile communications, Korea’s Samsung and LG Electronics approached
several telecom companies around the world to explore the possibility of acquir-
ing technology. However, companies such as Motorola were only interested in
exporting their products into Korea. Moreover, European firms such as Ericsson
and Nokia had already developed their “global system for mobile communica-
tions” (GSM) digital technology and were not willing to share it with Korean
manufacturers. This made Korea’s choice to pursue CDMA easy, in a sense,
because it was the only option if the nation was to develop its own technology
capacity.17
The MOC had outlined plans to develop a new mobile standard in 1988. The
development history of CDMA in Korea was spread out over a period of nine
years, beginning in 1989. The main difference between this project and the TDX
project was that this was a proprietary technology originally developed and
owned by the U.S. company Qualcomm. Therefore, it was conceived as a joint
development project. As in the TDX project, ETRI was the main Korean institu-
tion, this time working with Qualcomm as an international partner in the technol-
ogy transfer program.18
In 1991, four domestic manufacturers, Hyundai Electronics Industries, LG
Information and Communications, Samsung Electronics and Maxon Electronics,
joined the project to develop a commercial CDMA system with a target date for
commercial service of 1996. The key components in CDMA were three applica-
tion-specific integrated circuit (ASIC) chips (MSM or Mobile Station Modem
chipsets). These were initially supplied by Qualcomm, but over time ETRI and
the Korean manufacturers developed their own versions. Over the course of the
CDMA project, ETRI was able to keep pace with changes in technology and
move to its next frontier.19
The total cost of the CDMA project over its entire time span has been
estimated at US$65 billion. Samsung alone spent more than $200 million on the
project, which involved 1,200 researchers. Part of the financing came from serv-
ice operators, who were required to donate a percentage of their revenues to
research and development. Another part came directly and indirectly from
consumers who had to pay a special tax on signing up, up to $1,000 for a handset,
along with deposits and activation fees.20
The CDMA project had a huge market creation effect for South Korea. First,
its companies were able to acquire both innovation and manufacturing capability,
not only in CDMA but in GSM as well. Second, this new capability led to
increasing exports of both handsets and base stations. Table 5.1 shows how large
the market-creation effect of CDMA was estimated to be compared with other
major technologies developed by ETRI.21
As part of the agreement, the manufacturers had to pay Qualcomm a royalty
of 5.25 percent of the total handset price, excluding the cost of packing and
batteries, instead of paying a royalty on only the chip and software. Over time,
with the introduction of newer phone models with cameras and other features,
these royalty payments became burdensome for Samsung and LG. From 1999
through 2002 they were at an estimated level of well over US$200 million
annually.22
From 1995 to 2002 it was reported that Korean mobile handset manufacturers
paid Qualcomm US$1.26 billion in royalties. Eighty percent of this amount was
accounted for by royalties paid by Samsung and LG Electronics.23 By 2007 it
was estimated that Korean handset makers were paying Qualcomm more than
$500 million annually in royalties.24 After an investigation, the Korea Fair Trade
Commission (KFTC) in July of 2009 fined Qualcomm $208 million dollars for
abusing its dominant position in the market. To that date, this was the largest fine
ever levied by the KFTC, Korea’s anti-trust watchdog. The KFTC accused
Qualcomm of collecting royalties in a discriminative way and of offering condi-
tional rebates to Samsung and LG Electronics in return for purchasing its CDMA
modem chips.25
Table 5.1 Estimated New Market Effect of Major Technologies Developed by ETRI,
1976–2003 (in billions of Korean won)
Type of technology Period Domestic Export Total R&D New

supply sales sales investment market
creation
effect
TDX 1978–1993 4470 522 4992 107 46.65

CDMA 1989–1996 34970 19070 54040 78 692.82
Optical 1993–2001 1910 12 1922 50 38.44
transmission system
Computed from data provided by the Electronics and Telecommunications Research Institute (2003).
Source: Adapted from Mani, Sunil. Keeping Pace with Globalization: Innovation Capability in
Korea’s Telecommunications Equipment Industry. Working Paper 370. India: Centre for Development
Studies, March 2005, p. 24.
In November of 2009 a development took place that appeared to signal a turn-

ing point in this dispute over royalties. Samsung Electronics and Qualcomm
signed a fifteen-year contract for the cross-licensing of wireless telecommunica-
tions technology. Under the contract, Qualcomm gained the right to use
Samsung’s 57 patent licenses in mobile technology and Samsung negotiated a
reduction in the 5–5.75 percent royalty per handset it had been paying to
Qualcomm. Although the details of the agreement were not made public, it was
clear that Qualcomm stood ready to negotiate a similar arrangement with LG
Electronics and Pantech.26
The “Mobile Triangle” and the Handset Subsidy Debate

With five carriers in the market, after 1995 Korea’s cellular subscription fees and
per minute charges dropped rapidly. The logic of competition moved toward
subsidies for handsets, just as it had in Japan. Subsidies for a typical handset cost-
ing US$440 began at about $160 in 1997 but by 1999 had escalated to the point
where handsets were being given away. Unlike Japan, the subsidies were in
exchange for ever-longer obligatory subscription periods, reaching three years by
1999. In the late 1990s a policy debate that caught the MIC off guard shifted the
dynamics of competition away from subsidized handsets.27
One factor that greatly stimulated the rapid diffusion of CDMA technology in
Korea was government policy on handset subsidies. When the first CDMA
networks were introduced in 1995, the handsets were very expensive and few
citizens could have afforded them. Thus, to help create a market for the new
technology, the government instituted a policy by which mobile providers could
lock subscribers into a two-year, exclusive contract in exchange for free handsets.
The government also kept the maximum per-minute charge high so that the
mobile carriers could earn sufficient revenues. Furthermore, by giving out
free handsets the mobile operators could buy phones in bulk, thereby reducing
per-unit costs. In general, the close coordination among government, industry and
service providers in Korea has been called the “Mobile Triangle.”28
The issue of handset subsidies eventually became a high-profile political foot-
ball that pitted the MIC against the Korea Communications Commission (KCC)
and the Korea Fair Trade Commission. The MIC regulated subsidies under the
Telecommunications Business Act. When they reached the point where carriers
were giving away phones in exchange for increasingly long lock-in contracts,
the MIC moved to cap subsidies at approximately $125. However, the core
problem was the practice of carriers who were not required to fully explain or
give documentation to customers about the termination penalty. Consequently,
the KFTC, in response to consumer complaints, ordered the abolition of penalty
clauses that required consumers to return the subsidy amount when terminating
their contracts early.
The cellular markets reacted to this move abruptly and dramatically, and
consumers began rapidly switching handsets. This raised Korean imports for
handset components at a bad time for the government in 1999, just when the top
political priority was to meet the IMF bailout conditions for balance of payments.
The MIC, in favor of ensuring carrier profitability and competition with SK
Telecom, moved forward to curb subsidies. However, an informal industry
arrangement to cap handset subsidies was viewed by the KFTC as industrial
collusion, and it stepped in to levy fines on the carriers. This interference in what
the MIC viewed as its jurisdiction was too much. In June 2000, the MIC banned
handset subsidies altogether.29
Following the ban, consumer demand for handsets dropped dramatically. In
response, the MIC attempted to alleviate the suffering of handset manufacturers
by allowing installment sales of handsets. The Ministry further tried to strengthen
SK Telecom’s competitors by exempting subscribers switching from SKT to
other carriers from certain fees. However, the KCC objected to this latter
move, arguing that asymmetrical regulation hindered fair competition. Korean
consumers also became active in this issue, with protests against the carriers.
They called for the abolition of handset subsidies, in exchange for 40 percent
lower subscription fees. Korean consumer groups even organized a rotating sit-in
in front of the MIC for the better part of a year.30
The Debate over Standards for 3G Mobile Communication

The debate in Korea over mobile standards did not end with the adoption of
CDMA. Internationally, a political struggle took place over which 3G standard to
use. It pitted a European–Japanese alliance favoring GSM against the United States
government which lobbied on behalf of Qualcomm’s CDMA technology. The
result was a compromise in which two incompatible standards were approved.
The first standard, W-CDMA, was positioned as an upgrade from GSM, the
dominant standard in Europe and the one with the most subscribers worldwide.
The other, CDMA 2000, was developed by Qualcomm and involved incremental
upgrades from the technology used in North America and South Korea.
In the debate over standards for second generation (2G) mobile communi-
cation, the Korean government had adopted a single de jure standard. However,
when it came to third generation (3G) the choice was more difficult. CDMA
2000, the Korean CDMA standard, only controlled about twenty percent of the
global market. W-CDMA was expected to take the rest of the market for mobile
services, in which global roaming would be a critical component.
The rise of a global standard affected the entire industry and changed the
interests of telecoms firms. In this situation, the MIC wanted to ensure that at
least one Korean service provider used the home-grown CDMA 2000. In 1999 it
announced that it would award 3G licenses. Concerned that excessive competi-
tion might deprive operators of the capital needed to build out networks, it limited
the number of licenses to three. This policy prompted a wave of consolidations
in which SKT acquired Shinsegi Telecom in 1999 and KTF acquired Hansol in
2001. Consequently three consortia, SKT, KTF and LG Telecom, applied for the
3G licenses.
The MIC announcement was followed by another political battle, this one
involving the ministry, carriers and equipment providers over who should apply
for which license. The MIC argued that one or two carriers should adopt the
W-CDMA standard since it was projected to be the most widely deployed around
the world as the successor to GSM. The existing carriers also argued for
W-CDMA, even though it would mean building an entirely new infrastructure. In
contrast, the equipment manufacturers, including Samsung, Hyundai and small
CDMA equipment providers, strongly preferred CDMA 2000, although they
did not take a strong public position.
The government, in balancing these considerations, urged adoption of CDMA
2000 in order to facilitate exports. The MIC eventually recommended that two of
the three carriers apply for CDMA 2000 licenses and one for W-CDMA. However,
the carriers disregarded this advice and all three applied for W-CDMA licenses.
The government then granted two of these, to the SKT and KT consortia. In the
end, the government used a combination of informal pressure and financial incen-
tives (lower licensing fee) to convince LG to apply for a CDMA 2000 license.
The strained circumstances in the licensing of 3G CDMA, along with the slow
growth of W-CDMA in Europe, created a situation where Korea’s carriers did not
rush to implement W-CDMA networks. Instead, SKT and KTF chose to continue
incremental upgrades of their existing CDMA networks, even though they could
never reach full-fledged CDMA status since they were licensed for W-CDMA.
A major reason was that the CDMA 2000 1x EV-DO had faster data transmission
speeds than the initial W-CDMA standard. Once W-CDMA could offer
comparable speed, SKT began to introduce W-CDMA and the service grew in
popularity, starting in 2006–7.
Benefits of the CDMA Decision

Although the decision to go with CDMA carried risks, it brought tangible
benefits. First, the shift to CDMA in Korea achieved the government’s main
strategic objective of nurturing domestic manufacturers and reducing the
country’s dependence on foreign equipment. Korea thereby achieved a degree of
technological independence. Since Korea was the first country to commercialize
CDMA, Motorola and the other international firms that dominated Korea’s equip-
ment market had no expertise with the new technology. Consequently, Motorola’s
equipment share plummeted, even as Korea’s cellular market expanded rapidly.
In 1995, Motorola had slightly more than half of this market, but by 1999 domes-
tic equipment manufacturers controlled 90 percent of the market.
Second, as proponents had argued, CDMA was technically superior for dealing
with the expected increased public demand for mobile communications
services.31 The rapid diffusion of mobile telephony in South Korea is a matter
of record.
Third, Korea’s collaboration with Qualcomm to commercialize CDMA yielded
significant benefits in international markets. Korean manufacturers paid signifi-
cant royalties to Qualcomm, which held the core intellectual property rights. In
return, they were given the right to distribute CDMA handsets worldwide, an
arrangement that paid off handsomely when major American carriers adopted the
standard for their digital networks.32
CDMA equipment, including mobile handsets, rapidly became South Korea’s
second most important strategic export market after memory chips.33 As of the
end of 2005, approximately 285 million people in 77 countries around the world
were communicating with CDMA technology developed in South Korea.
According to the Ministry of Information and Communication, CDMA-related
research and production had by that time an inducement effect of $400 billion
dollars and had employed approximately 3.1 million persons from 1996 to 2005.34
The World’s First Digital Multimedia Broadcasting (DMB)

In 2005 South Korea introduced a second innovation into mobile communication
in the form of digital multimedia broadcasting (DMB). Korea thus became the
first nation in the world to introduce mobile TV. DMB used digital radio to send
radio, TV or data to mobile phones, navigation systems and other mobile devices
via either satellite or terrestrial channels. Delivery of the signals via digital broad-
casts was a far more efficient approach than sending individual data streams to
each viewer's handset, as was mostly done in other countries.
The technology proved very popular with consumers in South Korea. South
Koreans are presently the world leaders in the viewing of mobile television.
Twenty-seven million people, or about 56 percent of the population, view regularly.
Twenty-five million of those watch free terrestrial broadcasts, which carry adver-
tising, while another two million pay to subscribe to satellite programming.35
While the consumer appeal of mobile television is unquestionable, a major
problem has been to find reliable revenue streams to keep the services afloat, with
neither the advertising nor subscription-based business models fully succeeding.36
Initial government estimates had indicated that advertising revenue would be
sufficient to support DMB but, as of early 2009, it appeared that this might not
be the case. A combination of increasing debt and sluggish advertising revenues
caused the companies to consider halting their coverage on subway lines in
order to keep the business afloat. In 2006 the country’s six terrestrial mobile
television companies had jointly invested in order to allow commuters to watch
World Cup football games on their handsets.
Despite such difficulties, the Korean government continued its efforts to export
DMB technology around the world. Also, Korean companies forged ahead with
their developments. In July of 2009 SK Telecom was working with GCT
Semiconductor to develop a chip that could simultaneously receive both satellite
and terrestrial DMB signals.37 All three of Korea’s mobile carriers were also
moving quickly to introduce two-way data broadcasting to terrestrial DMB
service. This would allow users to be able to carry out search, shopping and
communications while watching DMB programs.38
Korea’s terrestrial DMB companies have also begun to specialize their content
in order to attract both viewers and advertising through better targeting. For
example, U1 Media, which was already attracting younger viewers interested in
professional baseball and basketball, sought to add Starcraft telecasts and become
a channel specializing in online and offline games. Another major channel was
planning to increase its focus on economy-related programming.39
Also, notwithstanding the challenges DMB faced in the Korean market, export
prospects continued to improve. As of mid-2010, countries around the world
were adopting different DMB technologies and Korean DMB appliance vendors
were reportedly thriving in the global television market.40
In late 2009, Korea’s terrestrial DMB broadcasters announced that DMB 2.0,
which combines broadcasting and two-way telecommunications, would be
launched in 2010. The hope was that DMB 2.0 would provide a new business
model for wireless internet using data broadcasting and two-way services.41
In early 2010, this was followed by an announcement that the new DMB 2.0
service would appear in Android phones.42
DMB-equipped cellphones are a popular item in the electronics markets here
and, as with SMS messaging, watching television on a cellphone gets a boost
from the nation’s excellent system of public transport. Watching television seems to
be a sure way to take the boredom out of a long commute by bus, subway or train.
Regardless of its future in the overall media mix, DMB in South Korea has
proven that, if it is provided, people will watch free television in large numbers
on mobile handsets and other devices. It seems that television is television,
whether viewed on a mobile phone, a notebook computer, or a large “home
theater” flat screen.
WiBro (Mobile WiMAX)

WiBro (for wireless broadband) is a fourth-generation communications technol-
ogy, generally referred to as Mobile WiMAX outside of Korea. The development
and commercialization of WiBro resembled Korea’s earlier technology successes.
Like earlier efforts, the project was government led, as the Ministry of Information
and Communication again designated ETRI to work with a group of companies
from the telecommunications sector to develop and commercialize this
technology. Also, it represented an effort by Korea to assert its own technology
independence in an increasingly global environment, in which Long Term
Evolution (LTE), the European-backed alternative for fourth-generation mobile
communications, would be a strong competitor.
In terms of mobile communications standards, WiBro is a subset of 802.16e,
usually referred to as WiMAX (Worldwide Interoperability for Microwave
Access). The two offer different versions of the same basic wireless standard,
802.16, except for the crucially important difference that WiBro is mobile.
Users can connect at broadband internet speeds while traveling at more than
70 kilometers per hour. That explains why most of the world will know the
technology as Mobile WiMAX, and also why we treat it in this chapter.
A critical event in the development of an international mobile WiMAX stand-
ard occurred in 2004 when Intel, Samsung and LG agreed to modify the mobile
802.16e standard to harmonize with WiBro and adopt its physical layer rather
than that of the fixed WiMAX standard. This concession by Intel and its allies was
seen as a major step toward establishing WiMAX as a globally unified standard.
In October of 2007, the International Telecommunications Union approved the
mobile WiMAX platform as the sixth IMT 2000 3G telecommunications standard
at its general meeting in Geneva. A representative of the Ministry of Information
and Communication (MIC) reacted by stating that “This is good news for the
government and the whole nation. This is the first time for a Korean-developed
technology to be recognized as a global standard, and it will help Korea keep its
international image as an IT powerhouse.”43
In November of 2007 the ITU approved the WiBro frequency as a common
spectrum band for 4G communications, thereby making global roaming possible.
For a long time, the WiBro frequency band had been reserved for military use in
the U.S., Europe and Russia. However, this action by the ITU marked a turning
point and the technology was expected to go mainstream from that point on.44
The Development of WiBro Technology

WiBro was selected as one of eight next-generation services by the Ministry of
Information and Communication in its so-called IT 839 project. In 2003 a WiBro
consortium was formed that included Samsung Electronics, SK Telecom, KT and
the Electronics and Telecommunications Research Institute (ETRI).45
Although ETRI played a key role in the development of WiBro, this technol-
ogy development project was different from earlier Korean successes in several
crucial ways. First, as already noted, it was the first time for a Korean technology
to be recognized as a global standard. Second, the development process was
led by the private sector, with Samsung Electronics taking the leading role.
Third, this technology development was truly global in scope. The process of
negotiating to harmonize WiBro with mobile WiMAX and getting it accepted as
an international standard was only part of the challenge. It would also require
successful commercialization and sale of the technology in markets around the
world, in the face of a looming long-term challenge from LTE.
In mid-2009 Samsung Electronics announced that it would cooperate with
Nokia-Siemens on WiBro Technology. This amounted to a tacit acknowledge-
ment by Nokia that Samsung leads the world in WiBro technology.46
Prospects for WiBro Business in Korea and Globally

Over the long run, Korea’s WiBro technology will compete internationally with
LTE, which has substantial backing in Europe. LTE, or Long Term Evolution, is
a GSM-based technology. In the United States, it received a boost when Verizon
adopted it. However, LTE was not to be introduced there until 2010, with mass
coverage expected by 2012. WiBro, by contrast, has already been commercialized
and tested in Korea, the United States and other countries.
Samsung Electronics has been particularly active early on in exporting WiBro
technology, signing deals with Brazil, Kuwait and Taiwan. Samsung is already
working on commercial or pilot WiBro projects in 19 countries, including Japan,
Russia, the United States, Saudi Arabia, Lithuania and Venezuela. As of
July 2009, Samsung Electronics alone had supplied WiBro equipment to 20 out
of 23 WiBro service carriers in 22 countries. The majority of these were in the
developing nations of Southeast Asia, the Middle East and Africa. The notable
exception, of course, was Clearwire in the United States.47
In September of 2009, Samsung Electronics announced that it had succeeded
in exporting WiBro under its own name through NSN, the world’s third largest
telecommunications equipment firm. Samsung announced that it would supply
WiBro equipment worth US$30 million to telecommunications providers
including VMAX Telecom in Taiwan. That was on the scale of providing WiBro
service throughout Taiwan.48
The WiBro market is forecast to grow from US$3.5 billion in 2008 to $59.6
billion in 2012, with the number of subscribers increasing from 12 million to
280 million, according to ABI Research, a U.S. technology market research
firm.49 As of this writing it is difficult to forecast exactly what share of the global
market for fourth-generation mobile communications WiBro may capture. Some
industry analysts suggest that it may take up one-quarter to one-third of the global
market. However, what seems certain is that WiBro is headed for success as a
technology developed in Korea and exported to the world.
In October of 2008, XOHM (Sprint’s 4G business unit) launched a citywide
mobile WiMAX network in Baltimore. An Intel executive noted that “access to
the internet with its rich multimedia and social media applications has become an
essential and entertaining part of our everyday lives and this network will ulti-
mately redefine where, when and how people enjoy that mobile experience.”50
As of this writing, Clearwire had installed mobile WiMAX in 56 American cities
across 16 states, including Seattle and Tacoma in Washington, Charlotte in
North Carolina, Daytona Beach in Florida, Richmond in Virginia and Syracuse
in New York, to name a few.51
The importance of a successful launch of WiBro service in the South Korean
market can hardly be over-emphasized, for several reasons. First, it is hoped that
a successful launch would accelerate convergence spur innovation and open up
new markets. The IT sector has been the engine of South Korea’s economic
growth. As an MIC official put it, “we must try to create leading edge environ-
ments to turbocharge this engine.”52 The second reason underlying the impor-
tance of WiBro is that its success is critical to sustaining South Korea’s status as
a test bed for the world in next-generation ICT products. Both local companies
and international companies value the opportunity to test out new networks and
digital devices before exporting them. The third reason WiBro’s success is so
important is that it holds part of the key to the success Korea’s companies will
have in exporting WiBro network equipment and devices. For companies like
Samsung Electronics, a majority of earnings from WiBro will come from export.
However, failure of the technology to succeed in South Korea itself would exert
a depressing effect on exports. On the other hand, success in Korea tends to have
a demonstration effect that would boost efforts to export the technology.
For Samsung and for Korea more generally, success in export markets goes
beyond simply the sales of WiBro per se. It could represent a significant foothold
in key areas for the next generation of broadband services and could be a major
step toward dominating an important wireless standard.53
IP and Patent Activity Generated by WiBro

As of 2006, South Korean companies and research institutions owned a major
share of WiBro-related patents, including 51 percent of the patents relating to a
core technology called Orthogonal Frequency Division Modulation. About 20
percent of various WiBro standard technologies were developed by Samsung
Electronics, and Samsung developed its WiBro system more than a year ahead of
other companies such as Intel and Motorola.54
An industry report in 2008 showed that the number of patents in the WIMAX
area had grown to 628, a 27 percent increase over a year earlier. Furthermore, the
report noted the continuing dominance of Samsung and Intel in the patent filings,
a strong growth in IEEE 802.16e-related intellectual property development, and
the evolution of WiBro patent filings to application and end-product-related
work.55
WiBro leading to Ubiquitous Networks

Some observers might question why Korea introduced a mobile internet solution
just at the time that fixed WiMAX was being introduced in other parts of the
world. The answer is that South Korea was already a world leader in broadband
internet and mobile telephony. The next phase of media and technology conver-
gence would require both mobility and high speed. Korea required a fast mobile
solution as part of its move toward the ubiquitous networked society. Other
countries with high broadband internet penetration, such as Japan, Hong Kong
and Taiwan, would also be likely to prefer a mobile solution to another fixed
technology for connecting to the web.
Mobile Broadband and Korea’s “iPhone Shock”

Despite the extremely rapid diffusion of CDMA-based digital mobile telephony in
South Korea, the nation was ironically one of the slower ones in the world to actu-
ally start using mobile broadband services. In fact the mobile broadband era in South
Korea only took off after Apple’s iPhone arrived there fully two and a half years
after its launch in the United States, and after it was already in use in more than 80
other countries around the world. In this section we look at some factors in the diffu-
sion of mobile broadband and at why its adoption was delayed in South Korea.
The Global Shift from Handsets to Services

The introduction of Apple’s iPhone in the U.S. in mid-2007 and its over-
whelming success signaled the start of a revolution in mobile communications.
Google’s development of Android and the creation of the Open Handset
Alliance were other symptoms of this change. As noted earlier, telephones
became more than just simply “smart phones.” They were transformed into
handheld computers, with internet access. That meant they could easily handle
voice telephony and do so more cheaply than older technology using VOIP
services such as Skype.
In 2008 a review of industry trends by The Economist called attention to
several major developments.56 First, sales of smart phones were booming, rela-
tive to other mobile phones, and industry forecasts suggested that by 2013 they
would make up 34 percent of all mobile phones and half of the total value of the
handset market worldwide. Second, as the handsets got smarter, the nature of the
industry would change. It would be less about hardware and more about software,
services and content, including “apps” for the iPhone, Android-based phones and
their competitors. Consequently, a fierce battle had broken out among operating
systems for handsets.
The existing operating systems for mobile phones, provided by Research in
Motion with its Blackberry, Symbian, controlled by Nokia, and Microsoft’s
Windows Mobile, were all proprietary. Therefore they limited what could be
done on a phone, especially as users desired more internet-related applications.
The introduction of Apple’s i-Phone and Google’s Android-based phone each in
slightly different ways disrupted the status quo in the mobile telecommunications
market. A general industry consensus developed that most smart phones would
ultimately be powered by open source software.57
Korea’s Response to the iPhone and Android

Although Korea’s leading handset manufacturers, led by Samsung and LG,
responded to the introduction of the iPhone by turning out a growing array of
touch-screen handsets, the iPhone was nowhere to be seen in the Korean market-
place. Nor, for that matter, was the Blackberry, a phone that was popular among
business users in overseas markets. In addition to the conspicuous absence of
smart phones, Korea’s mobile market had the following characteristics.
First, as late as October 2009, usage of 3G mobile phones in Korea was univer-
sal, but only a little more than 10 percent of all customers purchased a data plan
to use web-based services because of exorbitantly high data rates. Consumer
complaints about such high rates were heard as late as September 2009 when SK
Telecom introduced its own App Store, in a response to Apple. Users not
subscribed to one of SK Telecom’s fixed rate data plans would have to download
apps over its 3G network at a charge of 3.5 won per kilobyte. So, downloading
one of the most popular apps, the 1,349 kilobyte “2009 Pro Baseball” mobile
game would cost users nearly 5,000 won for network usage, in addition to 3,000
won for the game itself.58
Second, the two largest mobile telecommunications service providers in South
Korea, KT and SK Telecom, limited their customers to only Korean language
content from the internet as part of their custom services. For SK Telecom this
was Nate and for KT it was Show. This content was selected, reformatted for
mobile and sold to customers. In effect it was an intranet or “walled garden.”
Only LG Telecom sold handsets that allowed its users to actually surf the global
internet.
Third, until the spring of 2009, Korea maintained a software requirement
called the wireless internet platform for interoperability (WIPI). The original idea
behind WIPI was to give interoperability to mobile content providers. Prior to its
introduction, SK Telecom was using its own virtual machine (VM), KTF was
using Qualcomm’s Brew and LG Telecom used Java. Under those circumstances
content providers had to develop three separate versions of their applications.
While WIPI solved that problem, it was still only a Korean standard, and it
formed a barrier of sorts to entry into the Korean mobile market by Apple and
Blackberry.
Korean consumers, especially the younger ones, took note of the iPhone
and its cousin the iPod Touch. In the two years before the iPhone formally
entered the Korean market, the iPod Touch flew off the shelves of Apple’s
outlets in Myeong-dong, a fashionable district of central Seoul. Well over a
million of these enhanced MP-3 players were sold and many customers installed
Skype on them and either used them in one of Korea’s many WiFi hotspots or
paired them with one of Korea Telecom’s Eggs. The Egg is a small battery-
operated portable device that provides a wireless broadband (WiBro) signal and
virtually transforms the iPod Touch into a telephone, at least for those willing
to use Skype.
Why was the Mobile Broadband Era Delayed?

Why did Korea, possessing some of the world’s most advanced digital networks,
delay its acceptance of the iPhone and therefore the introduction of the mobile
broadband era? The answer to that question sheds considerable light on the
strategic restructuring of the nation’s telecommunications sector early in the
new millennium.
The first reason for this ironic situation is that Korea’s major mobile service
providers feared a disastrous loss of voice revenue if the market were opened up
to the iPhone and other smart phones. South Korea’s service providers were not
alone in this concern. The soaring popularity of Skype and other voice-over inter-
net protocol (VOIP) services sent a warning signal to service providers in Europe,
North America and the rest of the world. If smart phones were allowed into the
marketplace, it would virtually destroy the existing business model which relied
heavily on voice revenue. As already noted, the popularity of Apple’s iPod Touch
among Korean youth underscored that point.59 To protect their voice revenue,
SKT reportedly insisted vigorously that Samsung Electronics and LG should not
include Wi-Fi capability in the mobile handsets they manufactured for SKT’s serv-
ices.60 Likewise, to protect revenue from their NATE service, SKT would have
little interest in opening up web surfing and web-based applications to their users.
Korea’s handset manufacturers, led by Samsung and LG, were in a different
position, having established themselves as major players in the international
handset market. Moreover, both of these chaebol corporations were founding
members of the Open Handset Alliance that backed the Android mobile OS plat-
form. However, all of the major handset manufacturers had developed very close
relationships over the years with Korea’s mobile service providers. Nonetheless,
Samsung and LG are both global companies with major stakes in the mobile
handset business. The business press has speculated that a recent shakeup within
Samsung Electronics may have been partly motivated by the impact of Apple’s
iPhone.61
Finally, the role of the government must be assessed in order to answer the
question of why smart phones were late in coming to the Korean market. The
answer here becomes more complex. However, it seems more than coincidental
that the launch of the iPhone came during a presidential election year in South
Korea and at a period when communications convergence was exerting great
pressure on the policymaking process. Moreover, the newly elected government
of President Lee Myung Bak eliminated the MIC, which had been the leading
ministry for telecommunications policy, and the Ministry of Science and
Technology. These moves were accompanied by the establishment of the Blue-
House-appointed KCC. Taken together, these sweeping changes gave great
discretion to the private sector, both mobile service providers and handset
makers, for a period of months while the new administration was being formed
and preparing to pursue important policies.
Restructuring Mobile Communication and Shaping Future

Networks in Korea
The reaction of South Korea’s telecommunications sector to the arrival of the
iPhone helps to clarify the relative roles of the private sector and the government
in this latest restructuring of telecommunications services. As we have already
noted, consumer demand for the iPhone was very high more than two years in
advance of its arrival in the marketplace.
From a strategic restructuring perspective, the introduction of digital mobile
communication in South Korea bore many of the hallmarks of earlier develop-
ments in the 1980s and the introduction of fixed broadband service, including a
healthy degree of competition by multiple private companies to provide the
nation with mobile communication service. With respect to two of the key
balances in government policy, we might observe the following. First, the balance
of government or public initiative versus private has see-sawed in both directions
over the past three decades. Government initiative as the MOC prevailed in its
debate with MOTIE was critical to the decision to adopt CDMA as a national
mobile standard. Yet by 2007, the year Apple introduced its iPhone in the
U.S., a presidential election took place in Korea and, with it, sweeping change in
telecommunications policymaking. From 2007 well into 2008 it seemed that
industry gained the upper hand, as Korea’s mobile service providers and handset
manufacturers protected their existing market share. Then, once the new
government of President Lee Myung Bak settled in, the KCC issued several
rulings that cleared away several barriers to the iPhone and ultimately to the
growth of mobile broadband.
Second, the role of foreign influence in policymaking within Korea was unde-
niable, although that influence took place more through the internet and public
communication channels than through behind-the-scenes trade negotiation. The
mainstream media in Korea, attuned as they were to the nation’s IT successes of
recent years, began reporting more intensively on the success of the iPhone, along
with Samsung and LG’s exports of Android handsets. Over time, this brought
pressure upon Korea’s manufacturers and mobile service providers, along with its
government, to open up the mobile market.
Mobile, Immersive, Interactive Entertainment

Korea’s strong position in the online game industry has direct implications for
the future of mobile communications on the peninsula. As Noam62 has noted,
digital convergence is bringing about a switch-back from the well-known
“Negroponte switch” of digital lore. Nicholas Negroponte of MIT’s Media Lab
popularized the observation that traditionally voice telephony had run over
landlines while mass communication such as television traveled over the air to
viewers. He noted that this was rapidly changing: telephony around the world
was migrating to mobile wireless, while television moved in the opposite
direction to cable landlines.
In Korea, and some other countries, the switch noted by Negroponte is
reversing itself. Already here, during some hours of the day, more people watch
television (DMB) on mobile handsets than over conventional TV sets. Although
some people may still think that viewing television on a mobile handset is inferior
to watching it on a large screen, future developments in displays for mobile
devices will deepen the quality of the image. For example, future mobile
displays may utilize eyeglasses or other devices that provide large, realistic,
“heads up” displays. It is even possible that wireless television will become
superior to stationary wired TV in its visual and immersive experience and
intensity.63
Another degree of intensity is added to the equation when we consider future
mobile versions of multiplayer online games, which are so popular in Korea and
such an important export category for this nation. The game industry in South
Korea really started its development in 1999. At that time, PC Games, online
gaming and mobile games started to develop independently of the previously
existing arcade games. A leading analyst of South Korea’s game industry now
believes that one of the biggest changes on the horizon for the game industry is a
move toward mobile games.64 A major reason for this impending change is the
opening up of a new distribution channel with the arrival of fast internet access
on mobile phones. The introduction of the Apple iPhone and Google Android
phones and, more generally, the increase in smart, broadband equipped handsets
may bring about a sea change in the market for mobile games. The arrival of the
web-to-phone distribution channel means that the major challenge for mobile
games will be to format them to work well on the smaller screens of mobile
devices.
Currently mobile games occupy only a small fraction of the overall game
market in South Korea and there is a markedly greater use of mobile games by
women than by men. Casual games, web board games, sports games and manage-
ment/construction/nurturing games are among the most popular genres.65
In 2006, mobile games, along with online games, were a driving force in
South Korea’s thriving domestic games market. Sales of mobile games increased
by 23 percent over the previous year, reaching more than 239 billion won. As of
2006 there were an estimated 200 mobile game content providers active in the
Korean market.66 There were more rated mobile games on the market in 2006
(1,060) than rated online games (818), reflecting the greater cost involved in
developing online games.
In early 2009, a senior manager of a Korean company selling mobile multi-
player role-playing games said that revenue from post-sale micro transactions
was being generated at rates as high as 90 percent of a title’s initial sales. Senior
Manager Joony Koo of the mobile game publisher Com2uS said that his company
is looking to include micro transaction support in more of its games in 2009, with
a particular emphasis on encouraging players to buy virtual goods that help foster
a sense of community among players.67 Virtual goods can be shared among a
group of players in various ways. For example, in a multi-player homerun derby
game such items as bats, clothes, helmets and baseball stadiums can be purchased
and sent to friends. Com2uS was developing an MMPORG for the iPhone and
iPod Touch that would support microtransactions through a built-in system if
approved by Apple.
The importance of the game industry to Korea can be seen by looking at
its share of content-related exports. As of 2009, it accounted for approximately
half of all Korea’s cultural content exports. We explore this topic in greater
detail in Chapter 9.
Fixed, Mobile and Nomadic Access to Broadband

In its recent survey of broadband around the world, the Berkman Center at
Harvard distinguished between fixed, mobile and nomadic access. Fixed
networks, of course, are based primarily on fiber optic cables. By mobile, they
referred to networks that evolved from cellular telephones, primarily 3G
networks. By nomadic, they meant various versions of Wi-Fi hotspots.68
The Harvard study found that, in many countries around the world, nomadic
access has developed with little support from policy. An example of this in
Korea would be the free Wi-Fi access offered at Starbucks coffee outlets
which have proliferated around the country. Nomadic access is offered by fixed
broadband providers who seek to make their networks more flexible, as in the
case of KT’s Nespot service, by mobile broadband providers who seek to increase
the utility of their networks to their subscribers, or through public efforts to
create connected public spaces. Clearly, nomadic access plays a role in the
effort to eventually provide seamless, ubiquitous access, without undermining
competition.
The Berkman Center study suggested that mobile and nomadic access to
broadband are important independent measures of performance toward the goal
of providing next-generation ubiquitous, seamless connectivity. The need to
measure both was originally raised in the U.S. by those who thought it would
rank higher if both nomadic and mobile connections were included in measuring
broadband penetration.69
As of 2009, South Korea had approximately 13,000 Wi-Fi hotspots, the
seventh largest number in the world. The majority of these were accounted for by
Korea Telecom’s Nespot service.70
Ubiquitous Mobile Networks

In large part because of the phenomenon of digital convergence, any discussion
of mobile communications leads logically to questions about next-generation
networks and the shape of the future ubiquitous network society. As network
devices, including those with various types of sensors, become smaller and
smaller, the possibilities for building ambient intelligence into human environ-
ments increases. In this new, highly networked environment, mobile handsets and
other mobile devices will play a key role.
Convergence is expected to eventually link all wireless networks through an
IP-based unified core network. Mobile phones and the internet have already
permeated all aspects of human life here in Korea, and the nation is looking
toward the next stage in which there will be a new world of networked and inter-
connected devices that provide relevant content and information, regardless of
where the user is located. The convergence of broadband internet and ubiquitous
networks with current mobile services may, as the ITU notes, emerge as the
key means of providing communication and monitoring capabilities to users.71
Indeed, early experience with the iPhone and Android handsets suggests that
their appeal to customers comes in large part from location-based services,
“augmented reality” and other services that make use of intelligence in the
human environment. Such a ubiquitous network environment is the focus of the
following chapter.
6 Intelligent Buildings, Sentient Cities
and the Ubiquitous Network Society
In 2006 the Korean government approved and announced the U-Korea

Master Plan. It was the first such plan by any national government in the world
and it stated the ambitious goal of making the nation the world’s first ubiquitous
society. The plan was issued jointly by the Ministry of Information and
Communication (MIC) and the Prime Minister’s office, a sign that the ministry
had reached the zenith of its power and influence.
The vision of a ubiquitous network society conjures up a future world in
which information can be accessed from anywhere at any time by anyone and
anything. As one study put it simply, “The ‘ubiquitous network’ is a network
environment in which persons and objects are always connected.”1 It is made
possible by digital networking and from that standpoint it is inexorably the next
step in building an information society. In the early years of the 21st century,
Korea and Japan were the two leading examples of nations pursuing ubiquitous
networks.
The release of Korea’s master plan signaled to the whole world that the nation
was willing to continue building the information society with massive, long-term
investments in communication networks and infrastructure. The ubiquitous soci-
ety will involve building ambient intelligence into all parts of the human environ-
ment, including housing, the workplace, transportation systems, health care and
recreation. Ambient intelligence envisions an era in which small computing and
sensing devices are built into everyday objects and materials and are networked
so that they can communicate with each other and with the internet. This opens
up a fascinating range of possibilities for the future, in which some sort of mobile
computing device might play a key role, allowing individuals to communicate
with and control the objects and machines that surround them.
This chapter describes Korea’s plans for the ubiquitous network society. It
begins with a discussion of digital convergence as the underlying process leading
toward ubiquitous networking and ambient intelligence. The second section of
the chapter looks at global developments in this area, positioning Korea within
them. The third part of the chapter lays out the basic elements in the U-Korea
Master Plan, as announced in 2006. That is followed by an exploration of the
New Songdo City development in Incheon, the nation’s most prominent effort to
demonstrate the commercial viability and human value of ubiquitous networking.
114 The Ubiquitous Network Society
Finally, the chapter concludes with some comments on Korea’s most recent
strategic restructuring in the ICT sector and where it is heading.
From Convergence to Ubiquitous Networks

Convergence is a complex, multi-faceted process at the heart of digital develop-
ment today, in Korea and globally. With today’s trend toward cloud computing,
convergence means that a user can access and work on the same information, in
the form of video, documents, spreadsheets or e-mail from a variety of devices,
in any location and while moving. To explain how convergence is leading toward
pervasive or ubiquitous networks, it is helpful to think of it in terms of the media,
technologies, and industries.
Media Convergence
One of the most common perspectives on convergence today is that of media
convergence. It includes the widely discussed merging of broadcasting and print
media on the internet, but also deals with all aspects of the media and human
communication:
• sources, channels,
• content, and
• audiences,
• effects.
Convergence affects all media, including the so-called “new” digital media.
Take, for example, internet television. As Gerbarg and Noam put it, “Internet
television is the quintessential digital convergence medium, putting together
television, telecommunications, the internet, computer applications, games and
more.”2 As they point out, there is no generally agreed-upon definition of the
new internet television, which is being called IPTV in South Korea. At the lower
end of complexity this could refer to a narrow-band, two-way internet-style asyn-
chronous channel that accompanies regular one-way synchronous broadband
broadcast TV or cable. At the other end of complexity would be a fully asynchro-
nous two-way TV, with each user receiving and transmitting individualized
TV programs, including direct interaction in the program plot line. Beyond
providing simple viewer choice and control, internet TV will soon enable and
encourage new types of entertainment, education and games that take advantage
of the internet’s interactive capabilities.3
Another good example of media convergence is the convergence of the internet
with both fixed line and mobile telephony as illustrated by voice over internet
protocol (VOIP) telephone services such as Skype. The popularity of Apple’s
iPod Touch with Korean young people in 2007 and 2008 was in part fueled by
user interest in Skype, the free VOIP software that could be loaded and used
within Korea’s WiFi hotspots.
The Ubiquitous Network Society 115
Media convergence itself only begins to touch the breadth and depth of the
phenomenon. It is a broad and complex process that extends well beyond the
media to the convergence of IT with other technologies and industries.
IT Convergence with Technologies and Industries

Korea and the other technologically advanced nations are now challenged by
the future multilayered convergences of ICT with bio, nano and green techno-
logies as well as convergence with many industries. In January of 2009 the
Korean government, through the Knowledge Economy Ministry, announced its
intent to focus on IT convergence with five industries: automobiles, shipbuilding,
machinery, textiles and medical services. It officially launched the industrial
IT convergence forum where experts from these five key industries would
participate.4
The transformation in medicine and health care is an instructive example. The
first technological revolution in modern biology started when Watson and Crick
described the structure of DNA half a century ago. The sequencing of the human
genome a decade ago set off a second revolution which has begun to illuminate
the origins of certain diseases. Today, many industry observers are convinced
that a third revolution is under way, involving the convergence of biology and
engineering. This convergence is led by information technologies through the
digitization of medical records and the establishment of an intelligent network for
sharing those records. That essential reform should spark other technological
changes, boosting research on drugs and the ability of not only physicians,
but patients, to share information with one another.5
Various industry studies in markets such as the United States, which spends
about 16 percent of its GDP on health care, suggest substantial savings from the
digitization of health care records. Already, such efforts by Kaiser Permanente
have resulted in substantial savings and improvement in efficiency.6
Another powerful illustration of the convergence of IT with medical science is
found in the field of genomics. At the point when the cost of sequencing the
human genome reaches a low enough level, many suggest that the possibilities
for personalized medical care open up. Today improvements in gene sequencing
machines, borrowing from techniques used in semiconductor manufacturing,
have improved even faster than microprocessor performance.
IT is also converging powerfully with nanotechnology. Actual development of
the field of nanotechnology owes a great deal to the information revolution and
the semiconductor industry. In particular, miniaturization took place in that
industry before others.
In late 2009, the President of the International Astronautical Federation
suggested that South Korea could leverage its strength as a world leader in IT to
create a niche in the global space industry. He noted that information technology
is becoming more important to the space industry, along with greater interna-
tional cooperation and the broad effort to replace existing solutions with cheaper
and more effective alternatives.7
In summary, convergence is a complex, multifaceted process involving virtu-
ally all industries and technologies. It is also a process in which information and
communication technologies and digital development are a driving force. We
turn now to the next logical stage in this process.
The Ubiquitous Network Society

The concept of a ubiquitous network society is closely related to that of ubiqui-
tous computing, also referred to as pervasive computing or ambient intelligence.
Ubiquitous computing is a model of human–computer interaction in which
information processing has been thoroughly integrated into everyday objects and
activities. It envisions small, inexpensive, robust networked processing devices,
distributed at all scales throughout everyday life and generally used for common-
place ends. For example, a home ubiquitous computing environment might
interconnect lighting and environmental controls with personal biometric moni-
tors woven into clothing so that illumination and heating conditions in a room can
be continuously and imperceptibly modulated.
Mark Weiser, who was Chief Technologist of the Xerox Palo Alto Research
Center (PARC), coined the term “ubiquitous computing”. He noted that “The
most profound technologies are those that disappear. They weave themselves into
the fabric of everyday life until they are indistinguishable from it.” The idea was
that intelligent interfaces can make computers simple to use, while communica-
tion networks would connect devices for use, anyplace, anytime. As a 2006 ITU
report noted, “Tomorrow’s ubiquitous network will map objects and activities in
the real world onto objects and activities in the virtual world.”8
The Global Context

The convergence of technologies and industries that is at the heart of today’s
information revolution is inherently global in scope and poses crucial challenges
for the domestic and global governance of ICT infrastructure. As Cowhey and
Aronson note,9 there are at least four reasons why the domestic governance of
ICT infrastructures depends on global arrangements. First, network externalities
ensure that networks are more valuable when they connect to more users. As
mentioned in earlier chapters, this is sometimes referred to as Metcalfe’s Law and
means that the value of the internet is exponentially related to the number of its
users. Second, economies of scale apply to the engineering and economics of
networks, inviting the growth of regional and global suppliers whose fate depends
in part on rules governing provisioning of the networks. Third, a number of
unusual strategic dimensions arise because of the particular features of network
economics. Fourth, concerns over sovereignty issues make it likely that the
public holds government responsible for the quality of networked infrastructures.
The political leadership encourages this equation, so the national control of
networks becomes highly political. This in turn has major consequences for the
performance of networks.10
Cowhey and Aronson describe a political economy of global governance of the
ICT infrastructure in which the most powerful markets will tend to get their way.
They assert that the United States, historically the market leader, will likely retain
its leadership position until 2025. In their view, power, technology, ideas and
domestic politics will all play a role in future governance. While we do not take
issue with them, our point here and in later chapters is simply that South Korea,
by dint of its accomplishments, now sits at the table with the U.S. and other
advanced ICT economies when it comes to decisions about the future. Put other-
wise, South Korea’s market power in ICT should give it a voice far larger than
its population or certain other measures would indicate.
Korea’s Plans and Policies for Ubiquitous Networks

Korea’s interest in ubiquitous networking was first broadly articulated in the
IT 839 initiative introduced by the Ministry of Information and Communication
in 2004. It outlined ambitious goals for eight services, three infrastructure
technologies and nine product categories. The eight new services were portable
Internet (WiBro), mobile television (DMB), home networking, vehicle-based
information systems (telematics), radio-frequency identification (RFID) technol-
ogy, W-CDMA mobile telephony, digital television broadcasting and voice-over
Internet protocol (VoIP) services. The advanced network infrastructures were
the broadband convergence network, sensor-based computing networks, and the
next-generation internet platform IPv6. The new products were mobile handsets,
digital televisions and broadcast devices, home network equipment, system-on-
chip products, next-generation personal computers, embedded software, digital
content and solutions, vehicle-based information equipment and intelligent
robots.
The specific goals of the IT 839 initiative showed that the MIC and the govern-
ment were aware of the approaching era of ubiquitous networking. In fact,
in 2006 the government streamlined the long-term plan and re-named it the
u-IT 839 plan.11 However, in May of that year, the government also released its
path-breaking U-Korea Master Plan.
The U-Korea Master Plan: to Achieve the World’s First Ubiquitous Society
Prime Minister Han Myeong Sook’s introduction to the U-Korea Master
Plan made clear the ambitious character of Korea’s hopes. In it, she said “The
successful implementation of the U-Korea Master Plan, the new blueprint of
Korea’s informatization, will create the world’s first ubiquitous society and
achieve an advanced Korea.”12 The nation’s leaders were well aware that
other countries were strategically approaching ubiquitous IT, drawing on their
own strengths and unique environments. These included the Network and
Information Technology Research and Development (NITRD) Program in the
U.S., i2010 in Europe, and the New Industry Promotion Strategy in Japan. The
U-Korea Master Plan noted the developments in artificial intelligence, home
networks, home-robots, u-post office and u-logistics based on RFID advances.
It concluded that “The characteristics of ubiquitous IT – convergence, artificial
intelligence and real-time – are the most effective means to upgrade the operating
system of the country and to resolve the full range of social, economic and
administrative issues.”13
The Issues Korea Confronted

The plan addressed key national and international issues. Notably, in a section
titled “Current Issues and Contributions of u-IT” the report stated that “New
social environments need to be created for a unified Korea together with the
expansion of free trade based on the promotion of joint economic zones and
improvement of economic cooperation between the two Koreas.”14
The same section of the plan referred to South Korea’s “nutcracker” condition
in which high-tech competition with advanced countries and price competition
with developing countries such as China were squeezing the country just like a
nut in a nutcracker. It noted that the technology gap with China, which had been
the major export market for Korean IT products, was gradually narrowing.
However, it followed that observation with acknowledgment that “The focus of
the world economy is moving away from the U.S. as the Pan-Yellow Sea Rim
Economic Forum has materialized and the East Asian economic zone, triggered
by the rapid growth of China, has emerged.” It went on to suggest that “Strategies
to lead the East Asian economy should be formulated to prepare for the era when
Asia would be the center of the world economy.”
This report also explicitly acknowledged the serious threats posed by global
warming and threats to the natural environment, noting that “Mass production
and mass consumption destroy the natural environment, and depletion of natural
resources and environmental pollution break the balance of ecosystems, threaten-
ing the survival of human beings.” In underscoring this point, it noted that
“Intensive environmental monitoring and regulating lead to high added value for
environmental industries.”15
The report also acknowledged that there was a growing gap in the amount
spent on education between high and low income consumers and that this
was one factor contributing to conflicts between regions, social classes and
generations.
Finally, the report noted that Korea’s society was aging more rapidly than
other advanced economies. It noted that as Korea becomes a “super aged
society” welfare for the elderly, contraction of the economically active popu-
lation and inter-generational conflicts might become social and economic
problems.
The U-Korea Vision and Goals

The vision of the U-Korea Master Plan is to transform Korea into an advanced
country by realizing the world’s first ubiquitous society based on the world’s best
u-infrastructure. The plan sets forth goals in terms of advancing in the following
five areas:
• Friendly government. This goal is to actively answer the administrative

needs of the public and to simplify civil service processes.
• Intelligent land. The main element here is to bring intelligence into all
national infrastructure facilities.
• A regenerative economy. South Korea wants to achieve a per capita
income of $30,000 by developing the new market for ubiquitous IT and
strengthening the competitiveness of existing industries through ubiquitous
informatization.
• A secure and safe social environment. This goal is to be accomplished
through security and environmental systems based on ubiquitous IT.
• Tailored u-Life services. This refers to providing more convenient and afflu-
ent living conditions by delivering customized and autonomous services
based on advanced intelligence systems.
Advancement in the five areas outlined above would be accompanied by

optimization of four engines. The first of these was balanced global leadership,
or the u-globalization engine. South Korea sought to exert such leadership as is
appropriate to the country’s image as a global IT leader. To accomplish this goal
the plan called for aggressively entering overseas markets to establish U-Korea
as the national brand. This market entry would include pilot projects to connect
industrial clusters at home and abroad, and the selection of promising products
for next-generation export.
Second, it aimed to establish an ecological infrastructure and to allow viable
industries to take root. This goal sought to prevent an unreasonable rush for
industry development.
Third, the plan sought to streamline social infrastructure. It wanted an
efficient and flexible infrastructure for seamless provision of various ubiquitous
services.
The fourth goal was a transparent technological infrastructure. This was an
environment in which IT and other technologies such as bio, nano, space, cultural
and environmental technology could converge to create synergistic effects.
The U-Cities Movement

There are efforts under way around the world, including Singapore, Hong Kong,
Dubai and several European cities, to introduce state-of-the-art technology into
urban development to create digital or wireless cities. Around 2005, many local
governments in Korea began applying this concept to urban development.
In February of 2006, the Ministry of Information and Communication and the
Ministry of Construction and Transportation signed an MOU on the u-city
project. That project was aimed at building industry-wide partnerships between
the high-tech and construction sectors to integrate advanced IT infrastructure into
the construction of sustainable cities. Under the MOU, the two ministries agreed
to cooperate in such areas as
• enactment of regulations for the construction of u-cities,

• development and certification of a standardized u-city model,
• promotion of u-city pilot projects,
• R&D development of u-city-related technologies, and
• discovery and promotion of u-city-related subjects.
In addition, the two ministries agreed to exchange information and personnel

and to undertake international activities for global standardization and advance-
ment into international markets. Under the MOU, they agreed that Korea
would push ahead with its nationwide u-cities plan. Several city governments,
including Seoul, Busan and Incheon, expressed their intent to pursue u-city devel-
opment independently and all six regions in Korea had plans to invest in their
own u-city projects.16 In 2007 Korea passed a law on the construction of u-cities,
allowing the central government to have some policy influence on the diverse
local efforts.17
The Busan u-city project achieved a major milestone in mid 2009 when it
completed installation of a Firetide infrastructure mesh to enable wireless
communication anywhere in the city via a mobile device (smart phone, PDA or
notebook). Completion of the project by Korea’s second largest city meant that
visitors and local vacationers would have ubiquitous access to public internet data
and media applications, as well as to a custom online visitor portal, no matter
where they were located in the region.18
New Songdo: Korea’s Brand New Ubiquitous City

New Songdo City in Incheon aims to be the world’s first entirely new ubiquitous
city, built from scratch. Rising up on almost 1,500 acres of reclaimed land off the
coast of Incheon, it is one of the largest planned city projects ever undertaken
anywhere in the world.
New Songdo City is a joint venture of Gale Company, an American developer,
and POSCO E&C, a subsidiary of South Korea’s large steel company. The city
includes a convention center, a 65-story trade center, a Jack Nicklaus-designed
golf course, and a central park, similar to New York's, that incorporates a system
of canals using filtered sea water. When completed in 2014, the new city will
be home to some 65,000 people and a workplace for over 300,000.19 However,
what really distinguishes New Songdo City from other planned cities is the effort
to build ambient intelligence into the city right from the start.
In this ubiquitous city, all major information systems for government, residen-
tial, medical, business and educational purposes were built into houses, streets
and office buildings. Since the underlying technologies for ubiquitous networks
were rapidly changing, this amounted to an open-ended effort to build in as much
ubiquitous communication capability into the city as possible right from the start.
To ensure that Songdo would have access to the latest in RFID technology, the
Ministry of Information and Communication earmarked $297 million to build an
RFID research center in the city.20
New Songdo City assumes special prominence among Korea’s u-city projects
for several reasons. First, it is an integral part of the Incheon free economic zone
(IFEZ) which includes Korea’s new Incheon International Airport. The entire
zone is about one-third the size of Singapore, 2.5 times the size of Manhattan and
more than 70 times the size of Yeouido in Seoul.21 With the planned installation
of high-speed rail connections to Seoul, Incheon becomes part of the greater
Seoul area. Second, the airport and the FEZ are the closest ones to South Korea’s
big cooperative industrial project with North Korea at Kaesong. The longer term
vision of Korea as a hub in Northeast Asia contemplates a unified Korea. Third,
as noted already, New Songdo City, unlike existing cities, presents an opportu-
nity to build in ambient intelligence from scratch. Finally, New Songdo City has
particularly ambitious goals to become a global educational and research hub for
the 21st century.
The central government’s commitment to the New Songdo City project to date
seems clear and unwavering. From 2005 to 2009 the IFEZ authority attracted six
different investments from central government ministries and agencies totaling
US$12.4 million. These included the u-Safety project, launched by the Ministry
of Land, Transport and Maritime Affairs, which installed a wireless mesh CCTV
system as a model project for cities and provinces around the country.22
The Incheon Free Economic zone is one of six such zones in Korea. The others
are Busan and Gwangyang, designated in 2002, a western coastal area in North
Jeolla province including the cities of Pyongtaek and Dangjin, the Daegu area in
North Gyeongsang province, and the Saemangeum-Gunsan zone in North
Cheolla province.23
The 2002 law on the Designation and Operation of Free Economic Zones
effectively granted foreign firms special legal status, exempting them from a
range of labor-related requirements. It also marked the start of foreigner-friendly
facilities such as special clinics and pharmacies. Moreover, it stipulated the legal
enforcement of English as one of the official administrative languages within
each of the zones.24
In 2009, the Ministry of Knowledge Economy adopted a promotional logo for
the six free economic zones to help promote foreign investment in those areas. At
the same time, it announced that development of all these zones would be
completed in the 2020 to 2030 time frame.25
Incheon as a Regional Hub

The full significance of New Songdo City can only be grasped as part of the
overall plans for the Incheon Free Economic zone. At the broadest level, the aim
is to make Incheon a global hub for (1) communications, (2) sea and land trans-
portation, and (3) air transportation. Korea is situated between the other two
largest Asian economies in the most economically active area of the world.
One of the most spectacular features of this hub and tri-port strategy is the new
21.38 kilometer long Incheon Bridge which soars over the West Sea, connecting
New Songdo City with Incheon International Airport. The bridge is a critical
element in the future success of New Songdo City, allowing a fifteen minute drive
from the airport for tourism, logistics and all sorts of activities. It is the world’s
seventh longest such structure and was dedicated by President Lee Myung Bak in
mid-October of 2009.26
Songdo as a Test Bed

New Songdo City will offer a chance to study the large-scale use of RFID, smart
cards and sensor-based devices even as Western societies lag in this next wave of
computing.27 The technology infrastructure will be built and managed by Songdo
U-Life, a partnership of New Songdo City Development and the South Korean
network integrator LG CNS, which is recruiting foreign information-technology
companies as partners.
B.J. Fogg, director of the Pervasive Technology Lab at Stanford University,
said that “New Songdo sounds like it will be one big Petri dish for understanding
how people want to use technology. This is a competitive advantage for the
Koreans. They will know before anyone else what flies.”28
Culturally speaking, the New Songdo City project draws heavily on Korean
expectations of less privacy than in Western countries and on the willingness
of people to quickly embrace new technologies. These cultural factors may
allow Korea to take the lead in ubiquitous networking technologies and to set
standards.
Education in New Songdo

No other area underscores the ambitious goals of the New Songdo City develop-
ment better than its plans for education. One of its aims is to establish an indus-
trial and research cluster to foster innovation.29
The Korean government invited ten international universities, mostly from the
United States, to set up branch campuses as part of a single Global Campus in
New Songdo City. To emphasize the seriousness of its invitation, it offered US$1
million to each school, for planning purposes.
The first U.S. university to announce plans for a branch campus in New
Songdo City was Stonybrook University. In December of 2008 it signed a fund
support agreement with the Incheon FEZ.30
Yonsei University has traditionally been one of South Korea’s most interna-
tional universities. It was the first to develop a large international division, and
the first to create a graduate school of international studies. In 2006 Yonsei
launched the Underwood International College, the most significant commitment
by a Korean university to date to a four-year, English-only undergraduate
program with the aim of attracting students from around the world and producing
global leaders.
Also in 2006, Yonsei University reached a final agreement with the Incheon
Metropolitan City Government to build a new global academic complex. The first
phase of the complex included a 228-acre campus with a residential college for
freshmen and a university global village, intended to improve the living environ-
ment for distinguished foreign scholars. In a second phase beginning in 2011,
Yonsei planned for a science park, an international college and an international
space technology research center as a joint effort with the Harvard Smithsonian
Center for Astrophysics.31
Private Sector Investment

One of the goals of the New Songdo City development is to establish a state-of-
the-art industrial cluster. This is aimed at establishing a virtual knowledge
ecosystem ranging from R&D to commercialization to reinvestment. The strategy
is to build organic linkages among domestic and foreign businesses, universities,
think tanks and support agencies.
The IFEZ is already operating a Radio Frequency Identification/ Ubiquitous
Services Network (RFID/USN) Center, jointly funded by the former Ministry
of Information and Communication and the Incheon Metropolitan Government.
About 24 international and Korean RFID technology developers are associated
with the center, including Alien Technology, the world leader in RFID. In
December of 2006, Alien announced the formation of Alien Technology Asia,
based in Songdo, to serve rapidly expanding markets for RFID in Asia. In its deci-
sion to locate in Songdo, Alien Technology considered the advanced stage of the
RFID market in Korea and its technology capability, leadership and vision.32
New Songdo City also attracted a contribution of $450,000 from IBM to help
establish a bio-research complex with a goal of becoming Asia’s leading bio-
research center. That project also obtained a long-term loan worth US$20 million,
a W30 billion (US$24.3 million) joint research project with IBM Watson-
Almaden Research Center, and an investment of more than W300 billion
($243 million) from the Gachon Gil Foundation.
In April of 2009 Gale International and Cisco signed a framework agreement
for establishment of the Cisco Global Center for Intelligent Urbanization. It is
Cisco’s first center focused solely on intelligent urbanization and was located within
the Northeast Asia Trade tower, a 65-story building that is one of New Songdo’s
landmarks. Cisco’s new global initiative was designed to help cities around the
world use the network as the next utility to optimize their long-term growth.
A key feature of intelligent urbanization is the ability to make buildings
“green aware.” “The intelligent building gathers, analyzes, and displays real-time
building energy use and employee resource-consumption data. By displaying
real-time building information such as power consumption, CO2 emissions
and water usage on Cisco's digital signage solution, Green Aware is designed
to drive a change in user behavior by arming consumers in Songdo IBD with
information to help them become environmentally conscious and contribute to
the sustainability of their surroundings.”33
Promoting the Ubiquitous Network Society
Like the concept of “information culture,” the idea of a ubiquitous society
became a promotional theme for the private sector, government, the education
sector and the media. Various efforts to explore, plan for and promote ubiquitous
networking became so pervasive in South Korea that here we can touch on only
a few prominent examples.
U-Seoul Forum
In June of 2008 a U-Seoul Forum was established.34 As of mid 2010 the forum
had 702 members, including university professors, research institute staff, and
representatives from industry and community organizations.35 The purpose of
the forum was to explore and suggest methods for building a ubiquitous Seoul.
The founding goals of the U-Seoul Forum were stated as follows:
• To create an organic network of corporate, academic, research and govern-

ment cultures for the purpose of information exchange. It includes special-
ists in the rapidly changing era of information culture and those who are
interested in it. (A human network of specialists in ubiquitous networking
including government officials, professors, research institute staff, corporate
employees, and city employees.)
• To introduce to each other those who are promoting the ubiquitous
enterprise in the city of Seoul and to build in this city a plan for cooperation
and collaboration.
• To prepare a grand dialogue where specialists in ubiquitous design,
traffic, welfare and other areas come together in one place and collaborate
to discover this new enterprise.36
Ubiquitous Exhibits in Seoul

Several areas of Seoul have installed media to promote the ubiquitous society
while helping to acquaint citizens with some of its features. The Kangnam district
south of the Han River has installed 12-meter-tall poles along what officials call
U-street. Installed in March of 2009, there are 21 of these poles along a major
road near the Kangnam Subway Station. They allow people to search maps, read
the news and check transportation information. The area around the poles is also
a free Wi-Fi hotspot. The poles provide services in English, Chinese and Japanese
and also include a service for sending photographs and for playing casual games
while waiting for transportation.37
In June of 2007 the National Information Society Agency announced that
Cheonggyecheon, the highly successful stream renovation project in central
Seoul,38 would be made into a ubiquitous ecological stream with the help of
Samsung SDS. In May Samsung disclosed that a research project to create a
“u-Cheonggyecheon” had been made part of Seoul City’s roadmap for the
u-Seoul master plan.39
Samsung used several ubiquitous technologies for this project. An independ-
ently developed “UbiCenter” platform would be used to control the water level
in times of torrential rain, and water quality sensors were used to detect the inflow
of contaminants in advance in order to maintain water purity. A viewing system
was also installed to enable citizens to view Cheonggyecheon’s underwater
ecosystem. In addition, Samsung provided systems and features to allow citizens
to enjoy the site and its rich history and culture more conveniently.40
Another prominent example of ubiquitous networking is the Digital Media
City (DMC) being built within Seoul.41 The DMC is a new town development in
Seoul’s Sangam area, designed as an incubator for the creation of digital media.
It hosts global as well as Korean firms and start-up enterprises. Initially it targeted
recruitment of firms creating the technology and content for the media and enter-
tainment industry. However, with the onset of the ubiquitous era, it broadened
that to include any enterprises creating or using digital media and software. These
included biotechnology, pharmaceutical firms, transportation, corporate consult-
ing, telecommunications service providers and a range of other industries.42
Facilitating Convergence: Legal and Regulatory Changes

The sweeping reorganization of the government by the new administration of
President Lee Myung Bak was accompanied by a series of legal and regulatory
changes. First, in early 2008 the South Korean government announced plans to
encourage media conglomerates by allowing firms to own both television stations
and newspapers. After receiving a policy briefing from the Korea Communications
Commission, President Lee Myung Bak declared that “The government should
create an environment to enable the advent of a world-class media firm with
global competitiveness by drastically loosening the strings of regulations on the
broadcasting and communications sector.”43 Until that announcement the news-
paper law prohibited newspapers from controlling terrestrial and cable television
stations. Traditionally, the purpose of that law was to prevent media giants from
wielding too much influence over public opinion. The same law had also prohib-
ited large firms with assets exceeding $2.6 billion from owning news outlets,
but the KCC’s proposed revision would lift that ceiling to $8.77 billion. The
Commission’s report noted that the stringent regulations on ownership and multi-
ple ownership prohibit the broadcasting sector from expanding through new
investments and mergers and acquisitions.44
Second, in 2008 the Korean government approved a law that would allow
providers of IPTV services to include the analog television offerings of existing
broadcasters as part of their services. By January 2009 KT, along with SK
Telecom and LG-Telecom, were all operating in this new market.
In a third change, the KCC announced that it would allow private media repre-
sentatives to sell advertising. This move would do away with the monopoly of the
state-run Korea Broadcast Advertising Company (KOBACO). Choi See-Joong,
Chairman of the Korea Communications Commission, was quoted near the
end of 2008 as saying “It is obvious that the media industry will go through
revolutionary changes next year and in 2010, and it’s anybody’s guess who
will end up as winners or losers as a result of the changes. A larger number of
companies, and possibly newspapers, will be able to establish or acquire televi-
sion stations under the new framework, which would be an important step in
expanding the pie of the media industry. If the changes are inevitable, why not let
them happen next year.”45
As this book is written, one thing seems clear. The reorganization of
ICT-related bodies in the government and changes in media law had as one
major goal to actively encourage further convergence toward the creation of a
U-Korea.
7 Education and Building Citizen
Awareness
No other topic resonates as strongly with the title of this book as education, since
it provides the building blocks for the information society. Specifically, as the
recent World Bank/OECD study of Korea has shown, education helps form
the four key pillars of the knowledge economy:
• An economic and institutional regime with incentives for the use of existing
knowledge and the creation of new knowledge.
• Education, training and human resource management. (An educated, entre-
preneurial population that can both use existing knowledge and create new
knowledge.)
• A dynamic information infrastructure, to facilitate effective communication,
dissemination and processing of information.
• An efficient innovation system, comprising firms, science and research
centers, universities, think tanks, consultants and other organizations.1
From the rubble of the Korean War and half a century of Japanese occupation,
South Korea faced the task of rebuilding its entire system of schools. Lacking
natural resources, South Korea turned to education and knowledge as the key
engine of economic growth.
In this chapter we explore the critical role of education in South Korea’s
digital development. We begin with the story of how Korea built up its formal
educational system, and the role of ICT in it. Then we move to the massive,
pan-national campaigns to promote citizen awareness and ICT training. The final
sections of the chapter deal with innovation, research and development and the
globalization of education in Korea.
Building the Formal Educational System

When the armistice that ended hostilities in the Korean War was signed on July
27, 1953, South Korea found itself faced with an extraordinary challenge simply
to build an educational system. There were two major reasons for this. One was
the half-century of Japanese colonial rule in Korea, which ended at the end of
128 Education and Citizen Awareness
World War II. The other was the widespread destruction and dislocation of
families caused by the Korean War.
The Legacy of Colonial Rule and the Korean War

During Japanese colonial rule in the first half of the twentieth century, a compre-
hensive, modern national system of education was established in Korea. However,
the Japanese came as conquerors and two features of colonial educational policy
contributed greatly to the anger and frustration that the Korean people felt toward
the colonial state.
First, access to education beyond the elementary level was restricted as part of
Korea’s subordinate status in the empire. Colonial planners did not see the need
for their subjects to learn more than basic reading and arithmetic skills. This
restriction on higher education led to a pent-up demand for educational access in
Korea that would explode when the Japanese empire collapsed.
Second, colonial education policy used education to indoctrinate Koreans into
being loyal subjects of the Japanese empire and later to assimilate them into
Japanese culture. This forced assimilation left nationalist anger and demonstrated
to Koreans that education could be used as a political instrument by a powerful,
centralized state.2
Consider the state of Korean education at the end of World War II in the
Pacific which ended Japan’s colonial rule. Only 64.0 percent of elementary
school-aged children were enrolled in school. This percentage plummeted to
3.2 percent for secondary education and 0.18 percent for higher education.3 One
survey estimated that the population of South Korea aged 13 years old and above
was 15 million and that 53 percent of that population (8 million) was illiterate.
Those who had a secondary education or more accounted for only 12.6 percent
of the population.4
Faced with this desperate situation, the U.S. Military Governance and the
Republic of Korea set the expansion of elementary education as their number one
task for educational development. This became especially challenging as 68
percent of the school buildings were destroyed during the Korean War.5 During
the war itself, displaced families had set up schools in tents and made an effort
to continue their children’s schooling. However, many children were unable to
attend school during the conflict and thus graduated from high school
two years late.
Today’s universal literacy and high levels of educational achievement in
South Korea need to be measured against the legacy of colonial education policy
and the devastation of the Korean war. Defining universal enrollment as attaining
a 90 percent enrollment rate, Korea achieved universal elementary education
by 1957, universal middle school education by 1990, and universal high
school education by 1999. It is no exaggeration to say that Korea’s first move in
modernization came in education.6
As the nation began to develop, the requirements of industry and govern-
ment for technically trained people increased, and so did the demand for
Education and Citizen Awareness 129
university-level education. Accordingly, enrollment in progressively higher
levels of education increased as South Korea moved from an emphasis on heavy
industry in the 1970s to electronics and information industries, beginning in the
1980s and through the 1990s.
By 2007 Korea ranked fourth among OECD countries, behind the Russian
Federation, Canada and Japan, with all four countries having more than fifty
percent of the population attaining a tertiary degree. Along with Japan, France
and Ireland, Korea showed a gap of more than 25 percent between the older and
younger age groupings, indicating the rapid expansion of tertiary education in
recent years.7
Korea’s Efforts to Produce Skilled Information Workers

Strengthening vocational education became a priority in the economic develop-
ment plans of the 1970s, and vocational junior colleges were set up during
that decade to supply technicians for the HCI. That plan explicitly acknowledged
the need to upgrade technology and the technical workforce. The framework of
vocational education was institutionalized in 1976 through enactment of the
Basic Vocational Training Act, which was wholly amended in 1981.8
The increased need to provide students with scientific, technological and other
skills for the information age is a common denominator among the thirty member
nations in the OECD. In a particularly telling statistic, South Korea led the world
in 2006 in the proportion of tertiary science graduates in the 25–34 age group per
100,000 employed people in the same age cohort. This measure is one way in
which the OECD gauges the output of high-level skills by different educational
systems.9
Part of Korea’s approach to education for the information age has been to
change the focus and curricula of its schools at all levels to meet the changing
human resource requirements. At the high school level, Korea has general high
schools, vocational high schools, science high schools and other specialized high
schools. Courses offered at the vocational high schools have recently been diver-
sified to include information technology, robotics, animation, films, cooking,
beauty, tourism, horse care and so forth to meet the demands of a rapidly chang-
ing industrial society. According to the Ministry of Education, specialized high
schools are designed to “identify and nurture students with outstanding ability
and aptitude in some particular areas at an early stage to strengthen the national
competitiveness.”10 As of March 2006, there were 129 such high schools special-
izing in nine different areas, which breaks down to six national, 82 public and
41 private high schools. Today South Korea has several internet high schools and
even a Game Science High School. At the latter, students who are admitted
complete all of their national high school requirements the first year and spend
the next three years working on projects for the game industry.11
Junior colleges, which have mostly two-year and some three-year post-
secondary programs, are a direct outgrowth of the increased demand for technical
manpower with rapid industrialization. As of 2006 there were 152 junior colleges
in Korea, 139 of which were private institutions.12 They had a combined total
enrollment of 517,235 students.
A large focus of junior college education is on industry–academia cooperative
efforts. These cooperative programs between junior colleges and industries
include student internships, industrial field training for junior college faculty,
education of industry employees at junior colleges, joint research, exchanges of
technology and information, and suggestions for the curriculum by industries.
The percentage of junior college graduates who gain employment after gradua-
tion has been maintained at 80 percent, higher than that of four-year colleges and
universities.13
The Ministry of Education administers public universities in South Korea, but
the Ministry of Science and Technology over the years has contributed funds to
university science and technology programs, both public and private, through
the Korean Science and Engineering Foundation (KOSEF), Korea’s equivalent of
the U.S. National Science Foundation. As of 1997, KOSEF had established
approximately 30 university science and technology centers of excellence, which
it funded annually at the million dollar level. Those centers were required
to collaborate with at least three other institutions and were strongly encouraged
to attract supplemental support from industry.14
Centers with the best reputations include the Korean Advanced Institute of
Science and Technology (KAIST) and Seoul National University (SNU). Special
facilities and training in electronics-related disciplines offered by these two insti-
tutions include KAIST’s Material Surface Engineering Center, SNU’s Research
Center for Thin Film Fabrication and Crystal Growing of Advanced Materials, and
SNU’s first-rate facility for teaching semiconductor processing. This latter facility,
as of 1997, had equipment comparable to that of UC Berkeley, MIT or Stanford.
For example, it had an e-beam direct-write lithography system that routinely
processed runs of multiple project chips with designs from other universities.
Of the 150 colleges and universities in Korea, approximately 100 have electri-
cal engineering departments. Seventy of those were active in the Integrated
Circuit Design Center and at least 40 of them were well regarded by the Korean
semiconductor industry for their teaching of IC design.15
South Korea’s universities were generally modeled after those in the United
States. Like their American counterparts, major private and public universities in
Korea have played an important role in basic research and development across
virtually all of the main fields of scientific and technological research. University
faculties and leading university research institutes in South Korea have strong ties
with all of the major governmental and private research institutes. One factor that
has strengthened these ties is the predominance of U.S.-trained PhDs in the
nation’s universities and research institutes.
The Role of ICT in Korean Education

While education is undoubtedly a central ingredient in the information revolu-
tion, it is also the case that the media and new communications technologies
play an exceedingly important role in education. Therefore, beginning in the
1980s when South Korea first began building its digital networks, the networking
and computerization of South Korea’s schools became a top national priority.
Consequently, schools, colleges and universities throughout Korea, along with
government bodies, were consistently among the first organizations in the coun-
try to enjoy the latest advances in high speed networking and broadband internet
as the country built out its infrastructure.
As the nation reached near-universal enrollment at the elementary, middle and
high school levels, the placement of computer labs in those schools with high
speed internet also helped to minimize the problem of a digital divide. Children
from families in all segments of society could enjoy the same level of computer
and internet education at school.
The Introduction of Cyber-Universities

When it came to the introduction of distance learning at the tertiary level, or the
so-called cyber universities, it came rather quickly and on a large scale. In 2001
and 2002 alone, there were 14 new cyber universities founded. As of 2009 there
were 18 cyber colleges or universities in South Korea with a freshman quota for
admissions that year of 20,747 students.
As of 2009, online universities enrolled some 88,000 students, or 5 percent of
the total number of university students nationwide. Many of the cyber universi-
ties in Korea stressed lifelong education and offered courses in such niche
markets as IT, real estate, counseling, nursing and education programs for the
handicapped.16
Informatization in Korea: Citizen Awareness

and ICT Education
The public promotion of internet services and new digital media has played a
crucial role in ensuring that South Korea’s new networks are used and are
economically sustainable. The full benefits of ICT can only be realized when
used for social means. This is the demand-side of the economic equation and it is
crucial to the building of an information society. It requires citizen awareness of
both the nature of the information society generally and the uses of specific tech-
nologies that come with it.
At each stage of Korea’s network modernization and infrastructure develop-
ment, there was a broad and sustained emphasis on demand creation and public
promotion of the information society. Informatization is to the information
revolution what industrialization was to the industrial revolution. As noted by
the World Bank Study, promotion of informatization requires both large-scale
investment and the long-term cooperation of various organizations.17
Efforts to create such citizen awareness began in the early 1980s and have
steadily increased over the years. Indeed, it is precisely the broad public
acceptance of information culture, led by the internet, that has fueled the rapid
development of information technology in Korea. The idea of spreading or incul-
cating information culture in Korea included
• changing mindsets and attitudes toward information use,developing a sound

information environment and information ethics,enhancing citizens’ capabili-
ties to use information,spreading an information-centered lifestyle, and
• establishing relevant laws and regulations.18
In the 1980s, the Ministry of Communications emerged as a highly visible

proponent of the information society and importance of information culture in
everyday life. As the decade wore on, other ministries, including Science and
Technology, and Trade and Industry, also promoted this concept.19
In 1988 an Information Culture Committee, consisting of public opinion lead-
ers from various fields, was formed and June was designated “Information
Culture Month” in South Korea. It was originally designed to help make people
aware of information culture in daily life and to more comprehensively promote
informatization. For the past 22 years, leaders from government, industry,
academic and citizens' groups have organized events that call attention to the
nation’s progress in informatization. Awards are given to citizens who have made
exemplary contributions in this area and there is naturally considerable media
attention.20
Korea’s informatization efforts proceeded in stages. They received a big boost
with the establishment of the Ministry of Information and Communication and
consolidation of its telecoms policy leadership in 1994 and the passage of the
Informatization Promotion Basic Act in 1995.
From 2002 to 2004 special attention was paid to addressing the problem of
digital divides, at both national and global levels. Both the “E-Korea Basic Plan”
and the “U-Korea Basic Plan” were established, indicating a move from internet-
based informatization toward the ubiquitous society. In January 2003, pursuant to
Article 16 of the Act on the Digital Divide, the Korea Information Culture Center
was upgraded to become the Korea Agency for Digital Opportunity and
Promotion (KADO).
Most recently, Korea’s drive to develop information culture has been promoted
through the U-Korea Basic Strategy Plan, moving toward the new paradigm of a
ubiquitous networked society. While previous campaigns had been computer
oriented, these efforts were directed toward use of mobile phones and other
wireless value-added devices.21
The Informatization Promotion Fund

The goals of South Korea’s Information Promotion Fund (IPF) included not only
rolling out broadband networks, but also promotion of E-government, support for
ICT R&D, standardization, and ICT education.
The IPF, based on both government and private sector contributions, allowed
profits from the ICT fields to be reallocated into the ICT sector. From 1993 to
2002 the IPF reached US$7.78 billion. About 40 percent came from the govern-
ment, 46 percent from private firms, and 14 percent from miscellaneous profits
and interest receipts.
A total of US$5.33 billion was invested between 1994 and 2003. Of that total,
38 percent was invested in ICT R&D, 20 percent into informatization promotion,
18 percent into ICT human resource development, 15.1 percent in broadband
infrastructure and promotion, 7 percent in infrastructure in the ICT industries,
and 3 percent in standardization. In other words, if one includes R&D, fully
three-quarters of the IPF was used for educational purposes.22
Korea’s Expanded Education Efforts in Developing Countries

In 1998, the KADO launched an invitational program to train overseas IT experts
and corporate leaders. One broad aim of the program was to help strengthen
Korea’s global IT leadership by working to narrow the digital divide among
countries of the world. As of 2006, there were a total of 2,102 participants in the
educational program, from 99 countries. Also, beginning in 2002, KADO constructed
a total of ten information centers dealing with South Korea’s IT infrastructure in
developing countries, building two every year. Finally, KADO dispatched youth
service teams overseas to help promulgate the internet. 1,650 young men and
women with IT talent visited 57 countries from 2001 through 2006.23
In 2007, the Information and Communications University introduced a
program called the IBT Policy Program for Senior Officials (IPPSO). This
program had the same basic goal as KADO’s efforts, to share Korea’s experience
with communication and information technology in the convergence era.
Since its inception the IPPSO program has trained over 100 senior officials from
47 different countries.24
ICT Education
Part of South Korea’s immense educational effort over the years was directed
toward technical training that would allow its citizens to use computers, the inter-
net, and the myriad of other technical gadgets that come along with modern
digital networks. Without technicians to lay the fiber optic cable, or to install the
routers, switches and mobile base stations, one can hardly conceive of Korea
today. Or, to take another example, suppose one’s mobile phone malfunctions.
Think of how important a role is played by the technicians at the after-service
center who dismantle the phone to replace a broken cable or solder in a new
electronic component.
In 1985, the Information and Communication Training Center implemented
programs for those graduating with non-computer majors and trained 1,900
people that year in ICT skills. By 1995 a total of 32,000 people had completed
such training programs.25
The 1997–98 economic crisis, most widely known in Korea as the “IMF
crisis,” stimulated renewed attention to ICT training and did so on a massive scale.
In 1999, on the heels of the crisis, the government announced a comprehensive
informatization program aimed at improving the digital literacy of the entire
Korean population. It was called, appropriately, “The Informatization Education
Plan for 25 Million People,” and its name indicated its ambitious character.
The plan aimed different education strategies at different target groups.
Initially, it focused on 10 million students, 0.9 million government officials, and
0.6 million of those serving in the military. This was later extended to include the
disabled, housewives, the unemployed, farmers and fishermen. Broadcasting
organizations were employed to educate people about IT communications,
with informatization education textbooks and an information communication
terminology book also being published and distributed.
Under this plan, Information Education Centers were established at post offices
throughout the country to offer educational services to the general public. IT
instructors were trained and supported through the Information Culture Center.
As if this were not enough, from 2000 through 2002 a separate basic informa-
tion education plan was carried out side by side with the ongoing effort. This plan
was aimed specifically at those who were socially disadvantaged and therefore
had a lesser opportunity for education. Its aim was to minimize the digital divide
within Korean society. By 2002 almost 11 million people, including housewives
and farmers, had received ICT education. The program increased internet use
among the population, helped develop the IT industry and aided expansion of the
information infrastructure.26
The government’s support of ICT education was not limited to technical
aspects of the new digital media. Recognizing that digital contents add value to
the nation’s new digital networks, the government also undertook a range of
efforts to support the development of new content. These included assistance to
improve the education curriculum and increase the number of professors for
digital-content-related departments in universities, and efforts to foster game
developers. Government support for human resource development included
measures to bolster education at home and abroad and to foster IT manpower that
was actually demanded by industry.27
In summary, South Korea’s efforts at ICT education over the past three
decades have accomplished two important goals. First, they ensured an adequate
supply of technicians to install and maintain the constantly changing and ever
more powerful digital networks and the electronic devices that connect to them.
Second, they ensured that a very broad section of the nation’s citizens – approach-
ing half of the population – could avail themselves of basic education about how
to use a personal computer and the internet. Probably no other country in the
world has gone to such expense and effort to educate the public in order that all
citizens might fully participate in the information society.
Innovation, Research and Development

Daniel Bell noted back in 1973 that “The joining of science, technology
and economics in recent years is symbolized by the phrase “research and
development” (R&D).”28 Popular conceptions of R&D lead some people to think
that it consists merely of scientists playing in their laboratories while
using up large amounts of the government budget. Many think that scientists
can squander hundreds of millions of dollars in citizens’ taxes while only using
their heads. To the contrary, research and development, properly understood, is a
money-making business.
As shown in Chapter 2, two major R&D projects were at the heart of the
epochal developments of the 1980s in South Korea. Without successful research
and the development of the TDX switching system and the 4 Mb DRAM
semiconductor, the telecommunications revolution of that decade might not
have occurred. It was the success of those two R&D projects that ignited the
information revolution in South Korea. One of their most important consequences
was to instill an appreciation of the role of research and development among the
nation’s leaders.
The Structure of R&D in Korea

Research and development activities in South Korea are conducted by private
corporations, government research institutes and universities. Large firms
accounted for well over half of all basic research and development. As of 2006,
61 percent of all basic research and development in Korea was conducted by
private corporations, with all but seven percent of that being done by large
firms.29 Government research institutes accounted for 17 percent and universities
22 percent of basic research and development.
When compared with other countries in the world, Korea still has a relatively
low percentage of R&D conducted in universities. As noted in a recent OECD
report, government research institutes were traditionally used as the vehicle
to accelerate technology adoption, while universities were concerned with
teaching.30
Business R&D (BERD) expenditures in Korea are heavily focused on high
technology, especially ICT. One breakdown of BERD for 2004 showed that elec-
tronic parts accounted for 35 percent of total investment, while audio/video and
communication equipment accounted for another 12 percent. Automobiles
accounted for 15 percent and “other manufacturing” another 26 percent.31
Trends in Korean R&D

Korea has one of the world’s highest levels of gross domestic expenditure on
R&D (GERD). In 2006 it amounted to a little under US$30 billion, or 3.23
percent of GDP. This was one of the highest levels in the world. Over the past
several decades there have been several broad trends in R&D expenditure in
South Korea.
First, as shown in Figure 7.1, South Korea has steadily increased its expendi-
ture on research and development since the mid 1960s. This is represented by the
line showing R&D as a percentage of GNP.
100% 4.0
90% 3.5
80%
3.0
70%
60% 2.5
50% 2.0
40% 1.5
30%
1.0
20%
10% 0.5
0% 0.0
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Government share Private share GERD/GDP (right axis)
Figure 7.1 Gross Expenditure on Research and Development in Korea, 1976–2008.

Source: Ministry of Education Science and Technology.
Second, there is a clear trend toward an increasing reliance on the private

sector and a decreased reliance on the government for R&D funding. The annual
growth rate of business R&D in Korea is about twice the OECD average and is
among the highest in the world. This reflects the emergence of Korean leaders in
industrial technology, especially in information and communication technology,
automobiles, shipbuilding and steel.32
Third, as Korea caught up with advanced countries and moved toward techno-
logical frontiers, it faced an increased need to conduct fundamental research.
Accordingly, basic research increased from 13.6 percent of total spending in 1999
to 15.2 percent in 2006.33 In particular, within private-sector R&D the proportion
of basic to applied research has increased. In 1998 basic research accounted for
only 6.5 percent of private-sector R&D, a figure that had increased to 12 percent
in 2004.34
President Lee Myung Bak’s government reorganization in 2008 shifted the
government’s R&D budget, which had been under the control of the Ministry of
Science and Technology, to the new Ministry of Education, Science and
Technology. The new government also declared that it would increase the level
of government investment in R&D while placing more emphasis on basic or
fundamental, rather than applied, research.
As shown in Figure 7.2, R&D in South Korea’s ICT industries grew steadily
over the years from 1991 through 2008. In 2008 it accounted for approximately
48 percent of total national research and development. In that same year, business
enterprises accounted for about 89 percent of total national R&D expenditure.
Clearly business, rather than government, has contributed the major portion of
research and development funding, but this is not to diminish the leadership
impact of the smaller, but targeted, governmental expenditures.
30,000
25,000
20,000
15,000
10,000
5,000
0
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
total R&D expenditure R&D expenditure in ICT
Figure 7.2 Total and ICT R&D Expenditure in Korea, 1991–2008.

Source: Ministry of Education, Science and Technology.
Intellectual Property and Innovation

Patent statistics provide one reliable, although far from perfect, indicator of inno-
vative activity. Not all inventions are patented and the internationalization of
R&D means that research may be conducted in one location, but protection for
the invention sought in another. Also, use of the patent system to protect inven-
tions varies across countries and industries.35 Nevertheless, the number of patent
applications in a country is one measure of its success in research and develop-
ment. The granting of patents represents an important step in the “development”
side of the R&D equation.
A 2009 report by the World Intellectual Property Organization noted that
between 1995 and 2007 there was a significant increase in the number of patent
filings received by the patent offices of China and the Republic of Korea.36
The five largest patent offices (China, European Patent Office, Japan, the
Republic of Korea and the United States of America) accounted for 69 percent of
total resident filings and 81.5 percent of non-resident filings in 2007.37 As shown
in Figure 7.3,38 the Korea patent office ranked fourth in the world in total filings
in 2007, after the United States, Japan and China.
The World Intellectual Property Organization also presents data on the relative
specialization index which shows the technologies in which different countries
have above- or below-average concentrations of patent filings. South Korea has
high and above-average concentrations of filings in telecommunications and
semiconductors.39
500,000
450,000
400,000
Number of Applications
350,000
300,000
U.S.
250,000 Japan
China
200,000 Korea
150,000
100,000
50,000
0
19 0
19 1
19 2
19 3
19 4
19 5
19 6
19 7
19 8
19 9
19 0
19 1
19 2
19 3
19 4
19 5
19 6
19 7
19 8
20 9
20 0
20 1
20 2
20 3
20 4
20 5
20 6
20 7
08
8
8
8
8
8
8
8
8
8
8
9
9
9
9
9
9
9
9
9
9
0
0
0
0
0
0
0
0
19
Figure 7.3 Patent Applications by Leading Patent Offices, 1980–2008.

Source: World Intellectual Property Organization.
The World Intellectual Property Organization reported in 2009 that South

Korea ranked number one in the world in patent filings per Gross Domestic
Product, a measure that corrects for the effects of country size.40 It also ranked
number one in the world on another measure commonly used to correct for coun-
try size, patent filings per Research and Development (R&D) Expenditure.41
Japan ranked second and China was in the top five on both measures.
Globalization of ICT Research and Development

In recent years there has been a broad trend in ICT research and development
toward more international and collaborative work. Many firms are embracing
open innovation approaches and collaborating with external actors. Underlying
these changes are the increasingly knowledge-driven nature of innovation and the
changing organization of research and exchange of knowledge, driven by infor-
mation technologies. A recent OECD report noted that an increasingly globalized
ICT R&D agenda is emerging, with the following eight broad priorities:
• physical foundations of computing,

• computing systems and architectures,
• converging technologies and scientific disciplines,
• network infrastructures,
• software engineering and data management,
• digital content technologies,
• human technology interfaces,
• ICT and internet security and safety.42
In 2005 the OECD sector, including 21 ICT goods and services, spent about
two and a half times as much on R&D as the automotive sector and more than
triple the pharmaceutical sector. Korean ICT firms have caught up with firms in
other advanced OECD countries in terms of R&D spending.43 Notably, in 2007
Samsung Electronics overtook IBM in overall levels of R&D spending.
ICT-related R&D is increasingly important to technological advances and
innovation in non-ICT sectors. These include space, defense, infrastructure
(power grids), automobiles, automation, robots, logistics, aviation, health care,
environment, monitoring and toys.44
As of 2005, the Korea Industrial Technology Association reported that Korean
firms had set up about 60 overseas research and development centers. Ten of
these were operated by Samsung Electronics, and an even larger number by LG
Electronics. Hyundai Motor operated five overseas R&D centers, three of which
were in the United States.45
Daedeok Innopolis and ETRI

In 1973 the Korean government announced plans to build a science city in
Daejeon, a centrally located city that had traditionally been a hub for rail trans-
portation and is today only 50 minutes from Seoul via the high-speed KTX train.
That development has today become the Daedeok Innopolis. Located on and near
the grounds of the EXPO Science Park in Daejeon, the Daedeok Innopolis is now
home to 242 organizations including 21 government-sponsored research insti-
tutes, 39 private research institutes and 148 ventures. Daejeon is also the home of
the Korea Advanced Institute of Science and Technology (KAIST) and several
other universities as well as the Electronics and Telecommunications Research
Institute (ETRI).
The goal of the Daedeok Innopolis is to help realize a positive cycle in which
R&D, commercialization and profits can interact. Among the notable commer-
cialization successes coming out of Daedeok Innopolis are CDMA, LCD
modules, WiBro and DMB. To this date, the Innopolis has assisted over 900
venture firms.46
The role of ETRI, which is located inside the Daedok Innopolis, deserves
special emphasis. While the Ministry of Information and Communication was
steadily increasing its influence, the Electronics and Telecommunications
Research Institute became the nation’s leading R&D center in the ICT field. In
2006 ETRI commissioned a retrospective study of its research and development
activity. That study concluded that the total direct and indirect economic effects
of ETRI’s research totaled over $104.5 billion. The same study applied Pareto’s
law (the 80:20 rule) to ETRI’s situation and found that R&D investment in the
following five core technologies accounted for only 12.5 percent of total research
investment but 80 percent of the economic impact:
• TDX
• DRAM
• CDMA
• DMB
• WiBro47
ETRI has a set of ambitious goals. Its current management objectives call for
it to become “the world’s best IT and R&D institution of the 21st century.
To measure its progress in maximizing intellectual capital, ETRI in 2003
began publishing an annual Intellectual capital report. In doing so, it recognized
the increasing importance of intangible assets in the information age. It was
also a response to criticisms of Korean government-sponsored research institutes
for a lack of visible performance measures, considering the large expenditures
on R&D.48
In 2004, Intel, the world’s largest maker of computer chips, signed an agree-
ment to develop technologies with ETRI for products used in wireless technology
and the home. The new research center was to hire 20 people and Intel hired
K.S. Lee, formerly of Samsung Electronics, to head the center.49 ETRI has
entered into a number of similar cooperative arrangements with companies and
research institutes around the world.
In April of 2009, ETRI signed an MOU with Technische Universität Darmstadt
to help develop internet protocol television (IPTV) and next-generation network
technologies. The tie-up was proposed by the German university and would give
ETRI a presence in Hessen, which is home to global IT software and telecom-
munications companies.50 From our vantage point, in 2009, ETRI has progressed
well beyond its early goal of becoming a “Bell Labs” for Korea.51
KISDI: The Role of Telecommunications Policy Research

On January 30, 1988 Korea formally opened the Korea Information Society
Development Institute (KISDI), the world’s first institute to receive that name. It
was created by renaming the Institute for Communication Research, which had
been founded in 1985.52
The founding of KISDI sent a powerful message to the nation and the
world about the priority South Korea’s government placed on information
society development. It was also a clear indication that the Korean government
recognized several realities:
• the growing importance of government policies affecting telecommunica-

tions and the growth of a healthy information society, the increasingly global
nature of telecommunications technology and policies, and
• the need for the best possible research into policy alternatives from economic,
political and other social science perspectives.
KISDI has addressed each of these concerns as it has grown in stature over
more than two decades. Its research provides vital background information on
policy alternatives and makes recommendations for consideration by Korean
government officials and communications industry leaders. Over the years,
members of KISDI’s research staff formed part of Korea’s team in bilateral
trade negotiations with the U.S. and in the WTO negotiations. By providing
research-based inputs into the policy process, KISDI today contributes to digital
development not only in Korea, but around the world.
Globalization of Education in Korea

The information revolution itself is a major factor contributing to the globaliza-
tion of education, and Korean education has been profoundly affected by this
development. In the following pages we review some general developments in
study abroad by Korean students, Korea’s efforts to attract international students,
and the globalization of research and development.
Study Abroad as a Factor in Korea’s Information Revolution

The Korean diaspora dates from the Japanese colonial period. Few people from
Korea had left the country before 1910. However, during the colonial period a
sizeable number of workers left their homeland and settled in Manchuria, on
Sakhalin and in Japan. Most of these emigrants were indentured labor migrants,
but some were forced to leave their home country under colonial rule. During the
same period of time, many Koreans migrated to China and stayed there because
of dissatisfaction with Japanese colonization of their homeland.53
The character of Korean migration changed decisively in the 1960s, when the
country’s economy began to develop and the government adopted an active
emigration policy as a part of population control. Many Koreans moved to
other countries in search of better economic opportunities, with the majority
going to the United States. By 2003 there were fifteen countries with more than
10,000 Koreans and five countries with more than 100,000. These latter five
include the United States, China, Japan, the CIS and Canada which together
account for about 93 percent of overseas Koreans. Overseas Korean residents
totaled 6.64 million in 175 different countries around the world, including
1.15 million temporary Korean expatriates.54
Academic studies have shown repeatedly that trade and investment bear an
important relationship to diasporas. Our study adds support to that notion by
showing the role of Korean engineers and academics in the U.S. in both the
successful TDX electronic switching project and in jump-starting the semicon-
ductor industry in South Korea. The business and social networks created by
diasporas help to overcome informal trade barriers.55
During the early decades of South Korea’s postwar development, while it was
building its own system of university education, it began sending large numbers
of students overseas to study. Their most popular destination, by far, was the
United States. There are several aspects to this remarkable phenomenon.
First, the system of tertiary education in South Korea is broadly based on
the American model. The academic calendar, courses offered, administration,
activities and overall structure of admissions, grading and so forth all resemble
colleges and universities in the United States.
Second, the popularity of study in the United States meant that Koreans who
had earned PhDs in the U.S. came to occupy positions of leadership in govern-
ment, industry and academia. Today, three-quarters or more of the professorships
in leading South Korean universities are held by U.S.-trained PhDs.
Third, study in the U.S. became so popular that South Korea became the
number one source of international students for U.S. colleges and universities. As
of December 2008, over 110,000 Korean students were studying in the U.S., at
all levels. This number exceeded the totals from Korea’s more populous Asian
neighbors China, India and Japan. In short, South Korea has forged by far the
largest study-abroad relationship with the United States of any country in the
world.56
Finally, it is important to underscore that study abroad is first and foremost a
cultural experience. Those who went to the United States in the 1970s or even
earlier not only went from an East Asian to a Western culture, but from one of
the poorest countries in the world to the world’s richest country. This helps to
explain the big impact the experience had on them. The cultural experience was
more important than anything else.57
To be more specific, those who studied in technical fields such as electrical
engineering or other sciences that relate to ICT development, not only learned the
subject matter being taught at their university, but had a chance to observe and
participate in the American way of life. Such experiences typically included
using the telephone system in the U.S., with its collect calls, different style pay
phones, and other services that were not available in Korea at that time. For some
of them, the contrast between the relatively universal and reliable telephone serv-
ice in the U.S. and the utter lack of such a service in Korea imbued a strong
determination to do something about it when they finished their study and
returned to Korea.
Research by Choi showed that the Korean diaspora appeared to have a positive
impact on trade by generating more exports than imports. He estimated that a
doubling of the number of overseas Koreans appeared to increase South Korea’s
exports by 16 percent while increasing its imports by 14 percent. Significantly,
his research underscored that the diaspora did not cause a brain drain, but instead
contributed to South Korea’s development by transferring back home the knowl-
edge and skills gained in more advanced countries.58
The globalization of education in Korea is a fitting topic with which to
conclude this chapter. The new media, epitomized by the internet, are so inher-
ently global in their scope and ramifications that these developments must be at
the heart of any attempt to understand Korea’s emerging information society.
Ultimately, success in building such a society will depend heavily on education
for citizen awareness, research and development, and even Korean reunification.
8 Korea’s Information Culture
and Media Ecology
“Communication is the fundamental social process.”1
Within the global network formed by broadband internet, languages and

cultures like Korea’s seem to thrive. Hallyu, or the Korean Wave, provides one
example and Naver, the preferred Korean-language search engine, another.
Cultures, like societies, are human constructions. As the information revolution
progresses, culture both influences the shape of a nation’s media environment and
is itself transformed by the new information and communication technologies.
This chapter examines this two-way give and take and the interaction between
culture and technology in South Korea, along with the quality and texture of its
information culture.
We first examine the new digital media ecology that has emerged in South
Korea over the past several decades. The second section looks at salient aspects
of Korea’s information culture, including the role of language, media institutions,
consumer culture and political culture. The third part of the chapter takes up the
dark side of the information society, including such topics as internet addiction,
personal identity theft, hacking and cyber-bullying. Finally, the chapter concludes
with a look at the warm and emotional way in which information technology was
presented in the Ubiquitous Dream Hall and more generally in Korean media
content.
The New Media Ecology

In Korea, as in other countries, convergence of media and technology changes the
way we learn about the world. It is no longer sufficient simply to read the printed
word. Children and adults must be able to critically interpret the powerful images
of a multimedia world. As the media become more pervasive, some have
suggested that they not only shape culture, but in fact they are culture.2 In this
new information culture the concept of media ecology, broadly defined as the
study of complex communication systems as environments, becomes more
useful to describe the evolution of an information society.3 Korea’s new media
ecology has several key features.
144 Information Culture and Media Ecology
First, there is a steady but measurable increase in use of the internet versus
other media. Media convergence itself complicates measurement of the new
media environment. Channels or “apps” on the internet continue to proliferate,
along with digital displays and user devices, forming a richer and denser
information environment.
A second feature of Korea’s new media ecology is the continued centrality of
television. Whether it is called television or internet, the televised or video
portion of news, information and entertainment programming continues to hold
great appeal for Korean audiences, as we will discuss below. Eli Noam captured
the essence of this logic in a pithy 2008 editorial in the Financial Times, entitled
“TV or Not TV.”4 As he points out, television used to be simple, with a few
broadcast channels, all government licensed and tightly controlled. Then cable
systems and satellites were integrated into the system, adding greatly to the
number of channels. Now we are entering the next stage, where television
programs are delivered over the internet and wireless networks to computers,
mobile phones and other devices.
A third important aspect of the new media ecology in Korea is that, on balance,
it promotes positive notions of information culture. For example, much of current
advertising for electronic communication devices promoted a positive view of
how human beings could use the technology. A good example was the “Sarang-
hayeo, Sarang-hayeo LG” (literally “I love you, I love you LG”) musical and
artistic promotional campaign televised by LG Electronics in 2009 to promote its
household appliances and electronics products.
Yet a fourth aspect of South Korea’s media ecology is that many parts of the
media are more interactive and involving. Whether in the subway, on the street,
at home, at school or at work, it seems that a good proportion of South Koreans
are immersed in electronic communication.
Seoul’s Screens
The Seoul metropolitan area, which sprawls out in all directions into Gyeonggi
province, is home to nearly half the South Korean population. Among its many
unique features, Seoul today is a city with a profusion of digital screens.
Well into the 1970s electric billboards and lighted signs were prohibited by
law, as was color television. The digital revolution of the 1980s changed all that,
spurring growth in the graphics industry and allowing Korea’s venerable alpha-
bet, Hangul, to start appearing on signboards in a never-ending array of creative
new fonts. Today, Seoul is a city filled with bright and colorful digital screens
that range in size from the façade of an entire building to the screens on mobile
phones that everyone carries. There are small TV screens in subways, in elevators
and on the navigation devices that virtually every taxi uses. As part of Seoul’s
effort to become a design capital it hosted a “2009 Seoul Festival of Light.” In
November, as part of that festival, the largest LED screen in the world was lit for
the first time on the façade of the former Daewoo Building, opposite Seoul
Station. The screen was 99 meters wide and 78 meters high, and consisted
Information Culture and Media Ecology 145
of 42,000 LEDs covering the face of the 19-story building. Its initial display
included “Walking People,” a work by the renowned British pop artist,
Julian Opie.5
Seoul is also a city of bangs, all sorts of which prominently feature electronic
screens. As Choi notes, these include the PC bang, norae-bang and DVD-bang,
as well as the jjimjil-bang. Culturally speaking, Koreans think of a bang as a
multifunctional space, whose purpose changes according to the occupant’s will.
Thus, jimjil bangs contain sauna-like rooms, baths, sleeping rooms, snack bars
and a PC room.
The PC Bang Phenomenon

PC rooms played an important role in the rapid diffusion of broadband internet in
Korea, especially before many Koreans had high speed internet access at home
or at their office. As shown in Figure 8.1, the number of internet cafes in the
country increased more than five times from 1998 to 1999 and then showed a
42 percent increase year-on-year in 2000. This rapid growth took place in the
immediate wake of the Asian financial crisis and when Hannaro was beginning
to offer broadband services via DSL connections. In addition, Starcraft was intro-
duced to the online game market in 1998, boosting demand for high speed broad-
band as opposed to slower dial-up connections to the internet.6 There was also
a reciprocal influence in that the introduction of low, flat-rate ISP pricing for
broadband internet contributed greatly to the popularity of Starcraft and other
online games. Multiplayer online games require speed in order to give a realistic
sensation of simultaneous interaction online with many other players.
25,000
20,000
15,000
10,000
5,000
-
1998 1999 2000 2001 2002 2003 2004 2005
Figure 8.1 Number of Internet Cafes (1998–2005).

Source: The Rise of Korean Games: Guide to Korean Game Industry and Culture, 2006,
Ministry of Culture and Tourism, Korea Game Development and Promotion Institute, p. 39.
The number of internet cafes peaked in 2001 at 22,548 and has since main-
tained approximately that level, for two main reasons.7 First, high speed internet
had become nearly universally available, at home or at work. Second, the internet
cafes had reached a saturation level where they were present in literally every
neighborhood throughout Korea.
Massive Multiplayer Online Games

In addition to their role in creating demand for the fastest possible broadband
internet service in South Korea, the emergence of PC bangs also created a unique
social space for gamers. Chee’s investigations of online games in the Korean
cultural milieu suggest that the elevated level of gaming in Korea is not due to
the game itself, but rather to their cultural, geographical and economic context.
Her research was based on participant observation, focus groups and interviews
with gamers in South Korea. She found that PC bangs functioned as “third
places” or places of psychological comfort and support for young people. “At a
third place, such as a PC bang, one can choose from online games, e-mail,
online chat, Web surfing, visiting matchmaking sites, people watching, eating,
smoking, being with big groups of friends or just being with one’s significant
other in a friendlier setting.”8 In recent years, South Korea has become well
known as a center in the growing international market for massive multiplayer
online games (MMOG).
Viewing game exports as a future growth engine, the government’s eventual
goal was to make Korea the number three ranking country in the world in
the game industry, following the United States and Japan. In December of 2008,
the Korean government announced that it would invest $242.2 million in the
game industry through 2012 in an effort to raise annual exports to about
$3.5 billion.9
The nation pushed game exports to Japan, China, the United States and other
countries. Within South Korea itself, online gaming was a growing and important
part of culture, increasingly accepted by the mainstream. As of 2009 there
were three cable television channels devoted to internet games. It had become a
professional sport in which those who did well were considered national heroes.
South Korea even established a Game Science High School in 2004. Students
who were accepted into the school completed all of their national requirements
for high school graduation the first year and then worked on industry-related
projects for the remaining three years of high school.
Size and Growth of the Game Market

As of 2005, console games for products such as Sony’s PlayStation 3, Micosoft’s
Xbox and Nintendo’s Wii made up 60–70 percent of the market in the U.S. and
Europe. By contrast, they attracted only 11.5 percent of the market in South
Korea, while online games accounted for three-quarters of it.10 The number of
game companies in Korea increased from 694 in 1999 to nearly 3,000 in 2005.
As of 2008, more than 25 million people in Korea play online games, amounting
to 54 percent of the country’s population.
In retrospect, it is clear that several factors heavily influenced the rise of
Korea’s game industry. First, development of the game industry coincided
historically with the spread of high speed broadband internet. The industry
showed little development before 1999, which was when broadband usage began
to take off.11
A second, related, factor in the rise of Korea’s game industry was continued
investment by the government. Responsibility changed from the Ministry of
Health and Welfare to the Ministry of Culture and Tourism, and cooperation was
enlisted from the Ministry of Commerce and the Ministry of Information and
Communication to provide supportive policies for the game industry, beginning
in August 1998.
A third factor was the increase in overseas ventures by the game industry,
which commenced after the turn of the century and began bearing fruit in 2005.
In 2006 the international growth continued and a variety of genre games emerged.
They included MMORPG (Massive Multi-player Online Role Playing Games),
first person shooting games (FPS) and racing games, represented by Kart Rider.
The expansion of game genres contributed to more diversity among users of
games, expanding to the 30s and 40s age groups and including more women.12
Finally, as the rapid popularization of online games and their acceptance into
mainstream Korean culture shows, they also met important cultural needs. Korean
youth have used online games, along with instant messaging and blogging, to
nurture friendships and to help create their own tightly knit communities.13
Regulating Gambling
In December of 2006 the nation was caught by surprise when prosecutors indicted
two businessmen who had produced and distributed “Sea Story” video slot
machines.14 This led to a sharp rise in public interest and scrutiny of game indus-
try policies. In January of 2007, the Game Industry Promotion Act of 2006 was
amended to provide legal authority for a wide range of policies used to regulate
development of the game industry.15 The amended law gave the Korean govern-
ment sweeping authority to control all of the various aspects of the game industry,
including industry developments, planning, operations, training, research and
development, and the revitalization of e-sports, to name a few areas.
In March of 2007 the Korea Internet Safety Commission asked the country's
internet service providers to block access to 549 foreign-based Korean-language
gambling sites. According to an official at the government commission, these
sites began to spring up en masse in late 2006, when the offline “Sea Story”
scandal erupted.16
Legally, under South Korea’s system for rating and approval of online and
mobile games, the main reason for deferral or rejection of approval for a game
has to do with how online money is handled in gambling-like games. These
included such popular games as Go-Stop, Matgo and Seven Poker. There are
strict rules controlling how a user could recharge an account with game
money for those games in order not to “stir up excessive gambling spirits.” If it
could be demonstrated that a game could be recharged with cash, it would be
rejected by the Game Rating Board. Despite these measures, illegal trades with
cash and game items on gambling game websites were reported to be on the
increase in 2007.17
Features of Korea’s Information Culture

Generally speaking, Korean culture is oriented toward relationships and toward
the group. Korea’s longstanding cultural heritage places a premium on use of
interpersonal communication networks and knowing one’s proper place in them.
This cultural characteristic helps to explain why Koreans have been early adop-
ters of new digital media, including mobile phones and the internet. They are
acculturated to communicate frequently with members of their family, school,
work or other social groups. The new digital media, which operate more like
augmented interpersonal networks than the old mass media, simply provide
additional channels for them to carry on this communication.
While Koreans have been quick to adopt the new digital media, it would be a
mistake to think that Koreans have therefore adopted some sort of global or
universal culture. To the contrary, as a review of some prominent features of
Korean information culture shows, the information society being built in South
Korea is distinctively Korean.
Trust in Media
The question of trust is a fundamental component of human communication and
gets close to the heart of important questions about the media culture of any
nation. Survey data from around the world suggest that younger generations, who
grow up using the internet, are more likely to trust it as a source of news
and information about the world around them. A ten-country survey in 2006
for the BBC, Reuters and the Media Center showed that more people trust in
the media than in their governments, especially in developing countries. Not
surprisingly, national television was the most trusted news source overall, trusted
by 82 percent of the respondents.18 Across all ten countries, television was also
seen as the most important news source, by 56 percent of the respondents,
followed by 21 percent who cited newspapers and only 9 percent who mentioned
the internet.
However, the pattern in South Korea was different. Seventy-six percent
expressed their highest levels of trust in television, while 64 percent mentioned
national and regional newspapers. However, 55 percent also mentioned news
websites. Asked which specific news source they consider most trustworthy,
South Koreans’ responses include KBS television (mentioned by 18 percent), the
website NAVER (13 percent), Chosun (10 percent), MBC television (9 percent),
The Donga Ilbo and the Choong Ang Ilbo (both 6 percent), DAUM website
(5 percent), the Hankyoreh (3 percent), South Korea’s National TV Station and
YTN television (both 3 percent), and Yahoo and the Economist (both 1 percent).
South Korea was the only country where websites were so trusted to provide for
individuals’ news consumption.19
In 2007, the Edelman Trust Barometer, a survey of opinion leaders in 18 coun-
tries, found that Korea led the world in trusting the internet and blogs in sharing
credible information.20 In 2009, trust in social networks almost doubled from the
previous year, rising from 24 percent to 45 percent. Globally, Edelman found that
technology was the most trusted sector, with 76 percent of respondents saying
they trusted it in 2009. In the same year, 81 percent of respondents indicated that
they trusted the technology sector. This is in keeping with the generally positive
portrayal of ICT in most Korean media.21
Ohmynews: Web-based Citizens’ Journalism

The generally high levels of trust in new digital media in Korea is well illustrated
by the success of Ohmynews, a pioneering effort at citizens' journalism. The
motto of Ohmynews is “Every Citizen’s a Reporter” (with some editing), and it
combines characteristics of blogging with those of traditional journalism.
The news site began with 727 citizen reporters and four editors. Five years
later, Ohmynews had 38,000 citizen reporters. A dozen or more editors review
submitted articles, fact check and correct typographical errors.22 As of 2010,
Ohmynews had an international English Edition and also a television operation
called OhmyTV.
How Language Shapes Media Use

Language, as a key element of culture, exerts a strong influence on how the inter-
net and other media are used. In this regard, the ITU’s Broadband Korea case
study contains an important insight.
Korea is an exception to the argument that limited English fluency or

non-Latin character alphabets are barriers to Internet access. The develop-
ment of Korean content has been astounding and today the nation has one of
the highest usage ratios of home grown content. The top 10 web sites
accessed by Korean users are all in Korean. The number of domains regis-
tered using .KR – almost exclusively in the Korean language – ranks the
nation fifth in the world. Not only has this driven use, but it has also reduced
the need for expensive international circuits. It also suggests that in
many ways the Internet in Korea is actually one big Intranet with most users
preferring to access local sites.23
Although there is widespread enthusiasm in Korea for learning English,

when it comes to using the internet, Koreans display a strong preference for
Korean. It wasn’t sufficient only to build the information superhighways in Korea.
Korean-language content was needed to attract the bulk of users. As the number
of .kr domains began to sharply increase, so did internet usage.
Korean netizens’ strong preference for Korean-language web content largely
explains why Naver, rather than Google, dominates the search market here.
Remarkably, given its world-leading digital networks, South Korea is one of only
four national markets in the world today where Google’s internet search does not
have a strong share of the market. The others, in what the Financial Times termed
the “non-Google World,” are China, Russia and the Czech Republic.24 In each
of those countries, local companies designed technology to work in the local
language.
A second reason for the tremendous popularity of Naver in South Korea
is that it caters to the homogenous and group-oriented culture. Its most
popular feature is called “Knowledge-in.” Using this feature, a user can submit
a question and instantly receive a reply from the database that benefits from
the collective intelligence of millions of other Korean users. It does an outstand-
ing job of telling a Korean user what other Koreans are thinking on any given
topic.
One harsh critique of the impact of broadband in Korea suggested that it has
actually narrowed the Korean mindset. In this view the internet, instead of
opening up Korea and Koreans, has made them more tribal and less global than
before. Huer argues that the protective anonymity of the internet has given
Korean netizens a perfect sanctum from which to fire their fury and vengefulness
that have long been denied.25
Finally, it is worth noting that many Korean web surfers became comfortable
with Naver before Google entered the Korean market or they became aware of it
on their own. Korea’s lead over the U.S. and other nations in building high speed
broadband networks was instrumental in creating this situation. Also, the success
of Naver in the South Korean internet market puts an exclamation point under the
crucial role of language and culture in shaping media use.
Major Patterns in Internet Usage

Survey data help to show how digital development in South Korea affects the
daily life of its people. An annual survey in September of 2009 showed that there
were 36.6 million internet users in South Korea over age 3 and 35.7 million over
the age of 6. This amounted to 77.2 percent of the population over age 3 and
77.6 percent of the population over age 6. By comparison, in the year 2000, only
44.7 percent of the population over age 6, or just over 19 million people, were
internet users.26 The pattern of growth in usage is shown in Figure 8.2. Korea’s
usage rate placed it ahead of Japan, the U.S. and many other OECD member
nations, but behind some of the Scandinavian countries.
Although the data include all those who used the internet once a month or
more, more than three-quarters of those surveyed reported using the internet once
a day or more. As of 2009, Korea’s internet users spent an average of 13.9 hours
per week on the internet. However, about half of those surveyed reported using
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Figure 8.2 Number of Internet Users (Age 6 and above, in 1,000 persons).
Source: Korea Communications Commission and Korea Internet and Security Agency,
“2009 Status Survey on Internet Usage,” September 2009.
the internet more than fourteen hours per week and nearly one-quarter of them
more than 21 hours a week.27 How did they allocate this time?
Figure 8.3 shows the most common reasons for using the internet, according to
the same national survey.
Table 8.1, based on a November 2008 survey of internet users aged 6 and
older, shows how patterns of online media usage breaks down across age groups
and for different types of media uses.
Job search 7.1

Software download, upgrade 8.6
e-government services 13.1
Filesharing service 19.8
Internet finance 36.9
Online community, cafes, clubs 43.8
Homepage, blogs 44.8
Education, learning 52.5
Internet purchase, sales 56.4
Communication, e-mail, chatting 87
Leisure, music, games 88.4
Obtaining information 89.4
0 20 40 60 80 100
Figure 8.3 Purpose of Using the Internet (Multiple Answers) (Age 3 and above).
Source: Korea Communications Commission and Korea Internet and Security Agency,
“2009 Status Survey on Internet Usage,” September 2009.
Table 8.1 Online Media Usage Rate by Type – Internet Users aged 6 and over
Type Online Online Online Online Online Internet

TV newspaper radio movie magazine media
watching reading listening watching book reading usage rate
Total 39.6 51.6 31.1 46.2 40.8 76.4

Male 40.8 57.4 30.4 48.6 40.0 77.8
Female 38.3 45.0 32.0 43.5 41.9 74.8
6–19 39.7 26.7 26.2 44.0 38.9 59.5
20s 64.6 69.5 46.4 76.8 65.0 96.8
30s 41.5 63.0 34.0 53.1 45.8 88.8
40s 29.0 56.1 26.5 32.7 28.7 74.8
50s 16.8 50.7 21.3 17.2 21.5 63.8
60 and over 12.0 34.4 15.5 6.8 11.9 48.0
Source: KISA, KCC Survey on Internet Usage, November 2009.
The data in this table show a rather clearly delineated digital divide along
generational lines. To see this at a glance, just look at the last row which shows
online media use by those aged 60 and over, and compare it with the row for
those in their “20s.” The differences in online media usage rates are striking.
Overall, as shown in the last column, the rate is 96.8 percent for those in their
20s compared with only 48 percent for those aged 60 and over.
The data presented above show that Korea has a large volume of e-commerce
and that citizens also use the internet for e-government. We turn next to a more
detailed examination of those topics.
E-Commerce and Korea’s Consumer Culture

South Korea’s consumer culture started changing with completion of the nation-
wide, digitally switched PSTN in 1987, the start of a credit card verification
service called EasyCheck (now the Korea Information and Communications
Company, Ltd)28 and the arrival of credit cards. But it has come a long, long way
over the years. Koreans now have more credit and debit cards per person than any
country in the world, with the exception of the United States, according to Bank
of Korea data.29
Credit Card Usage

Between 1998 and 2002 the value of credit card transactions in South Korea rose
almost seven times, from $48 billion to $333 billion. In 2002 interest rates were
at a very low level. Also, 60 percent of the Korean credit card volume at that point
in time was from cash advances, suggesting that some consumers were getting
money from one card to pay off another.30
Starting in the late 1990s, the South Korean government had actively encour-
aged the use of credit cards as a payment method as a way of preventing tax
evasion by merchants. Individual cardholders were entitled to tax deductions for
expenditure paid by cards when filing a tax return.31
In 2003 the nation’s credit card bubble burst and the government was forced to
intervene in the overleveraged credit card industry. The government measures
called for companies and banks to put more cash into their credit card operations
to cover bad debt and at the same time to enforce more stringent requirements for
the issuance of credit cards.32
In the spring of 2003, South Korea's biggest companies and banks began pour-
ing about $4 billion into their credit card companies as part of a government-
driven plan to rescue them from bankruptcy and stave off another economic
crisis. For example, Samsung Electronics led the offensive, pledging to invest
another $100 million in the Samsung Card Company by the end of June. Other
major companies followed. 33
The Electronic Wallet: Mobile Phones as Money

The concept of the electronic wallet has already made significant inroads into
South Korea’s consumer culture. Korea’s mobile operators offer a service called
the “Cellular Small Payment Service.” It allows subscribers to pay for online
goods using authorization codes sent by SMS. This service is particularly popular
with younger Koreans, who can add such costs to their mobile telephone bills
without needing a credit card.
As of 2006, some 23 million Koreans, or nearly half the population, were using
one of five competing cellphone systems to make payments ranging from a few
cents to $120. In 2006, Koreans were expected to charge nearly $1 billion using
such services, up from just $290 million in 2002.34
The mobile operators also had other payment options, the best known of which
was SK Telecom’s Moneta service. If the user had a phone model equipped with
a Moneta smart card, linked to a credit card account, it was possible to make
phone payments at hundreds of thousands of businesses that had installed dongles
to communicate with the smart cards. In 2005, the Moneta service was expanded
to allow its use in paying for goods purchased over the internet.
More generally, the growth of commercial activities on the internet, together
with increased online advertising, provide two valuable indicators of South
Korea’s changing media environment. As Table 8.2 shows, online shopping,
advertising, games, banking and e-learning have all increased dramatically in the
early years of the new century.
In the year 2000, online advertising accounted for only 2.3 percent of all adver-
tising expenditure in South Korea. By 2008 the figure had increased to 17 percent.35
Furthermore, many of the top advertisers in Korea represent the ICT sector. In
2006, for example, the top five broadcast advertisers were Samsung Electronics, SK
Telecom, LG Electronics, KTF and KT, in that order. By broadcast, we refer to
traditional television, IPTV and DMB (digital multimedia broadcasting).36
Table 8.2 Major Internet Economy Service Volume
(Unit: 100 million won)
Type 2003 2004 2005 2006 2007 2008
Online Shopping 70,548 77,681 106,756 134,600 157,655 181,455

Online Advertisement 3,559 4,832 6,625 8,907 12,068 13,225
Online Game 7,514 10,186 14,397 17,768 22,403 –
Online Banking 77,905 89,910 125,182 150,903 185,570 228,426
(daily avg. fund transfer)
e-Learning – 12,926 14,525 16,133 17,276 18,668
KOSTAT, 2008 Annual and Q4 e-Commerce and Online Shopping Trend, February 2009.
IMCK, 2008 Internet Marketing Trend and Hot Issues, December 2008.
KOCCA, 2008 Korea Game White Paper, August 2008.
NIPA, 2008 Survey on e-Learning Industry Trend, March 2009.
BOK, 2008 Online Banking Usage Statistics (Compiled), February 2009.
Nearly everyone in South Korea uses internet banking. In addition to the

convenience factor for checking bank accounts and conducting transactions, the
purchase of an apartment in Korea often carries with it a requirement to use
internet banking. In 2002 there were 17.7 million registered internet banking
users in Korea, a number that grew annually at double-digit rates and had reached
52.6 million by December of 2008.37
Since 2004, over half of all stock trading in South Korea has been done
online.38
The total volume of e-commerce transactions in 2008 was KRW 630 trillion,
an increase of KRW 113 trillion from the previous year. In particular, the e-commerce
transactions in Internet shopping malls were mostly carried out in ‘open markets’
such as Auction and G Market. The ‘open markets’ in Korea have experienced
dramatic growth over the past 10 years.39 A 2009 survey showed that
62.3 percent of internet users aged twelve and above in Korea are “Internet shopping
service users,” who had purchased products online within the past year. Of these,
more than 23 percent had made purchases within the past month. 70.3 percent of
females used internet shopping malls, compared with only 55.6 percent of males.
The highest usage rate was among those in their 20s, at 88.6 percent.40
Social and Cultural Aspects of the Mobile Revolution

In his “small world experiments,” American psychologist Stanley Milgram gave
subjects in several American cities a letter containing the names of certain indi-
viduals in another distant American city. They were to attempt to forward the
letters to these individuals, but could do so only by sending the letter to someone
they personally knew (defined as on a first-name basis). Of those letters that
actually did reach the target, the average interpersonal network path length turned
out to be about 5.5 or 6. Several researchers have conducted “small world”
experiments with instant messaging and e-mail, getting results that support the
“six degrees of separation” concept.41
The strong group orientation of Korean culture engenders the need to keep up
with others in one’s reference group and helps explain the speedy adoption of
mobile communication here. Some have suggested that the strong cultural
tendency toward keeping up with brothers, sisters, cousins or close friends helps
to explain why Korean consumers, on average, change to a new model mobile
phone once every 11 months. However, this may also be explained by the
consumer’s desire for more convenience and ease of use.
Kim conducted an observational and survey study of mobile phone use, in
which he focused on the changing uses of mobile phones to schedule or cancel
appointments. Kim found that patterns of getting together were changing, the
range of participants in after-work meetings was broadening, meeting places
were spreading out and the boundary between public and private space was
changing.42
With the virtually universal use of mobile phones in South Korea a number of
social changes are occurring. Because the nation has a well-developed and
comprehensive system of public transportation, levels of certain types of mobile
communication such as SMS messaging are higher than in a country like the
United States, where most people drive private automobiles.43 Mobile phones
have also become fashion accessories as LG, Samsung and the other handset
makers compete on the basis of color, shape and features, with some emphasis on
the female market. The emphasis on feature phones was dominant until the
arrival of Apple’s iPhone in November 2009.
Social Networking and Cyworld

Thanks in part to the earlier completion of high speed broadband networks, South
Korea pioneered in the field of social networking, as this phenomenon swept
through the nation’s internet about four years before it reached the United
States. Nothing illustrates South Korean’s comfort with cyberspace and its new
media environment better than Cyworld, launched in 1999. This is the nation’s
equivalent of Facebook, which came along four years later in the United States.
As of late 2008 nearly half of the country’s population, 90 percent of Koreans
in their 20s, and many socialites or celebrities used Cyworld. Young people,
when meeting for the first time, would frequently ask for one another’s
“cyaddress” rather than their phone number. Some 40,000 companies, non-profit
organizations, government agencies and universities had joined Cyworld to
promote their businesses and activities.44
Cyworld was originally intended to facilitate trust-oriented information-
sharing among university students and young workers, based on the idea of a
personal resource program. As the founder of Cyworld noted, “Personal resource
is unique. It accumulates as the person ages. Everyone has it regardless of how
many financial resources they may have access to. The personal resource is
exchanged through social networks.”45
Unlike its Western social networking equivalents, Cyworld has cute avatars
and ‘mini-rooms’, known as mini-homepy, that are interconnected with other
friends’ and family pages. Friends can visit other friends’ mini-rooms, which are
places in cyberspace that often reflect offline spaces. As one researcher noted,
although Cyworld’s mini-rooms are filled with cute customization which might
be seen as childish in a Western context, in Korea the cute content is consumed
by both young and old users.46 Koreans seem to associate the cuteness with part
of “... a struggle to humanize and socialize technological spaces, to highlight the
mediated role of intimacy regardless of technological interference.”47
Cyworld mini homepages encompass a photo gallery, video, message board,
guestbook, friend list and personal bulletin board for visitors. Users personalize
their “rooms” with digital furniture, art, home electronics, wallpaper and music.
All these digital items are sold for anywhere from 20 cents to $9. Members
cultivate on- and offline friendships through buddy (il chon) relationships in
which one’s mini-homepy can be linked to another's. Cyworld uses its own
virtual currency called the dotori, which means acorn. As of 2006, one acorn cost
100 won and prices online varied from two acorns for a wall painting to six
acorns for a song. At that time, Cyworld’s daily revenue from sale of acorns was
estimated to be about $300,000.48
Cyworld is owned by SK Telecom, Korea's largest mobile carrier, so many
Cyworld users regularly logged on with their phones well before mobile broad-
band usage started to take off in South Korea in 2010. To encourage loyalty and
use of mobile phone service, SK allowed users to post as many photos as they
like, a very popular service given the almost universal use of camera phones.
In August of 2006 Cyworld officially launched a version of its site in the
United States. However, that effort at market entry had failed by the fall of
2008.49 This was another powerful illustration of the strong role that culture and
language play in the shaping of cyberspace.
Political Culture in South Korea

The diffusion of broadband internet and mobile communication in South Korea
had a profound impact on the nation’s politics. Upon his election, President
Roh Moo-hyun called himself the first “internet president” and in a very signifi-
cant gesture, at least symbolically, he granted his first post-election interview
not to a major television or newspaper outlet but to Ohmynews, the web-based
newspaper with citizen reporters that had staunchly supported him.
Another occurrence that underscored the new role of the internet in politics
was the controversy that arose over the web postings made by someone who
came to be known through his alias, “Minerva.” Park Dae-sung criticized and
angered the Korean government while attracting a large following with his
economic predictions on the internet.
For months, Minerva attracted the attention of South Korea with uncannily
accurate predictions. He correctly predicted the collapse of the U.S. investment
bank, Lehman Brothers, the crash of the South Korean currency, and the effects
on South Korea of the subprime mortgage crisis in the U.S. In some of his
hundreds of online postings, Minerva unleashed scathing attacks on the South
Korean government’s response to the global financial crisis.
When some of his predictions proved accurate, some readers dug up his earlier
accounts and eagerly waited for more. A national television anchor called on the
government to heed his advice. Bookstores gave special displays to economics
books recommended by Minerva.50
He was arrested in January 2009, but released in April after a court acquitted
him of charges that he used the internet to maliciously spread false information.
The crime of spreading false information in public with a harmful intent is
punishable by up to five years in prison. Some of Mr Park’s postings contained
factual errors and the government accused him of undermining the financial
markets.51 Although acquitted by the court, on his release Minerva was sharply
criticized for not being the authority figure most people had imagined him
to be.
The Dark Side of the Information Society

While most people would argue that the information highways and byways that
now extend their web throughout South Korea have been largely beneficial to
people, there is a dark side to these developments. Its nature and dimensions are
becoming better known. It includes internet addiction, various forms of cyber
crime, and the like.
Internet Addiction
Because of early and universal access to broadband internet, Korea was among
the first countries to identify internet addiction as a mental health issue. In
September of 2007, South Korea held the first international symposium on inter-
net addiction. On that occasion, Koh Young-Sam, head of the government-
operated Internet Addiction Counseling Center, said “Korea has been most
aggressive in embracing the internet. Now we have to lead in dealing with its
consequences.”52
A 2008 editorial in the American Journal of Psychiatry described internet
addiction as “a compulsive impulsive spectrum disorder that involves online or
offline computer usage and consists of at least three subtypes: excessive gaming,
sexual preoccupations and e-mail/text messaging.”53 Following a three-year
government-financed survey of the problem, Hanyang University child psychia-
trist Ahn Dong-hyun estimated that up to 30 percent of South Koreans under
age 18, or about 2.4 million people, were at risk of internet addiction. Such indi-
viduals spend at least two hours a day online, usually playing games or chatting.
Of those, up to a quarter million probably show signs of actual addiction, like an
inability to stop themselves from using computers, rising levels of tolerance that
drive them to seek ever longer sessions online, and withdrawal symptoms like
anger and craving when prevented from logging on.54
As of 2007, the nation had trained 1,043 counselors in the treatment of internet
addiction and had enlisted over 190 hospitals and treatment centers. In the
summer of 2007 it started an internet-rescue boot camp in which drill instructors
drove young men through a military-style obstacle course, counselors led group
sessions, and there were therapeutic workshops on pottery and drumming. All of
this to battle a new addiction: cyberspace.55
South Korean authorities have linked several high-profile deaths to excessive
internet game playing. In the summer of 2005 Lee Seung Seop, who worked as a
repairman on industrial boilers by day in the southeastern city of Daegu, fell off
his chair after a 50-hour binge playing the online game “World of Warcraft.” He
died a few hours later, and, according to a psychiatrist at Daegu Fatima Hospital,
“He was so concentrated on his game that he forgot to eat and sleep. He died of
heart failure brought on by exhaustion and dehydration.”56
With cases like Lee’s, the industry has become more aware of the potentially
addictive nature of its product. NCSoft Corp., South Korea’s largest game developer,
has put warnings in its popular “Lineage” and “Lineage II” games alerting players
that after an hour online, they ought to take a break for the sake of their health.57
Control of Language in Online Games

The Korea Game Industry Agency’s ongoing efforts to control the language used
while playing online games offers an interesting illustration of the challenge
posed in efforts to clean up the internet. Many of South Korea’s online games
offer a feature that allows the player to chat with other players. This raises the
possibility of indecent, foul or abusive language. Therefore, the Korea Game
Industry Agency published a list that identified more than 8,500 words that the
agency recommended should be banned by online game companies.
Efforts to control the vocabulary used online have created some controversy,
with some users of games claiming that it makes chatting much more difficult.
For example, try telling other gamers “I have to sleep now” after hours of labori-
ous cyber battles. The chat box might prevent one from doing so, depending on
how the sentence is arranged, as the Korean word for “sleep” includes a form that
spells identically to a word for a human sex organ.
KOGIA said it selected words that were lewd, violent, discriminatory and
possibly used for gambling. However, the wealth of everyday language included
in the extensive list could be seen as borderline comical.
One game player noted that “Banning words doesn't make much of a differ-
ence, as you can always deliberately misspell to get the words through. And what
are you going to do about voice chats? The restrictions just annoy everybody as
they interrupt even the most casual conversations.”58
Cyber Crime in Korea

Criminals do not need a computer to commit fraud, traffic in child pornography
and intellectual property, steal an identity, or violate someone’s privacy.
All those activities existed before the “cyber” prefix became ubiquitous.
Cybercrime, especially involving the internet, represents an extension of existing
criminal behavior alongside some novel illegal activities.
In early 2009, there were press reports of increasing activities by cybergangs,
affecting Korean internet businesses. Servers receive a distributed denial of serv-
ice (DDos) attack, followed by a blackmail message that asks for a certain sum
of money to stop the attack. For example, the owner of a flower delivery service,
named K, received a blackmail message. He disregarded it and his server was hit
with a DDos attack. He was able to avoid further attack by transmitting 3 million
won to the attacker. Industry insiders say that these types of attacks began in 2008
and that there were ten or more occurring each month.59 In 2007 the government
reported that 1,823 or 1.1 percent of organizations surveyed had experienced
damage from denial of service attacks.60
Korea’s National Information Society Agency has collected data over the years
on various adverse effects of informatization. These include hacking, worm or
virus attacks, personal information breaches and spam.
Hacking
As shown in Figure 8.4, the number of hacking attacks recorded in South Korea
increased in tandem with broadband internet growth, but reached a peak in 2005
and then began to decrease. The decrease can be attributed to better implementation
of basic security measures as awareness of the problem became more widespread.
Malware
Malware is a general term for software inserted into an information system that
can cause harm to that system or other systems or can subvert them for use other
than that intended by their owners. Different types of malware are described as
worms, viruses, Trojan horses, backdoors, keystroke loggers, rootkits and
spyware.61 Studies by Google and other organizations lead to the conclusion that
about 80 percent of all web-based malware is being hosted on innocent but
compromised websites, unbeknown to their owners.62
Virus infections and various forms of worms and malware are a continuing
problem in South Korea. One of the main reasons is that there are still large
numbers of computers with internet access that are not using proper anti-virus,
malware and firewall protection.
In 2007, a comprehensive survey showed that sixteen percent of establishments
in South Korea had experienced damage from an attack by a computer virus, worm
or Trojan horse. This amounted to approximately 36,000 establishments.63
Botnets and Broadband

Ironically, South Korea’s position as a world leader in broadband internet exposes
it all the more to an increased threat of botnets. The broadband transition to faster
upload bandwidth via fiber could intensify the botnet problem. A recent OECD
report suggested that the potency of one infected computer on a fiber connection
could be equivalent to 31 infected computers on DSL and 44 computers on cable
networks. Furthermore, with changes in spamming techniques over the last few
years, there is a correlation between botnets and spam. Attackers have found it
convenient to cooperate with spammers by using their e-mail lists to send mass
quantities of spam, which often contains malware as an e-mail attachment,
through botnets.64
In an effort to reduce damage from botnets, two measures were undertaken in
Korea. First, to reduce damage from vulnerabilities in the widely used Windows
operating system, the Korea Internet Security Center and Microsoft Korea
collaborated to develop and deploy the Automated Security Update Program to
home and small business users. When users visit major Korean websites, such as
portals or online game sites, a pop-up window appears on the screen to confirm
installation of the automated security update program. A user only needs to click
once, without modifying the Windows automatic update settings.
The second measure was to adopt the sinkhole system. It works to prevent
botnets from connecting to botnet command and control servers by subverting the
IP address of such command and control servers. The botnet infection rate in
Korea dropped considerably following adoption of the sinkhole system in 2005.
A third countermeasure being used in Korea is the MC Finder, which detects
malware on compromised websites. As of 2008, this program detected malware on
an average of 500 websites per month. The Korea Internet Security Center was shar-
ing such malware patterns with Google and three major Korean web portals.65
Cyber Warfare and DDOS Attacks

Despite all the efforts described above, on July 4, 2009 a wave of cyber-attacks
was unleashed on 27 American and South Korean government agencies and
commercial websites. In Korea at least 11 major sites slowed or crashed, includ-
ing the presidential Blue House, the Defense Ministry, the National Assembly,
Shinhan Bank, the mass circulation newspaper Chosun Ilbo and the internet
portal Naver, according to the government’s Korea Information Security Agency.
In the United States, the web sites of the Treasury Department, Secret Service,
Federal Trade Commission and Transportation Department were all affected and
the White House was also included in the attacks.
South Korea’s National Intelligence Service released a statement saying that
“This is not a simple attack by an individual hacker, but appears to be thoroughly
planned and executed by a specific organization or on a state level,” adding that
it was cooperating with the American authorities to investigate the attacks.66
Personal Information Breaches

An adverse effect of particular and growing concern in South Korea is the theft
of personal information on the internet. This is especially a concern given the
45,000
Hacking
40,000
Personal Info Breach
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Figure 8.4 Incidents of Hacking and Personal Information Breach in Korea, 2000–2009.
Source: Korea Information Security Agency.
extremely high levels of internet banking and other forms of e-commerce

and e-government. As shown in Figure 8.4, these incidents increased significantly
over nearly a decade.
Spam
As in other countries where internet usage is at high levels, Korea faces a
continuing problem with spam, both to regular e-mail accounts and in the form
of calls or text messages to mobile phones. During the early years of the broad-
band internet revolution in Korea, the nation became a major source of spam
simply because broadband had arrived earlier in Korea than in other countries.
The extremely rapid diffusion of broadband meant that a significant portion of
early users were not yet aware of the dangers posed by spam and how to prevent
them. In this respect, South Korea was no different from other countries around
the world.
In recent years, there has been more widespread public education about spam.
Korea has appeared on the list of top spam-relaying countries, but not at the very
top of that list. For example, the security firm Sophos ranked the United States
first in the world, relaying 13.1 percent of global spam, followed in order by India
which relayed 7.3 percent, Brazil 6.8 percent and South Korea 4.8 percent.
Although these four countries led the world in relaying of spam, they accounted
for only a little more than 30 percent of the global total.67
During the June 2008 OECD Ministerial Meeting on the Future of the Internet
Economy, President Lee Myung Bak told the ministers that, although building an
internet-driven world economy was desirable, internet progress had been a
“double-edged sword. Spam and other online risks undermine the confidence
people have in the internet and this damages trust in e-commerce. We need to
build popular confidence in electronic transactions.”68
In short, as this chapter demonstrates, Koreans are interacting with their
many new digital networks and sources of information with a certain amount of
enthusiasm and passion. The media ecology in South Korea today is certainly
unprecedented in the world for the sheer number of channels and different
messages it allows. The mix of a homogeneous culture with a single language
and a distinctive and scientific alphabet well suited to computerization and infor-
matization seems to energize the emerging information culture of this land.
Korean people and their culture are passionate. That passion comes through in
many ways, through music, dance, movies and the arts.
With its export-oriented economy and success in hosting international events
such as the Olympics, International Expositions and the World Cup, Korean
culture has firmly engaged with most nations in the world and with processes of
globalization. Along with the information revolution and globalization come
certain adverse effects. Yet one cannot escape the conclusion that the heart and
spirit of Korea’s culture, including information culture, will survive and thrive in
the global information society.
Cyber Bullying
The phenomenon of cyber bullying is by no means unique to Korea. It has been
experienced all over the world and bears a close association with the rise of social
networking. The main distinction South Korea can claim, as with the malady of
internet addiction, is that it began to experience the problem about four years
before the United States did. That is the approximate time lag between the intro-
duction of Cyworld in Korea and the corresponding start of Myspace or Facebook
in the U.S.
On October 2, 2008, Choi Jin-sil, a 39-year-old movie star who was considered
by many to be a national sweetheart, committed suicide and was found dead in
her apartment. The police, the media and even members of the National Assembly
immediately pointed fingers at the internet. After studying memos found at her
home and interviewing friends and relatives, police said that malicious online
rumors had led to Ms Choi’s suicide. The online accusations claimed that
Ms Choi was a loan shark and that a fellow actor, Ahn Jae-hwan, was driven to
suicide because she had relentlessly pressured him to repay a $2 million debt.
Choi Jin-sil’s suicide led to a debate in the National Assembly over how to best
regulate the web. In a month-long crackdown on online defamation, hundreds of
agents from the government’s Cyber Terror Response Center began scouring
blogs and online discussion boards to identify those who “habitually post slander
and instigate cyber bullying.”69
In order to deal with the problems of cyber bullying and misinformation on the
internet, the Korea Communications Commission in the fall of 2008 mandated
that all internet sites with more than 100,000 visitors impose real-name registra-
tions for their message boards and chat rooms, beginning in April of 2009. On
that date, an amendment to South Korea’s Act on the Promotion of Information
and Communication Network Utilization and User Protection went into effect70
and Korea became the first country in the world to implement a “real name”
system under which any South Korean can post comments only after they enter
their national registration number. Korea’s approach to real name registration
posed a problem for Google. Google’s head office explored various means of
bypassing the “real name registration system,” arguing that freedom of expres-
sion should be experienced globally by all users. Google even at one point
suggested shutting down YouTube services in South Korea. The country director
of Google Korea said that “Google respects users’ rights and freedom of expres-
sion to the fullest, and at the same time it also respects local regulations.”71 In the
end, Google dealt with this situation by shutting down some of the functions, nota-
bly video upload and comment capability, on its Korean site. Korean users contin-
ued to upload content, but using YouTube's sites in the U.S. or other countries.
Warm and Emotional Technology

Despite being one of the first nations in the world to experience the problems
presented by the new digital media, it is the warm, human and positive side of
the information society that dominates public discourse in South Korea today.
This can be seen in television and media programming, on the internet, and
through many forms of advertising and promotion. Nowhere is it more apparent
than in the Ubiquitous Dream Hall (UDH), an exhibition arranged by the Korean
government and major IT industry groups to showcase present and future
information technology applications.72 Jouhki recently examined the UDH in
terms of the visual and textual rhetoric being used in Korea to promote the vision
of a ubiquitous network society.
The Ubiquitous Dream Hall is a permanent exhibition organized jointly by the
Korean Ministry of Information and Communication and leading Korean IT
companies to showcase and promote their core technology and products for
domestic, public and office use. It was opened in 2004 and is located in the
center of Seoul. The exhibition is divided into three areas with distinctive
themes: “Home,” “Public Place” and “Office & Communication.” The nineteen
stops on the UDH visitor’s tour introduce, for example, a smart home with
applications related to security, household logistics and entertainment. There are
also examples of future office appliances, transportation, robotics and mobile
communication technology.
Joukhi’s study found that “In contrast to many popular visions of technology
as cold and heartless machinery, the UDH presents a vision in which technology
adds warmth to everyday life by implementing ubiquitous computing applica-
tions. The technology is not sterile or remote but it is all around us, accessible
anytime, and it cares for us. The heart of technology as well as of Korean society
is the home, and the future Korean home is empathetic.”73
However, Joukhi questions the lack of real connections between the warmth
and emotionality and the technology in the vision of the UDH – especially so
since Korea’s large technology companies and the government are also the very
organizations that make their employees work the sort of hours that make even
the Japanese look lazy. Yet he notes that emotional technology sounds refreshing,
to say the least. It could represent a real paradigmatic change in the development
of technologies and how people relate to them.
In Korea the information society has met with Confucian society. The result is
uncertain, but one might reasonably imagine a Confucian society of the future in
which the benefits of holistic control and benevolent and perhaps emotional
surveillance win out over critical Big Brother discourse.74
Building an information society is a human endeavor which, at its very heart,
involves language, culture and communication. The topics broached in this chap-
ter at least reinforce that point, even if they raise more questions than they
answer. One finding seems quite certain: that is the strength and resilience of the
Korean culture in the face of rapid and sweeping technological change and devel-
opment. Beyond resilience, the manner in which Korea’s language and culture
are shaping its information society should be a profoundly hopeful sign to those
in other nations around the world. It suggests that the future global information
society may, after all, encompass the diversity and richness of human languages
and culture.
9 Innovation Nation
Korea in the Global Information Society
South Korea’s digital development is part and parcel of a larger effort to build
the global information society and is inextricably bound up with processes of
globalization. The past three decades coincide with the so-called “third wave” of
globalization, which was driven by two main factors. The first was the techno-
logical change leading to lower costs for computing and communications
(and international travel) that made it economically possible for firms to locate
different phases of production in different and faraway countries around the
world. The second factor was the increasing liberalization of trade and capital
markets.1
Earlier chapters introduced the role of globalization in Korean education
generally, and in research and development more particularly. They also noted
Korea’s increasingly active involvement in and recognition by international
organizations, led by the ITU, the OECD and the World Bank. In this chapter we
expand our treatment of the global aspects of Korea’s digital development to
include innovation, trade, the country’s large chaebol business groups, and the
harsh reality of national division.
Trade and Innovation in Korea’s Digital Development

Trade and innovation are increasingly recognized as necessary for sustained
economic growth and prosperity for all nations, both developed and developing.
As noted in the foreword to a recent OECD–World Bank Study, “We often think
of innovation in terms of breakthrough inventions, but it can also be linked to
organizational changes and technology diffusion. In a globalized world, in which
countries and firms compete fiercely to buy and sell their products and services,
innovation is a key driver of competitiveness.”2 Noting South Korea’s success
in catching up with other OECD countries and reaching the technological
frontier, the study benchmarked Korea to assess how well China, Brazil and other
emerging economies were doing.
A key portion of the study, entitled Innovation and Growth: Chasing a
Moving Frontier, argued that Korea’s catch-up strategy involved a combination
of interventions to promote export-led growth and support for innovative
industries. “Growth in certain industries was powered by Korean exports.
166 Innovation Nation
Between the early 1980s and 2004 the share of output exported increased
from 38% to 64% in electrical machinery, which was Korea’s leading industry,
and from 5% to 33% in transport, its second largest industry. The overall
share of exports in GDP increased from 23% to 43% between the 1970s
and 2006.”3
Korea’s Changing Position in the Global Electronics Industry

As of 1985, the United States produced 45 percent of the world’s electronics
products, and Europe 21 percent. Japan’s share was 24 percent and it produced
over 50 percent of the world’s audio and video equipment.4 Since that time East
Asia has emerged as the world’s dominant center of electronics production.
By 2005 China and the nine major developing Asian countries accounted for
43 percent of worldwide production of electronics products.
As discussed below, the geographic shift toward Asia was accompanied by
growth of trade and establishment of global production networks, a shift away
from OEM manufacturing and innovation, especially in key industry sectors. In
addition, from the mid-1990s, Korea’s ICT industry itself experienced other
dramatic changes.5 It saw the rapid rise of the telecommunications equipment
sector, and a shift in export destinations that was related to shifting production
patterns.
Global Production Networks

The growth of electronics production in Asia was accompanied by an equally
impressive growth in electronics trade. The region’s emergence went hand in
hand with the development of global production networks in electronics. Most
finished electronics products today are modular, and as costs of communication
and transportation have decreased flagship companies in the U.S., Japan and
Europe, along with Korea’s large companies, have fragmented their production
chains vertically and offshored manufacturing activities to labor-abundant
countries.6 For example, in 2009 Samsung Electronics manufactured television
sets or LCD displays at its factories in Mexico, India, Hungary, Indonesia,
Slovakia and Brazil. In 2004 China overtook the United States to become the
world’s largest electronics exporter. However, this development was not
fueled by the growth of Chinese companies, but rather by the relocation of
production to China by multinational corporations in the West, as well as in
Japan and Korea.
One result of this globalization is that it becomes more difficult to precisely
credit one nation or one region with being the source of a particular product.
A striking current example is the iPhone 4, launched in June of 2010. In Korea,
media treatment of the launch featured extensive coverage of how the nation’s
leading handset manufacturers would be able to compete in the marketplace with
various Android-based and other smart phones. However, the story soon came
out that many of the most valuable components of the iPhone 4 are made in
Innovation Nation 167
Korea. The actual assembly of all these modular components into a finished
iPhone 4 was being done in China.7
Shift Away from OEM Manufacturing

Until the 1990s, the original equipment manufacturer (OEM) approach was the
dominant pattern in South Korea’s electronics industry. Korean manufacturers
conducted joint ventures and concluded licensing contracts with such interna-
tional companies as Philips, Micron, Intel, Toshiba, Sharp, Fujitsu, AT&T,
NEC and others. OEM contracts were particularly important as a route of
entry into the electronics industry because OEM clients provided guidance on
technological and quality requirements for their products, as well as providing a
market for the end products, thus allowing Korean companies to achieve
economies of scale. The disadvantages of OEM arrangements included lower
profit margins, and a hindered ability to develop independent brand name recog-
nition and marketing channels. The lower profit margins in turn made it difficult
to make the R&D and marketing investments necessary to build their own
brand products.8
Changing Export Patterns

According to OECD data, China, Germany, Japan, the Republic of Korea and the
United States are the world’s largest producers of electrical and electronic prod-
ucts. Patterns of trade in this sector can be broken down further by examining
data provided by the WTO. The following three commodity categories are of
particular interest.
• Electronic data processing and office equipment. (SITC Division 75),

• Telecommunications equipment (SITC Division 76). This category includes
mobile phones, flat panel displays and television sets.
• Integrated circuits and electronic components (SITC group 776). This
category includes the exports by Korea’s semiconductor industry.
As of 2004, the three categories of exports together accounted for 12.2 percent
of Korea’s Gross Domestic Product.9 Figure 9.1 shows recent trends in the
exports of these three industry categories.
The chart shows clearly that the export of semiconductors (ICs and compo-
nents) led the way from 1994 to 2000. A different pattern of exports emerges
following the Asian economic crisis of 1997–98, in which mobile phones and flat
screen displays and television sets (telecoms equipment) take the lead and the
semiconductor industry also recovers from its steep decline in 2001, which was
the worst year-on-year downturn in the industry’s history. The data underlying
this chart suggest that the Republic of Korea has continued to emerge as a major
producer of finished electrical and electronic products, while maintaining a
significant place in the production of components.
Millions
$50,000
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
19
19
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19
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19
19
19
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20
20
20
20
20
20
20
E-data-office Telecoms equip IC and components
Figure 9.1 Korea’s Exports of Electrical and Electronic Products.

Source: WTO Statistics.
More Innovation
By 1997, South Korea had more than 27 R&D centers in the United States, most
focused on electronics-related research, especially semiconductor research. That
made Korea the seventh largest foreign investor in such U.S. facilities.10
More recently, a Canadian study attempted to measure the level of sophistica-
tion of a country’s electronics industry. On the basis of technological sophistica-
tion of different electronics industry categories, the authors calculated a country’s
technology index (CTI) as the production-weighted average of the sophistication
levels of the electronics categories that it produces. When comparing South
Korea with the other Asian economies on how much they have upgraded their
CTI over time, they concluded that Korea had upgraded most rapidly and had
become the CTI leader by 1998. This is shown in Table 9.1. Perhaps the most
telling part of this picture is that only Korea, in the lead, and China are on an
upward trajectory, while Japan and the other nations fall behind.11
Since 2000, the competitiveness of the Korean electronics industry has signif-
icantly strengthened, thus enabling it to quickly take an ever-growing share of the
global market. As of 2007, Korea accounted for 7.1 percent of production of the
global electronics industry, ranking fourth behind the U.S., Japan and China.
From 2005 through 2009, Korea’s IT manufacturing sector has achieved
annual exports of more than US$100 billion. In 2009 they totaled $120.97 billion
and the national trade balance in the information technology sector posted a $58.97
billion surplus, the second highest in Korea’s history. Semiconductors were the
Table 9.1 Shares of Countries’ Electronics Production by Sophistication Category
(Percentages)
High sophistication Medium sophistication Low sophistication
1992 2005 1992 2005 1992 2005
Japan 50.7 68.9 33.3 19.8 16.0 11.03

NIEs 48.1 64.9 38.0 27.0 13.9 8.1
South Korea 61.0 73.9 15.5 20.9 23.5 5.3
Taiwan 48.5 77.4 44.8 15.3 6.7 7.3
Singapore 35.0 52.8 52.6 44.6 12.4 2.6
Hong Kong 47.9 55.7 39.1 27.2 13.0 17.1
China 45.7 35.3 18.1 50.6 36.3 14.1
High Income 57.5 65.9 32.2 28.6 10.3 5.5
OECD
Source: Author’s calculations, based on Reed Electronics research data.

Table adapted from Gangnes, Byron and Ari Van Assche, “China and the Future of Asian Electronics
Trade,” Scientific Series, Montreal, February 2008, p. 17.
top export item, followed by outbound shipments of display panels. Television

exports were also important, along with exports of mobile handsets.12
Developments in Key Manufacturing Industry Sectors

Korea is now a global leader in several key sectors of ICT manufacturing. These
sectors include semiconductors, display and television sets, mobile handsets, and
the parts and components industry. A brief review of current issues in each sector
underscores how Korea is now operating globally at the technological frontier
in each one.
In the semiconductor industry, South Korea’s companies dominated the
memory-chip segments of the market. As of February 2009, South Korea’s
leading manufacturers of memory chips had opened up a significant technologi-
cal lead over their overseas rivals. Both Hynix and Samsung Electronics
announced the production of new DRAM chips using 40 nanometer technology,
while major semiconductor manufacturers in other countries were still using
older technologies.13
Growth in exports of semiconductor-based goods has caused a surge in imports
of semiconductors. Most of the non-memory chips used in the manufacture of
best-selling products such as mobile phones, digital cameras, FPD TVs and auto-
mobiles are not produced in Korea, so the manufacture of these products is
dependent on imports. In 2007 the Korean semiconductor market was worth
roughly US$38.3 billion, of which 80 percent – some US$30.8 billion – was
supplied by imports.
As of 2008 the Korean semiconductor industry comprised about 270 compa-
nies. In terms of sales, device companies ranked as the largest group, accounting
for 60 percent or more of the total, followed by assembly, equipment, materials,
and design companies, all of which were of the small-to-medium-sized
category.14
The Korean semiconductor industry is shifting its focus from memory to non-
memory or system-on-a-chip (SoC) semiconductors. This will help Korea’s
industry to provide total solutions for IT products. As the latest example of such
an effort, Samsung provides Apple with the A4 chip that is used in its popular
iPhones and iPad products. In June of 2010 Samsung Electronics announced that
it would build a $3.6 billion expansion of its Austin, Texas chip plant to build a
production line for system large scale integration (LSI) chips. The world LSI chip
market was at that time dominated by Intel and was four times larger than the
market for memory chips. Most of the chips produced on the new line would be
for 3D television sets and mobile devices such as smart phones and tablet PCs.15
The display is a second sector of electronics manufacturing in which South
Korea is a global leader, having overtaken Japan in 2002. The rapid development
of this industry can partly be attributed to the fact that it achieved both the IT and
mass production technologies during the period of transition from analog to
digital technologies.
The ratio of display exports to total electronics industry exports has been rising
in recent years, increasing from 10.6 percent in 2006 to 14.5 percent in the first
two months of 2008.16 In relation to South Korea’s total exports, displays
accounted for less than one percent in 2003 and 2004, a proportion that had risen
to 4.5 percent in 2007.
The display industry encompasses television sets, mobile phones, computer
displays and screens of all shapes and sizes. The success of smart phones and
Apple’s iPad seems to suggest the logic of convergence toward a future in which,
as industry observers have noted, every surface will be a screen.
With rapid growth of the display industry, inbound foreign direct investment
(FDI) by companies from advanced countries has increased, in recognition of
South Korea’s technology level. These companies include Merck, Toshiba, Asahi
Glass and 3M. This trend is expected to increase as the industry moves into next-
generation display models. Another example of the global scope of the display
industry is a recent agreement between Apple and LG Display. In January of
2009, Apple and LG Display announced a long-term agreement under which LG
would continue to provide LCD panels for Apple’s notebooks and monitors for
the next five years. The agreement called for a US$500 million initial payment
to LG Display.17 LG also manufactured the display for the much-heralded
iPhone 4, which prompted an interesting industry debate over which handset
screen was superior, Samsung’s AMOLED or the LG “Retina” screen used in the
fourth-generation iPhone.
In 2009 a Seonggyungwan University–Samsung Advanced Institute of
Technology (SAIT) team announced that it had discovered a manufacturing
process for large-scale nanomaterial films that could herald the production of
flexible electronic devices. SAIT said that the breakthrough would allow the
country to make a grab for the global electrode market, which is critical in
making displays, and could strengthen Korea’s position in displays and
semiconductors.18
The telecommunications equipment or apparatus industry constitutes a third
manufacturing sector in which Korea is a global leader. As earlier chapters of this
book made clear, the biggest single item in this industry sub-sector is mobile
handsets. Korea’s entry into the mobile handset market was made possible by its
decision in the early 1990s to adopt CDMA technology. Its major industry play-
ers subsequently became a dominant force in the global marketplace for mobile
handsets while manufacturing an expanding array of attractive “feature phones”
that became popular in North America, Europe and all corners of the world.
The telecommunications equipment category also includes the base stations,
switching equipment and transmission equipment that are necessary for both
wired and wireless networks. Although less visible than the fashionable mobile
phones, electronic switches and network equipment form a very important part of
Korea’s exports.
Exports of communication equipment in 2007 stood at $31.8 billion, up
13.4 percent from the previous year, with two-thirds of that total being accounted
for by mobile handsets.
Finally, the manufacturing part of South Korea’s electronics sector today
includes a healthy sub-sector that manufactures parts and components. Harking
back to the situation Korea faced in 1980, it is now possible to note the spectacu-
lar success the nation achieved in revitalizing its electronics sector. Today,
South Korea is a world leader in the production and export of electronic compo-
nents for the IT industry. The old days when all the components had to be
imported from more technologically advanced countries are over.
Software and Content: Apps, Google, Games and TV

While manufacturing and export of ICT hardware has been one of Korea’s
traditional strengths, there is widespread recognition that the nation’s future rests
increasingly with software and content. This becomes especially apparent with
reference to the rapid developments in mobile broadband, the challenge posed
by Google, and the future of both the online games and television industries.
As described in some detail earlier, introduction of the Apple iPhone into
South Korea’s market came later than in most other countries and created a
distinct “iPhone shock.” Part of this shock was the realization that the success of
the iPhone had much less to do with the phone itself and everything to do with
the number, variety and quality of the applications that consumers could use
with the device. Indeed, the phone itself was manufactured in China, and virtually
all of its most valuable components were made in Korea! Yet it was the software
applications that caught the imagination of consumers and caused them to
dramatically increase their use of mobile data services in Korea, as they had
done in other countries.
The initial market feedback from Korea Telecom’s experience with the
iPhone indicates that the market for mobile applications will thrive in South
Korea. As evidence, one need only look at the enthusiastic adoption of
mobile apps by consumers and the success that a number of young Korean
entrepreneurs had with the development of iPhone and Android applications
during 2010.
Google
By all measures, Google shows up as the dominant search engine on the internet,
worldwide. Industry estimates of Google’s share of the global search engine
market range from over 60 percent to as high as 81.57 percent.19
In order to place Google’s worldwide dominance in some perspective relative
to Korea’s internet activity, it is helpful to look at the overall internet audience
worldwide. As of December 2008, China surpassed the United States and became
the world’s largest internet market with almost 180 million total unique visitors,
as measured by Comscore. The United States had 163 million 300 thousand
unique visitors and was followed by Japan, Germany and the United Kingdom
in rank order. South Korea ranked tenth with 27 million 254 thousand unique
visitors, comprising 2.7 percent of the total worldwide internet audience.
However, American web sites, led by Google, reach by far the largest internet
audiences. Google sites reach 77 percent of the worldwide internet audience, with
Microsoft ranking second at 64.2 percent, followed by Yahoo at 55.8 percent.
The remaining top-ranked sites, except for China’s Baidu, are mainly American
social networking, shopping or media sites.
Google’s significance extends far beyond its role as a search engine or web
search portal. It is more like a global information utility, with the potential to be
as dominant as AT&T, IBM or Microsoft once were.
Think, for example, of cloud computing. As of 2007, Google was rumored to
operate on 500,000 servers in its data centers. Google is building what amounts to
a virtual private network within the internet and completely interoperable with it.20
As Google’s bots crawl the internet, they are seeking to build a copy of as much
of it as possible. The value added in its business model comes primarily from the
value of search and of the applications that advertising revenues support.
Google’s ventures into the provision of content also bolster its success in
search and advertising. Since 2001 it has launched or acquired Google News,
Blogger, Google Earth, Google Maps, YouTube, the Android platform, the
Chrome browser, Google Voice and Google Books, to name some of its major
ventures.
Google Books was launched in 2002. By 2003, Google had refined a non-
destructive scanning process and resolved many tricky technical issues involved
in scanning books in 430 different languages.21 As of this writing, Google has
scanned the contents of more than 12 million books.22
Google’s accomplishments to date help to place in clearer focus the future of
the internet and South Korea’s potential role in it. One thing seems very clear.
Language is both a limiting factor and an opportunity for Korea. While the home-
grown search engine, Naver, does outstandingly well in the Korean-speaking
market, it most likely will not export well. As Cyworld already experienced
in trying to enter the U.S. market, it is extremely difficult to export web services
that appeal to Korean linguistic and cultural tastes to non-Korean markets.
However, Google’s efforts to date also underscore the opportunity that
presents itself. Its programs are available in many nations and many languages,
seeming to emphasize the vast multilingual nature of the internet and
cyberspace. Google Korea could well partner a Korean company to digitize all of
the books in Korea and make them available to Koreans at home and abroad.
Google’s encounter with the Korean government’s requirement for an identity
verification system to upload video and comments on YouTube underscored
the global nature of the internet, but also illustrated business opportunities for
Korea.
Games
In one content sector, that of online games, South Korea has a running start
and seems poised to be a world leader. One of the reasons for South Korea’s
remarkable success in the game industry may well be that online games have
their own language that is more or less universal. It doesn’t require a great deal
of text translation to play World of Warcraft, Starcraft or Lineage. Rather,
there is more emphasis on visual symbolism and such universal themes as good
versus evil.
Starting in 1998, the government encouraged national game companies to
participate in well-known international gaming exhibitions. This eventually led
300 companies to advance overseas.23
In 2000, Korea hosted the World Cybergames Challenge in Seoul. It attracted
168,000 participants from 17 countries, playing four game titles The WCG has
now become widely recognized as a major international exhibition, attracting
1.5 million participants from 75 countries, competing in 12 game titles by 2007
and continuing to grow.
South Korea’s burgeoning online game industry has already exerted consider-
able influence in the global marketplace. In 2005, its total exports of game prod-
ucts were far larger than those of either films or television programs. As of 2009,
game exports constituted fully half of all South Korea’s cultural content exports.
Indeed, the nation’s most popular online role-playing and casual games have
become very popular in other countries. The Korean game developer NCSoft
dominated the global online game market when it released Lineage and Lineage II
in 1998 and 2003, respectively.24
As noted in Chapter 6, the next big trend to hit the online games industry
will be the advent of mobile games. Fully fifty percent of revenues from
Apple’s app store are for games. In Korea, even before arrival of the iPhone,
the iPod Touch had already become the country’s most popular multimedia
player.25
TV and Video
For most of the twentieth century the United States, with Hollywood, has been
the world’s dominant source of films and television programs. For that reason,
Noam has posed the question of whether internet TV will also be dominated by
American content.26
In addition to online internet games, Korea has shown some strength in the
animation market. However, even if we assume a growing global market for
animations made in Korea, many of these will be custom-made for English or
other language markets.
The CEO of Google, Eric Schmidt has given numerous presentations in recent
years on the future of the internet. He notes that there is an explosion of content,
but so little awareness of what to do with it. He also notes the vast gap between
what computers can do and how human beings think, which is more insightful.27
In an interview in late 2009, he suggested that within five years the internet would
be a real-time, broadband intensive, video and app-centric web dominated by
Chinese language content.28
Although future internet TV and video may be dominated by English and
Chinese language products, there seems to be no reason, in principle, why Korean
firms cannot thrive in that environment. The large population of overseas Koreans
in the United States, Europe and other parts of the world may indeed play an
important role in building Korea’s information society as the development of
content and services become ever more critical.
Korea’s Chaebol Groups

Korea today possesses a diversified industrial structure, in no small part because
of its large family-controlled conglomerates called chaebol. Because the chaebol
tended to diversify into different industries, there are now large companies
competing in several key industries, such as ICT, shipbuilding and automobiles.
In fact, the definition of a chaebol group is a parent company, owned or control-
led by a family or extended family, that controls subsidiaries in various indus-
tries. As noted in a recent OECD study, the most striking success story in Korea’s
industrialization has been the ICT industry, which has become competitive and
globalized in a relatively short period of time on the back of strong exports.29
Korea’s large chaebol groups have many affiliates. As of 2004, Samsung had
63, LG 46, Hyundai Motor 28, Hanjin 23, Lotte 36 – and the list goes on. The
structure of the chaebols was cited by the IMF as one of the main reasons for the
1997–98 Asian economic crisis. At that point they had diversified beyond their
financial and technological capability, thanks in part to government protection.
Consequently, they became a major target for reform. The government announced
a number of requirements for corporate restructuring, including a focus on core
businesses, the reduction of debt-to-equity ratios below 200 percent by 1999,
dismantling of cross-credit guarantees among subsidiaries and management
transparency.30
Companies such as Hyundai, Daewoo, Lucky Goldstar and Samsung helped
to develop and commercialize key digital technologies over the years. As
they grew, so did exports, the nation’s GDP, and the proportion of private
sector contribution to Korea’s national expenditure on research and development.
The largest and most successful of the chaebol also became large transnational
corporations with facilities for research, manufacturing and sales straddling
the globe.
South Korea’s National Image and New Role in the World

Americans have traditionally exhibited a certain vagueness about Asia, and
Korea in particular. The reasons for this have to do with mainstream media
attention to the Korean War and its aftermath, continuing national division, the
ahistorical and crisis focus of media, and differences in language and culture.
Ironically, such vagueness and misperception persists even as the internet
produces a flood of messages including the powerful, moving images of
television.31 With the spread of mobile phones equipped with cameras, ordinary
citizens increasingly participate in the gathering and dissemination of news. In
this new digital and instantly global communication environment, both national
and corporate images assume greater importance than ever before. However, the
users of the internet must still search for and select the information they will pay
attention to. It appears that the processes of selective attention and selective
perception are alive and well in the 21st century.
“Seoul to the World, the World to Seoul”: The Seoul Olympics

as a Catalyst
The 1988 Seoul Olympics proved to be a catalyst that boosted South Korea’s
digital development and helped improve the nation’s image abroad. There were
two major factors that contributed to the improvement in South Korea’s national
image. First, as the largest regularly planned television and media event in the
world, the Olympics provided viewers around the world with a first-hand glimpse
of the new South Korea. Second, the Seoul Olympics marked an important turn-
ing point in South Korea’s relations with all of the world’s socialist bloc coun-
tries. While international media in general had paid scant attention to developments
on the Korean peninsula, socialist bloc countries, including the Soviet Union,
nations of Eastern Europe, China and Vietnam, had been completely cut off from
contact with South Korea during the Cold War years.
Except for the non-participation of North Korea, the Seoul Olympics helped
make the Roh Tae-woo administration’s “Northern policy” a great success. The
Seoul Olympics not only helped South Korea establish diplomatic, economic and
cultural relations with the former socialist bloc nations, but they also boosted the
nation’s public image in those countries. In that sense, the seeds were sown for
the Korean Wave that would later sweep through China and other countries in the
Asian region.
The “Korean Wave” and Cultural Exports
Starting in the late 1990s, a “Korean Wave” (hallyu in Korean) swept through the
Asian region and other parts of the world. This term referred broadly to Korean
popular culture, disseminated primarily through the mass media. The Korean
Wave included television dramas, movies, internet games, fashions and popular
music.
One researcher concluded there were three specific reasons for the Korean
wave. First, South Korean popular culture expressed Asian values and sentiments
which could easily be assimilated by other Asians. Second, the Asian economic
crisis, widely referred to as the IMF crisis in Korea, forced television producers
to seek out products that were cheaper than Japanese or Western products. One
such product, soap operas, became the starting point for the Korean Wave in
Taiwan. Finally, a third reason was the self-confidence and nationalism shown by
Koreans through their popular culture and international events. Many survey
respondents felt that Korean popular culture differed from others in that it
expressed inner passion and powerful energy.32
The last of these factors was prominently illustrated during the 2002 World
Cup by the omnipresent crowds of red-shirted Korean fans cheering on their
national team. These images of the passionate Korean fans were beamed around
the world in televised coverage of the tournament.
Of course, we must note that the advances in communications technologies
themselves are a major factor in the spread of popular culture within Asia and
around the world. The new digital networks, with their constantly increasing
bandwidth, simply allow for more content and a more diverse range of cultural
products. Here in Korea today, one of the major differences between the new
IPTV services and the older cable television is in the sheer number of channels
provided.
In February of 2009 the Korean government unveiled a US$91 million plan to
boost the country’s pop music industry, including the building of two massive
concert halls in Seoul. The five-year plan aimed to increase home consumption
of pop music and to increase exports by globalizing the industry. Its goal
was to approximately double the size of the market from 844 billion won to
1.7 trillion won.33
Korea’s Future Image – ICT and National Branding

The national image of any nation is an extremely complex phenomenon, consist-
ing not only of popular culture and the mass media, but impressions of its citizens
when traveling or doing business abroad, and the products and services of its
major companies. Once events take place and are published by the news media
around the world, the images of those events have a certain staying power.
A recent survey sponsored by the Korea Trade and Investment Promotion
Agency (KOTRA), conducted in 21 countries around the world, showed that the
Korean government's image scored an average 3.31 points out of 5, which was
lower than the citizen image at 3.62 points and the corporate image at 3.55 points.
According to a KOTRA official working on national brand management, the
frequent media exposure of North Korean missiles, demonstrations, strikes and
the long-lasting image of Korea as a divided country were some of the reasons
that the impression of Korea’s government scored lower than that of citizens or
corporations.
However, not all countries in the survey rated Korea low. Some of them that
rated both Korean products and Korea as good were India, China, France, Brazil
and Italy, and those that rated the country higher than its products were the U.S.,
Canada, Germany and Vietnam.34
The relationship between South Korea’s national image, considered as brand
image, and the image of its products, people and culture was considered serious
enough that in January 2009 a Presidential Commission on National Brand was
launched. On that occasion it was noted that Korea's national brand value was
negligible in comparison with its status as the world's 13th largest economy. The
national brand of the United States was valued at 143 percent of its GDP and
Japan's at 224 percent, while that of Korea was valued at below 30 percent.35
According to the outcome of a 2007/2008 survey conducted by KOTRA, Korean
products were valued 66 to 67 percent less than their American counterparts.
This “Korea discount” phenomenon reportedly affected the prices of Korean
products.
It is noteworthy that the first global promotional campaign recommended by
the Presidential Commission on National Brand focused on Korea’s strength in
ICT. Perhaps that and subsequent campaigns will help to make more people
around the world aware that Samsung and LG, among others, are Korean compa-
nies. That would be appropriate insofar as the private sector, led by those compa-
nies, was largely responsible for South Korea’s rapid digital development,
especially since the mid 1990s.
National Division and the Digital Divide

Any treatment of Korea’s place in the world today needs to acknowledge the
tragic reality of continued national division. The political and humanitarian
aspects of this division have been treated extensively by others. Here, we would
like to underscore the growing disparity in communications infrastructure
between North and South, which is vividly symbolized by the widely dissemi-
nated satellite photographs of the Korean peninsula at night, one of which is
shown in Figure 9.2. The bright lights in South Korea might just as well represent
its abundant fiber optic and wireless digital networks next to the darkness in the
North, which has earned the distinction of being the world’s biggest “internet
black hole.”36 The digital divide on the Korean peninsula today has no equivalent
anywhere else in the world.
Korea was divided before the dawn of the information age. In 1945 there were
no personal computers, communications satellites, cellular telephones or other
appurtenances of the information era. The more recent information revolution has
Figure 9.2 Photo of Korean Peninsula from Space at Night.

Source: Defense Meteorological Satellite Program, http://www.globalsecurity.org/
military/world/dprk/dprk-dark.htm
transformed the very meaning of Korea’s national division and sets the bar at a
new level in terms of expectations for eventual reunification. Today, high speed
internet and modern mobile communication are basic elements required to oper-
ate a modern market economy. Consequently, the media and telecommunications
will be called upon to play a far larger role in Korea’s reunification than anyone
might have imagined at the end of the Korean War.
Digital Divide: The Growing North–South Disparity in ICT Infrastructure

North and South Korea occupy the same peninsula and share a national history
that spans thousands of years. Yet today there are few pairs of nations on earth
that exhibit a greater gap in the level of development of communications
industries and infrastructures than these two states.
Communications Infrastructure
An attempt to compare the telecommunications infrastructures of North and
South Korea almost defies any quantitative comparisons. However, data on
teledensity (the number of telephone main lines per 100 population) from the
ITU show that, as by 2007, North Korea had achieved a teledensity of 4.96,
approximately what South Korea had 30 years earlier in the midst of its telephone
backlog crisis.
In 1995 North Korea’s teledensity was about 5 percent of South Korea’s.
Twelve years later, in 2007, its teledensity was 10 percent as large as
South Korea’s, but mainly because teledensity in the South had started a steady
decrease in 1999 as people shifted over to mobile telephony.
In January of 2008 Egypt’s Orascom Telecom announced that it had won a 3G
license to construct mobile phone networks in North Korea. This was reportedly
a joint venture, 75 percent owned by Orascom and 25 percent owned by
North Korea’s state-run Korea Post and Telecommunications. In the announce-
ment, Orascom said it planned to cover the capital, Pyongyang, and other major
North Korean cities during the first twelve months of operation.37
It is no coincidence that North Korea’s computer communications internally
takes the form of a large intranet, using the fiber optic network that has been
installed to link major cities. Actual connection to the internet is limited to a rela-
tive handful of elites in government and the military. In April 2004, an internet
café was opened through which ordinary people could use the internet. However,
access was reportedly limited to the domestic network; the real internet being
closed to the general public.38
The Implications of Korea’s Digital Divide

There are several clear implications of considering Korea’s division as a digital
divide. First, because technological change and development of the information
society are continuous processes, the infrastructure gap between North and
South Korea tends to increase year-by-year, rather than decreasing. This means
that the overall cost of removing the gap also increases.
Second, the digital divide between North and South is also a democratic divide.
Leaders in South Korea during the 1980s believed that the information revolution
would bring democracy to South Korea and history shows that has happened. In
the North, however, there are still leaders who think that the information revolu-
tion can be somehow controlled, filtered or shaped to suit their own vision.
Third, as this chapter makes clear, the division of Korea until now has been
a permanent part of South Korea’s national image and that of North Korea as
well. Although we hesitate to make forecasts about when and how unification
may take place, it is possible with some confidence to say that it will eventually
come about.
A Hub for Northeast Asia?

South Korea’s existing free economic zones, including the New Songdo City
development in Incheon, represent preliminary steps toward building Korea as a
hub. On the basis of its track record of the past three decades, South Korea alone
can make significant progress toward becoming a major regional hub. However,
there is little doubt that unification will add strength to the effort in the long
term.
A recent study by Goldman Sachs suggested that a reunified Korea could boast
an economy larger than that of France, Germany and possibly Japan by the
middle of the century. The economist who authored the study, Kwon, Goo-Hoon,
suggested that the costs of reunification need to be re-evaluated in light of the
rapid development of countries like Vietnam and Mongolia, which had state-run
economies as in North Korea. Both the Goldman Sachs study and a recent Bank
of Korea report suggested that the two Koreas maintain separate currencies and
restrict border crossings, perhaps for decades, as the North Korean currency
appreciates and its people grow wealthier. The study also noted that the North’s
huge growth potential could help offset the slowing growth of South Korea, with
its rapidly aging population. North Korea has large mineral deposits and a
younger population that is growing faster than that of South Korea.”39
Significantly, the Goldman Sachs study assumes a peaceful and gradual
economic integration of North and South Korea. This assumption, the study
notes, seems reasonable given the policy stance of the South Korean government
and the international community, and the apparent lack of alternatives for the
North Korean government other than economic reform and cooperation with
neighboring countries.40
These recent reports are in line with our emphasis on the growing disparity in
ICT infrastructure between North and South Korea. They suggest that the
North Korean economy is at a crossroads and note that South Korea is now the
North’s largest trading partner, and that cooperation at the Gaesong Industrial
Complex, which accounts for about half of inter-Korean trade, continued even
amid escalating tensions earlier in 2009.
While we can only provide some empirically based speculation on the question
of Korea’s national reunification, we can be more certain of our conclusions
regarding South Korea’s accomplishments. In the space of less than three decades
and only ten years into the new century, South Korea has assumed a leadership
role in the world’s evolving ICT sector and in its efforts to build a global informa-
tion society. The evidence we have summarized thus far makes that clear.
How far the nation will exercise that leadership, and to what ends, is the central
question South Korea faces now. In the concluding chapter, we will look ahead
into the future of cyberspace and Korea’s place in it.
10 Korea’s Place in Cyberspace
“Governments of the Industrial World, you weary giants of flesh and steel, I come
from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the
past to leave us alone. You are not welcome among us. You have no sovereignty
where we gather.” –
John Perry Barlow, A Declaration of the Independence of Cyberspace,
February 19961
Our book has traced South Korea’s efforts over the past three decades to build an
information society. A key aspect of the nation’s digital development was the
emergence of a realm called cyberspace. Among the earliest to venture into
cyberspace were those who frequented Korea’s ubiquitous PC bangs to play such
online games as World of Warcraft or Lineage. Then came such web services as
Cyworld. On the whole, Koreans began to experience cyberspace years earlier
and in far greater numbers than netizens from other nations.
Looking ahead, cyberspace seems destined to become increasingly important
not only for Korea but also for the other nations, corporations and people of the
world. What are the possibilities for a global information society and what will
be Korea’s future role in cyberspace?
Cyberspace will be a vital part of the future global information society and
Korea’s future strategy, for at least three important reasons. First, as we have
documented, South Korea built the information superhighways through which
one enters cyberspace almost half a decade before the United States and other
advanced economies. Once the digital networks were in place two new places
appeared in the expanding cyberspace. One consisted of massive multiplayer
online games (MMOG) that originated here, the best known of which is Starcraft.
In the latest versions of such games, participants increasingly immerse them-
selves in the virtual worlds of the games. The second expanding space was social
networking, as epitomized by Cyworld.
A second reason that cyberspace has profound importance for Korea has to do
with the balance between manufacturing and service industries. To date, South
Korea’s progress in digital development has been based largely on the manufac-
ture and export of hardware, including semiconductors, flat panel displays and
television sets, mobile devices and network hardware. The networks and commu-
nications hardware are a necessary but not a sufficient condition for cyberspace.
Three-quarters or more of the global communications market has to do with
software, content and service applications. These are the stuff of which cyber-
space is made and it will be vital for Korea to seriously move into these areas,
with the same sort of success it has achieved to date in hardware manufacturing
and export.
A third aspect of cyberspace also underscores its significance for Korea. Its
inherently global scope means that it poses a set of governance challenges for
governments, corporations and citizens’ groups. Such issues are of particular
importance to countries, such as Korea, that export ICT products and services to
the whole world. More broadly, they are significant for all nations that seek to tap
the power of ICT for development. Simply put, Korea already has too much of a
stake in cyberspace to sit idly by. Rather, it must be an active participant, as befits
its recent experience.
In this chapter we assess Korea’s place in cyberspace, starting with an exami-
nation of how cyberspace is commonly defined, including a Korean perspective
on cyberspace. The second part of the chapter then moves to an account of how
Korea strategically restructured its ICT sector to assume its present status.
Some parts of the Korean experience may hold lessons for other developing
countries that seek to emulate it. At the very least we want to summarize for the
historical record some main dimensions of Korea’s experience with digital devel-
opment. Finally, the chapter concludes with some suggestions about the future,
which may have as much to do with Korea’s place in cyberspace as its role in the
real world.
Conceptions of Cyberspace
The word cyberspace, which comes from combining cybernetics and space,
was coined by science fiction novelist and cyberpunk author William Gibson
in his 1987 story Neuromancer. He defined cyberspace as a “consensual halluci-
nation.” Metaphorically, the term is now widely used to describe a social
setting that exists purely within a space of representation and communication.
It exists entirely within an electronic, computer space, distributed across
increasingly complex and fluid networks. As used in academic circles and in
the activist community, cyberspace has become a de facto synonym for the
internet.
Defining cyberspace is very much a matter of context. However, a common
factor in virtually all definitions is the sense of place that they convey. Cyberspace
is most definitely a place where you chat, explore, research and play.2 In Lessig’s
analysis, spaces have values which are manifested through the lives that
they enable or disable. The process of enabling or disabling depends upon the
computer code that governs access to chat rooms, digital envelopes, internet gate-
ways and other systems. People, who in real life might be blind, disabled or ugly,
can overcome these limitations in cyberspace, depending on the architecture
Korea’s Place in Cyberspace 183
of that space. Codes constitute cyberspaces, which in turn enable or disable
individuals and groups.3
Mainstream media reports on cyberspace feature noisy commercial businesses,
stimulating or pornographic sex, and horrible crimes. By contrast, in healthy
people’s cyberspace there are pleasant meetings, recreation, information and
knowledge to satisfy a person’s mental needs. In twentieth-century fashion
cyberspace offered a form of escape. In the twenty-first century, if the younger
generations are exhausted, mentally running dry and craving for knowledge, isn’t
this the place to fulfill those needs?
Young people can benefit from using cyberspace as a place of refuge. As long
as netizens behave themselves mentally when they enter that space, they can find
a pleasant path. It is possible to visit new places, meet new people, and even
find love. Together the citizens of cyberspace can become aware of knowledge
they didn’t have and satisfy their curiosity about things they wanted to know.
All their requirements for knowledge and recreation can be met satisfactorily in
cyberspace.
Discovering the Geography of Cyberspace

Cyberspace is a new spatial realm that seems to be unfolding with almost
limitless possibilities for the future. Accordingly, one of the key questions being
asked about cyberspace is that of how we can discover its geography. One
approach to answering this question is mathematical. Since the internet is a
network of interconnected points, it can be readily examined using techniques
from topology or graph theory. A second approach uses techniques from the field
of geography, overlaying the structure of the internet on maps of the physical
world. The emergence of cyberspace raises some fundamental questions about
the importance of borders versus the notion of a borderless world. These new
borders, he notes, are unexplored, undemarcated and have few effective treaties.4
A third spatial aspect of the internet is the so-called “death of distance.” The
degree of connectedness in human society is rapidly increasing due to the internet
with its social networking and “six degrees of separation.” Cyberspace, of course,
is not subject to physical laws and real-world constraints. This opens up the possi-
bility, as already seen in computer games, where multidimensional worlds,
hyperspace jumps and wormholes become possible.5
The Internet versus Cyberspace

Though built on top of the internet, cyberspace is a richer experience. Cyberspace
is something you get pulled “into,” perhaps by the intimacy of instant message
chat or the intricacy of massive multiplayer online games. Some in cyberspace
believe they’re in a community; some confuse their lives with their cyberspace
existence. Of course, no sharp line divides cyberspace from the internet. But there
is an important difference in experience between the two. Those who see the
internet simply as a kind of Yellow-Pages-on-steroids won’t recognize what
citizens of cyberspace speak of. Some of this difference in perspective about
cyberspace may be generational. Consequently, to understand the world the next
generation will inhabit, it is necessary to understand cyberspace.6
Cyberspace as virtual space

Cyberspace differs from real space in that it is a virtual space. For example,
massive multiplayer online game (MMOG) space is like a cartoon on television
and may be three-dimensional and increasingly immersive. However, unlike the
cartoon, MMOG space enables you to control the characters on the screen in real
time, interacting with other such characters being controlled by others in real
time. Users of MMOG space are able to define the space and live out their own
stories. There is real life in MMOG space, constituted by how people interact in
this virtual medium. In 1990s terms people “jack” into these virtual spaces and
do things there. An estimated 20 to 30 million people were participating in these
virtual worlds.7
Another important characteristic of cyberspace is that, given the architecture of
the internet, access to cyberspace doesn’t depend upon geography. The structure
of the internet also makes it possible to enter cyberspace through anonymizing
sites that make it practically impossible to trace a person’s real identity. This
helps to explain why various forms of online gambling, pornography and such
flourish. The growth of online games on the internet has produced opportunities
for people to do things in the virtual world that they would never think of doing
in the real world. This also helps to explain why many of the most popular games,
such as World of Warcraft, have a fantasy element to them.
Cyberspace Sovereignty and Net Neutrality

The question of sovereignty in cyberspace is a new and complicated one.
Regulation of what happens in this space depends not only upon governments,
corporations or citizens' groups around the world, but also on the software code
that controls communication on the internet. “Code codifies values, and yet,
oddly, most people speak as if code were just a question of engineering. Or as
if code is best left to the market. Or best left unaddressed by government. But
these attitudes are mistaken. Politics is that process by which we collectively
decide how we should live.”8
Thanks to the development of cyberspace, ordinary citizens around the world
are connected and can make international transactions as never before. The real-
ity of new communities that go beyond any individual state is undeniable.
Examples abound: Global Voices Online is a relatively new organization made
up of bloggers and news reporters from countries around the world that are not
covered thoroughly by the mainstream media.9
Today’s “netizens” in Korea, if polled, would probably for the most part iden-
tify themselves as citizens of Korea, rather than “global citizens” or residents of
a larger political entity. Likewise, overseas Koreans might identify with their
country of citizenship, depending on their length of stay or generation of
birth. Nevertheless, the growth of cyberspace exerts a pull on netizens to
place their loyalties with other like-minded netizens around the world. At the
current stage of its development, the internet, and therefore cyberspace, is the
subject of a worldwide political battle. International laws, as they relate to cyber-
space, are increasingly significant because of the need for nations to arrive at a
common understanding of this space and a coherent strategy for dealing with its
regulation.10
Cybersecurity for People and for Nations

Today’s internet is organized around independently managed networks, most of
which are privately owned. On the other hand, as Mueller notes, the current insti-
tutional structure for public governance is organized around the nation state.11
Faced with this reality, some observers frame internet security or “cyber-
security” as a national security policy issue, while others conceive of the internet
as a global space where individuals and organizations interact and routinely
confront issues of crime and vandalism.
The national-security approach is represented by a recent CSIS-sponsored
report from a “Commission on Cyberspace Security for the 44th Presidency.”
That report, published in late 2008, urged the incoming president to proclaim that
“cyberspace is a vital asset for the nation and … the United States will protect it
using all instruments of national power.”12
Another report, published by a Dutch research organization in collaboration
with a U.S. academic institute, framed the problem very differently, as follows.
“Because the internet has no natural political boundaries, national bounda-

ries are not effective to partition cyber security policy responsibilities. And
even though security is a basic public sector concern, and typically regulated
at the government level, the bulk of the capability for dealing with cyber
security risk is not in the hands of governments but lies with the private
or semi-private sector entities that actually manage and operate the ICT
infrastructure.”13
The same report described a world in which those concerned with cyber
security have to think about hackers, cyber-criminals, terrorists, and high-tech
national security strategists.
In South Korea14 as well, with the early development and use of high speed
broadband communication networks, the cyber environment became more impor-
tant in such fields as economics, finance, communications and defense. As in
other countries, there emerged an all-out contest in cyberspace that included
cybercrime.
Also, while confronting North Korea, South Korea’s concept of defense
needs to encompass cyberspace. The subject of defense not only involves terri-
tory, people and basic national infrastructure in a concrete or material sense.
Information and knowledge have become an important part of the nation’s and
its people’s wealth or fortune, to be protected by both cyber and physical defense
measures.
Cyber-war is a new form of conflict and requires new training methods. It
requires attention to offensive and defensive fronts simultaneously and incorpo-
rates responsibility for protection of citizens’ private property and maintenance of
public order. Cyber-defense requires a great deal of concern and investment to learn
what the real organizational, manpower, construction and equipment needs are.
Although some consider that the United States has the world’s leading capabil-
ity for cyber-warfare, South Korea also has many governmental efforts under
way in this area. The government maintains a web-based support center with a
corresponding call center to deal with cyber-terror issues under the Korea Internet
and Security Agency (KISA). The National Police Agency operates a Cyber
Terror Response Center.15 Beyond this, all major government ministries are
making efforts to deal more effectively with cyber security.
Korean Conceptions of Cyberspace

Cyberspace can be thought of as the frontier built upon the infrastructure we
call broadband internet. How then do Koreans, as some of the earliest settlers in
that frontier area, view cyberspace and how does their vision compare with that
of other nations or cultures? Although this subject can be a slippery one, it is
important for leaders everywhere to struggle with the concept and to clarify their
own vision of the future, knowledge-based society.
For Koreans who have difficulty understanding cyberspace, it may be helpful
to think of it as a Utopia or a paradise. Then it is like the mythical Yi-eo Island
that people in Jeju-do dream of. Jeju is Korea’s island province, located south of
the peninsula and therefore enjoying a somewhat warmer climate. Residents of
Jeju Island have a dialect of Korean that cannot be understood by citizens on the
peninsula. However, they share one trait with Westerners, Chinese and people all
over the world: they have begun to imagine cyberspace. While Westerners
may imagine paradise, and the Chinese conjure up images of Utopia, the Jeju-do
residents think about Yi-eo island.
Traditionally, when the Chinese were troubled by the hardships of life, they
imagined a utopia called the Happy Valley. In that valley, if you picked and ate
the peaches they would bestow upon you eternal life. You could also put your feet
in the clear water of a brook and, if you imagine reciting the words shi han soo,
it would comfort your spirit.
Westerners tended to look upward to Paradise Island. In that place there were
only loving people and self assurance. Only two people existed and clusters of
trees laden with ripe fruit added their fragrance to a blue ocean beach. If there
were bitterness or rancor, a rainbow would appear. Also, in Paradise Island you
could see across the whole world.
Not surprisingly, the corresponding myth for Koreans has to do with moun-
tains. It can be found in the well-known “Arirang” folk song. Arirang is by far
the most representative and famous Korean folk song, and there are literally
hundreds of versions of the song.16 Fundamentally, all versions of the song are
about the travails of the song’s subject crossing a mountain pass. An English
translation of the basic lyrics is as follows:
Arirang, Arirang, Arariyo ...

I am crossing over Arirang Pass.
The man/woman who abandoned me [here]
Will not walk even ten miles before his/her feet hurt.17
The theme of this folk song is that of love between a man and a woman, and
its melodies and rhythms are very well suited to the Korean culture and character.
The full meaning of this folk song is open to interpretation. However, in the
instant that Arirang went over the ridge, it seemed as if a world of abundance
and happiness unfolded – a place in which hunger and cold disappeared and
there was no grief or sadness.
Yi-eo Do, on the other hand, was an island that existed only in the imagination
of people from Jeju-do. Sailors who went to sea in their ships but didn’t come
back were believed to have settled in Yi-eo Do. If one went to that place, all
worldly troubles or cares would disappear. Once a person set foot there, only rest
exists and it is believed he cannot return. Therefore, children believe in their
hearts that when their father dies he is not dead but living in Yi-eo Do. Sailors
occasionally feel an impulse to turn the bow of the ship and sail out to sea in
search of Yi-eo Do.
Once, it was reported on Korean television that Yi-eo Do was actually discov-
ered. However, if the actual location of the island were to appear on a map, that
would not really be Yi-eo Do. The island exists only as a vision inside the minds
of the people of Jeju-do. Whenever children long for their father, if they imagine
Yi-eo Do, it seems they can meet him. Likewise, wives can meet their deceased
husbands again in that place. Every day those sailors who have not reached
that place long for Yi-eo Do and thereby acknowledge that someday they will
go there.
Such an ideal place is imagined in every country and among every people. The
reason is that human beings want to live in a place where they can get rid of poverty,
destitution, discontent with existence, and even violent labor demonstrations.
If this is the case, it explains why another Yi-eo Do, called cyberspace, exists.
Today Yi-eo Do may have left the imagination of some people in Jeju Do. In
contrast cyberspace has created something even more realistic than the real
world. To that extent, the door to this place is wide; the climate is balmy and
warm. However, today there are many obstinate people in Korea who play games
day and night even to the point of dying from the exertion. In cyberspace there is
ample opportunity for recreation and acquiring knowledge, yet these things
cannot be more important than real life. Our recommendation to those who need
an example of this is straightforward. Turn off the computer and the reality of life
will return and your power of self control will expand!
The Cyber Path: Three Decades of Digital Development
Although Korea was not the only nation to take the cyber path toward develop-
ment, it was certainly the first.18 While it would be a mistake to assume that
Korea’s experience can easily be translated to that of other developing nations,
some aspects of it may be useful. After all, South Korea succeeded, beyond all
expectations, in harnessing digital technologies for development. Its transforma-
tion was both sweeping and rapid. The following review of our main findings
may help readers discern which lessons apply to their country and which are
unique to the Korean experience.
Education, Human Resources

Any catalogue of the major influences on South Korea’s telecommunications
revolution must begin with the importance of education, which is the basic
process of the information age. As such, it is a pre-requisite for research and
development, leadership and all the other key factors in Korea’s information
revolution.
As documented in Chapter 7, education played a prominent role in Korea’s
transformation in several different ways. First, the nation built up its infrastruc-
ture for formal education, a process that by the 1980s and 1990s came to focus
on university-level education. Second, Korea strengthened its capacity for voca-
tional education along the way. ICT is demanding of skills and an essential tool
for building a knowledge economy. A third component of South Korea’s
approach to education is study abroad. No other nation in the world sends as
many students overseas for study, and, considered on a per capita basis, Korea’s
lead is near insurmountable. A fourth contribution of education to Korea’s infor-
mation revolution was in creation of citizen awareness and demand. The massive
three-decades long government, media, citizen and private-sector campaign to
promote the information society and raise public awareness of information
culture is itself one large educational undertaking. Today, citizen awareness of
the information society and its significance is probably higher in South Korea
than in any other nation on earth. In creation of citizen awareness and demand,
Korea has set an example that many other nations might follow. A final dimen-
sion of education’s contribution to the information revolution in Korea is its
integral role in research and development. University-based researchers and
university-affiliated research institutes are important sources of basic and funda-
mental research relating to new media and ICT. The education sector’s support
for R&D thus makes it inseparable from the second major factor in South Korea’s
transformation, the development of indigenous technology capability.
ICT Innovation and R&D

Faced with continual rapid changes in information and communication technolo-
gies, South Korea was able to develop its own technology production capabilities.
The nation’s research and development efforts, beginning in the 1980s, were
focused on achieving an indigenous technological capability, initially in elec-
tronic switching systems and semiconductors. Those projects achieved rather
spectacular success and became major drivers of the digital revolution in Korea.
In other words, in the hands of well-educated people the new and more powerful
technologies of computing and communications are what account for the
epoch-making character of the information revolution.
Over the 30 years covered by this study, Korea’s model for technological inno-
vation changed in important ways. In the 1980s the state and its leading research
institute, ETRI, exerted strong, top-down leadership, with revolutionary results in
the landmark TDX project. Over the ensuing decades, the private sector, not only
in Korea but globally, became more influential in funding and guiding telecoms
R&D, and so the whole enterprise became more decentralized. Far from retreat-
ing to the sidelines, the government assumed a role that we have likened to that
of an orchestra conductor.
Government Policies
A third major factor in South Korea’s digital development is government leader-
ship. More frequently than any other country, Korea is held up as an example of
government-led ICT development. In Korea, it was the government itself that
initiated privatization and introduction of competition into the telecommunications
market. Government leadership can be seen in each of the four policy balances
that come into play in the strategic restructuring of the telecommunications
and information sector in Korea.
First, the role of the private sector relative to that of the government increased
greatly over the past three decades. However, the government maintained a criti-
cal role as an orchestra leader, through the revolutionary changes in broadband
internet and mobile telecommunications in the 1990s and into the ubiquitous era
of the 21st century.
We have documented these changes in two main ways. The first of these was
the government-initiated privatization of telecommunications services, beginning
with value-added services, then specific services, and finally general service
providers, epitomized by Korea Telecom.
The other way in which we have shown the growing influence of the private
sector is by documenting the spectacular growth of Korea’s chaebol conglomer-
ates, with special emphasis on the largest of them. Samsung Electronics illus-
trates the sort of impact that a single large company can have. Cumulatively, the
chaebol have had an immense impact on ICT diffusion and Korea’s economic
growth.
Studies by the ITU, the World Bank and other international organizations have
all noted the apparently smooth cooperation between government and industry in
Korea. Our interpretation is that this cooperation came largely because the
government and business circles shared a common interest. The need for
the government to privatize telecommunications and separate itself from the
industry was recognized early in the 1980s, yet it could not easily do this. The
closer government came to business circles, the more there was friction or criti-
cism coming from the business community. Yet leaders from both government
and industry acknowledged, during the 1980s, that telecommunications develop-
ment required a broadly cooperative effort. Only through such cooperation was
the revolutionary progress of that decade made possible.
Another important aspect of Korean government leadership had to do with
financing. The South Korean government and private sector invested very large
sums of money into the construction of the nation’s information superhighways,
between 1995 and 2005, and more recently the nationwide build-out of wireless
broadband (WiBro). In addition, the 1980s experience of building the PSTN, a
project completed in June of 1987, involved systematic reinvestment of a percent-
age (3 percent) of profits over a period of years into research and development, a
percentage that was not reduced until 2002. Traditionally, spectrum auctions and
licenses have been very lucrative for governments, and the funds generated are
absorbed in the government’s general budget for funding any projects as the
government sees fit. In contrast, the Korean government recognized that, as a way
to help Korea become a world leader in ICTs, these funds could be strategically
reinvested in the telecommunications sector.19
As the ITU Broadband Korea study put it, the private sector has done most of
the “heavy lifting” in helping to achieve Korea’s current status as a world leader
in ICT. Nevertheless, the role of the government as the leader in Korean ICT
development should not be overlooked. It is part of Korea’s business culture to
listen to the government.20
The Korean experience underscores the reality that modern digital networks
are large and costly construction projects. Part of the reason for this nation’s
success is that it invested significantly and over a long period of time in building
the required infrastructure. As the experience of the United States and other
countries in recent decades indicates, if private telecommunications companies
are left alone, they may or may not invest adequately in a national infrastructure.
On the second policy balance of monopoly versus competition there was major
change over the decades treated in this book. As the decade of the 1980s dawned,
telecommunications in Korea was a government monopoly under the Ministry of
Communications, as in many other developing countries at the time. That policy
balance shifted dramatically toward competition in the ensuing decades, particu-
larly as the government encouraged facilities-based competition. As the World
Bank study noted, “The key feature that distinguishes Korea’s deregulation and
competition policy in the telecommunications services sector from other coun-
tries was its reliance on facility-based competition.”21 Such competition results
when new entrants into the sector build their own facilities to provide services, as
opposed to service-based competition where the entrant uses the facilities of the
incumbent. Korea is one of the few countries that has multiple operators in all
markets within the telecommunications services sector.
Korea pursued a policy of gradual introduction of competition in basic tele-
communications services. Once again, the strategy took into account the category
of service. The provision of value-added services was opened up for competition
in 1990. In 1996 three PCS licenses were granted to new competitors in the
provision of mobile communications services. Competition in international calls
began in 1991, long distance in 1995 and local call service in 1999.
In the case of both broadband internet and mobile communications, the
Korean government orchestrated the players, rather than letting the pure market
oligarchy of large chaebol groups rule. It attempted to level the playing field for
competition, but at affordable prices to assure public acceptance. The Korean
government also showed a flexibility and willingness to change the road map as
it unfolded in response to supply and demand.22
On the third major policy balance, foreign versus domestic ownership, there
was also considerable change over time. Restrictions on foreign ownership of
telecommunications service providers began to be gradually lifted during the
1980s, most rapidly in the category of value-added services.
In the 1990s and beyond, private companies such as Samsung Electronics
and LG Electronics, along with Korea’s service providers, SK Telecom, KT
and LG Telecom, came to play an increasing role in the ICT sector. The
challenges posed by technology change and convergence have pushed all of
these companies toward joint ventures with U.S., Japanese, European and other
international companies. Along with other OECD economies, South Korea has
experienced an overall growth of foreign ownership and investment in the
ICT sector.
Our treatment of the foreign versus domestic policy dimension in this book
also dealt with the influence of bilateral trade talks with the U.S., the Uruguay
Round multilateral talks and the WTO negotiations. These clearly exerted a
growing influence on South Korea’s ICT sector as the country was drawn into the
new, increasingly global information age economy.
Finally, on the question of centralized versus decentralized telecommunica-
tions policy our analysis suggests that Korea’s approach became progressively
more decentralized over the three decades covered by our study. One important
aspect of this trend toward decentralization was the government’s own effort to
liberalize the telecommunications sector, in order that it could develop more
fully in line with global trends.
A second important element in decentralization, as discussed in Chapter 3, was
the steadily growing influence of the private sector and, along with it, an increase
in the number of actors capable of influencing policy. Shortly after the turn of
the century, it became evident that the old top-down policymaking that had
characterized Korea’s developmental state in the 1960s and 1970s would no
longer work. Accordingly, the government moved to incorporate ICT sector-wide
approaches that brought in more actors.
In retrospect, Korea had started important work to smooth decentralization
back in the 1980s. A third factor in the trend toward decentralization was the
steady attention of government and the private sector to citizen awareness or,
economically speaking, the demand side of ICT. The development of information
and communication technology is not just a matter of building the hardware and
programming the software. To be economically viable there must be sufficient
consumer demand for the products and services.
As a recent report by the Information Technology and Innovation Foundation
on Explaining International Broadband Leadership notes, “Demand-side poli-
cies matter.” It cites South Korea’s Agency for Digital Opportunity and Promotion
(KADO), the sole mission of which is to promote digital literacy and access
to computers, including training programs to let people buy computers through
low-cost installment programs.23
On balance, the broad government, private-sector, media and citizens' groups
campaigns for citizen awareness of information culture have made Koreans
among the most ICT-literate citizens in the world, and have had a decentralizing
effect.
Up to this point, the main elements in South Korea’s digital development are
ones that could be emulated by almost any other nation on earth. However, most
observers of Korea’s transformation would agree that there are other factors,
more unique to South Korea itself, that help to explain its success.
Timing
While we would stop well short of calling the communications revolution in
Korea an “accident of history,” the timing of developments treated in this book
must certainly be considered in order to fully explain them. For one thing,
consider the utter devastation wrought by the Korean War. Many who are alive
today can remember the hardships of that war and its aftermath. Ironically, those
desperate conditions may have helped instill a fierce determination to work for
the nation’s development.
Another important aspect of the timing of Korea’s telecommunications revolu-
tion can be seen with respect to telecommunications law and policy in the United
States, and the dramatic worldwide growth of the internet in the mid to late
1990s. In the United States, the Telecommunications Act of 1996, framed as a
reform effort, was a major modification to the Communications Act of 1934. It
was shaped during the early to mid 1990s and was enacted shortly after the 1995
commercialization of the internet backbone and the introduction of browsers that
helped popularize the World Wide Web. Although many of the key actors behind
this landmark legislation understood that sweeping change was on the horizon,
“… full appreciation of the key role of the internet did not exist, in society or in
Washington.”24
In Korea, on the other hand, because of the timing of these developments in
the United States, the country “hit the road running,” so to speak, by building
the information superhighways necessary to exploit the benefits of the World
Wide Web.
Another specific example of timing can be seen in the semiconductor industry.
The global scope and the scale on which this industry operates produces periodic
cycles of boom or bust that require long-range planning and investments of large
amounts of capital. Korea began manufacturing semiconductors in the 1970s,
following Lee Byung Chul’s famous public statement that he would stake the
future of his Samsung group on semiconductor manufacture. However, Korea
had not made much of a dent in the semiconductor industry worldwide when a
government-led consortium was formed in the 1980s to develop a manufacturing
capability for the 4MB DRAM chip. This project was successful in no small part
because the world markets were ready to buy Korea’s 4 MB DRAM chips in
large quantities just after the technology had been successfully commercialized.
Political Liberalization and the End of the Cold War

Digital development in Korea was also made possible by its political transforma-
tion, at home and in terms of its place within the community of nations. The
domestic political changes and the international developments are inextricably
related.
Domestically, South Korea achieved democratization. Political liberalization
in South Korea took a decisive turn in late June of 1987 as the government of
President Chun Doo-hwan chose to accept virtually all opposition demands and
called for elections later that year, in the interest of national harmony and the
successful hosting of the Seoul Olympics. Also, as we have documented in this
book, it was the government of President Chun that, early in the 1980s, made the
decision to liberalize South Korea’s telecommunications sector.
For evidence of the long-term significance of Korea’s “Northern Policy” and
the end of the Cold War, one need only look at Korea’s current exports of mobile
handsets, LCD displays and television sets to those former socialist-bloc nations
with whom South Korea had virtually no ties. Indeed, trade with China alone
underscores the success of the policy.
Both of these broad political transformations, democratization and the end of
the Cold War, bear a direct and profound relationship to the sort of information
society that South Korea has built over the past three decades. Absent either of
these changes, the remarkable developments described in this book would have
stopped well short of fruition.
Korean Culture and the Han-gul Alphabet

The Korean culture has proven to be very conducive to all forms of digital
media and to the information revolution generally. The value that it ascribes
to education helps to explain, as already described, how South Korea could
rebuild its education system domestically following the devastation of the
Korean War, send many students abroad for specialized training, and educate
the public as to the importance of the “information society” over the past three
decades.
In addition, the Confucian influence on Korean culture and its emphasis on
one’s relationship to key groups in society have shaped its information culture.
The rapid adoption of social networking via the internet in Korea makes this point
as clearly as any other possible example. The social networking site, Cyworld,
became wildly popular in Korea almost five years before such social networking
sites as Facebook caught on in the United States.
Another example also illustrates the influence of Korea’s tightly-knit and homo-
geneous culture on the diffusion of web services. Although it possesses the most
advanced digital networks in the world, South Korea is also one of four countries
that stand out from the global trend toward using Google to search the internet.
As described in Chapter 1, the creation of Han-gul, an indigenous alphabet, is
considered to be a crowning achievement of Korean culture. It not only contrib-
uted to mass literacy in Korea, but also accelerated the diffusion of computers,
mobile phones and other electronic devices that require keyboard input.
Moreover, because of its alphabetic and scientific character, it facilitated the
development of a thriving graphics industry in South Korea.
“Over the Mountains are Mountains”: Geography and Demography

The 2002 ITU study, Broadband Korea, noted that South Korea was not demo-
graphically suited to have the highest internet penetration in Asia, being larger
and more populous than the other “tigers,” Singapore, Hong Kong and Taiwan.
The report also noted that Korea had a lower per capita income than those
other three tigers.25
However, from another perspective Korea’s information revolution benefited
from its mountainous geography. A well-known Korean expression says that
“after the mountains are mountains.” Indeed, on a clear day, when traveling
through South Korea, there are many vantage points from which one can see a
seemingly endless series of mountain ridges.
Korea’s mountainous terrain has historically interacted in powerful ways
with Korean culture. While the nation had been devastated by war and possessed
few natural resources, in a very real sense it was blessed by its mountains. As
South Korea’s population grew, the logic of the mountainous geography almost
dictated that most of the population would live in large cities rather than in the
rural areas. This concentration of population in the cities and in the large high-rise
apartments that how house over half the population was a major factor behind
the rapid construction of Korea’s information superhighways and the speedy
uptake of broadband internet in South Korea.
In one other specific sense, Korea’s mountainous terrain facilitated the revolu-
tion in mobile communications. While mountains can block cellular and other
mobile communications signals, they also provide high vantage points for mobile
base stations. In this respect South Korea’s state-of-the-art mobile networks are
like the beacon system that used fire and smoke signals for over 500 years during
the Joseon Dynasty (1392–1910).
Korea’s Place in Cyberspace

To this point we have presented considerable evidence that the transformation of
Korea over the past three decades was essentially a revolution in information
and communications, made possible by the extraordinary efforts of the Korean
people and their partners around the world. The magnitude of the changes in
South Korea is now a well-documented matter of historical record.
However, those changes included the following characteristics that pose major
challenges for Korea’s future development.
• It was based largely on manufacturing in the ICT sector, rather than

services.
• It was strongly export-led.
• The large chaebol conglomerates played a leading role, versus small and
medium-sized enterprises.
• Korea’s domestic market lagged much of the world by more than two years
in the widespread adoption of mobile broadband, as exemplified by the
iPhone and Android phones.
• Korea was one of a small handful of nations around the world that did not
quickly adopt Google for web search, relying instead on Naver, a far smaller
Korean-language-only database.
The above features of Korea’s information revolution provide some important

clues for thinking about its future, but they may not tell the whole story. After all,
few people who experienced Korea in the 1970s or even in1980 would have
imagined that the nation could develop as it has.
Whatever the challenges Korea faces, our study has documented the manner in
which South Korea built its broadband networks several years before the other
major industrialized countries of the world. Consequently, Koreans began to
experience cyberspace and its effects some years before the rest of the world.
These included more efficient and transparent government services and access to
a broader range of educational information at one end of the spectrum. At the
other end, South Korea confronted some internet addiction, problems with online
gambling, computer viruses, hacking and malware, to name some of the negative
effects. In other words, by being one of the first nations in the world to build the
information superhighways, Korea experienced not only the benefits but also
many of the problems encountered in cyberspace.
The early arrival of broadband internet and the growth of cyberspace in Korea,
on balance, suggests opportunities for Korea’s future role. In the following
sections we look at some of these.
Local and Global Governance of Cyberspace

The growth and development of both fixed and mobile broadband in South Korea
occurred so rapidly that the legal system could not keep up with it. This was
the case despite an almost continuous effort by relevant government ministries
and the national assembly to reshape laws for the information age.
Other countries face the same situation, and indeed may benefit from learning
about the challenges Korea encountered and how it dealt with them. The nation
can share its success stories about building a world-leading system of
e-government, as well as the efforts it has made to deal with the negative side
effects of the internet.
Moreover, the challenge to the legal system affects not only Korea, but
every country in the world. Different legal systems and systems of government
react to the information revolution in different ways, but they all face the
challenge.
South Korea has moved very rapidly from a period of government-led telecom-
munications development to a position at the leadership table in the shaping of
the future internet and, with it, cyberspace. Leading industry analysts and observ-
ers have begun to recognize this fact. Eli Noam, referring to the regular meetings
of the world’s telecommunications industry organized by the International
Telecommunications Union (ITU), has argued that telecommunications leader-
ship is changing guard. “On the network side, the US is not in the lead in wireless
and broadband, the cornerstones of new communications. Even if things are not
nearly as bad as some critics charge, since the international comparisons have
apples-to-oranges problems, other countries are setting the pace, increasingly
in Asia.”26 As if this were not enough, he went on to argue that “On the govern-
mental and policy level, the US has ceased to be the place to find new
policy directions. True, much of what is happening around the world has been
inspired by FCC policies of five or more years ago, but the next generation of
ideas is coming more from London, Seoul, and Brussels than from Washington
or the federal states, which were often the laboratory for US policy innovations.”27
The remainder of his editorial went on to suggest that America was coasting on
past glories and that change would need to come from the FCC in Washington.
However, that organization had been politicized, while technology continued
to change at the speed of Moore’s Law. The question he suggested is: who will
now set the tone, pace and business models for the vital infrastructure of the
information age?
Education
Public education about the internet and cyberspace becomes a matter of increas-
ing urgency with continued growth of digital networks. It is precisely in the area
of education about the information society and information culture that Korea has
been a world leader and has a great deal to share.
Within Korea as well as globally, better education is required at all levels from
primary through tertiary and lifelong education. Only through such educational
efforts can the negative aspects of the internet be controlled so that its positive
contributions reach more people.
In July of 2009, recognizing the continuing educational challenge, both at
home and globally, three government agencies were consolidated into the Korea
Internet and Security Agency (KISA). The old agencies included the Korea
Information Security Agency, the National Internet Development Agency of
Korea, and the Korea IT International Cooperation Agency.28
The Korea International Cooperation Agency (KOICA) remains one of the
most important government organizations when it comes to international educa-
tional aid, especially for developing countries. KOICA supports a very active
program of aid on the role of ICT in development.29
Cyber Security
In November of 1988 the young internet experienced its very first worm attack.
At that time, there were only about sixty thousand computers attached to the
internet and most of them were mainframes, minicomputers and professional
workstations in government offices, universities or research centers. Within the
span of one day, five to ten percent of all internet-connected computers were
compromised by the worm.30
That first worm attack was successful because of the open structure of the
internet and the fact that computers back then were unsecured. This is what
Zittrain refers to as the generative character of the internet. He argues that it is
now in jeopardy because of developments since 1988. Unlike then, there is now
a business model for bad code, resulting in a massive increase in computer
viruses, malware and botnets. Leading anti-virus companies have begun to
publicly express doubts about whether they will be able to withstand the growing
onslaught of computer viruses.31
Today, many individuals and organizations are responding to the increase in
viruses, malware and spam by turning to cloud computing and the use of such
electronic appliances as the Apple iPhone. The underlying question is whether
this response will ultimately forestall internet failures caused by bad code.32
Over the years, Korea has had its fair share of experience with viruses, worms,
malware and botnets. The July 4, 2009 simultaneous cyber attacks on web sites
in the United States and South Korea was a sharp reminder of the increasing
challenge posed by the threat of cyber warfare.
There is growing international consensus about the need for public discussion
of cyber security. Today, there is still little agreement in cyber security circles
about what cyber warfare actually means. It could involve anything from surrep-
titiously infiltrating adversarial computers to siphon intelligence, to full-on cyber
assaults against a power grid or air-traffic control network. On the other hand, it
might also involve planting disinformation, manipulating the electronic results of
an election or sabotaging financial markets through computer networks.33
Korea’s future place in cyberspace will depend upon its ability, together with
governments, corporations and citizens’ groups around the world, to successfully
address these serious security threats. In July of 2010, Korea joined fourteen
other nations in making a set of recommendations to the United Nations Secretary
General for an international computer security treaty. The other nations were the
United States, Belarus, Brazil, Britain, China, Estonia, France, Germany, India,
Israel, Italy, Qatar, Russia and South Africa. The recommendations represented
the first step toward ending a decade-long impasse between the United States and
Russia over how to deal with threats to the internet.34
Without a secure internet, the healthy growth of cyberspace is jeopardized.
A secure internet in turn requires a viable form of international governance. This
is precisely where South Korea can play a constructive role in the years ahead.
Cyberspace and the Inflection Point

At this book’s outset we noted the importance that other scholars and industry
executives attribute to the current inflection point in the ICT sector. The growing
importance of cyberspace to Korea and other countries can be more clearly under-
stood as a consequence of the inflection point in the global ICT infrastructure.
The combination of increased modularity with the emergence of ubiquitous
broadband communications greatly increases the potential scope of information-
technology solutions. The current inflection point has two significant conse-
quences. First, it significantly changes competitive opportunities in the ICT
industry by lowering the cost of market entry and development costs and
speeding up the pace of development. Second, it breaks ICT out of its geographic
and functional boxes, opening new frontiers for applications.
The advent of grid-style computing and ultra-broadband networks seems
destined to revolutionize the conduct of basic research in science. In this context
the next generation of networks will be essential to support the ambitious goals
Korea has set for progress in the space industry, nanotechnology, biotechnology
and other cutting-edge growth fields. In just a decade or so, massively interactive
applications combining video, data and computing will support a range of new
activities. These might include remote medical examinations and aerodynamic
design of objects using ‘community’ wind tunnels and high-end simulation
facilities.35
Perhaps the most significant aspect of the inflection point, for Korea, is its
global scope. Many of the problems now facing humanity are not limited to one
nation, but rather extend around the globe. They include energy, global warming,
education, health care and a host of other issues. Virtual reality may provide a
significant means for human beings to ameliorate some of their most urgent prob-
lems. To date, it has been difficult to create a high-fidelity virtual reality experi-
ence, largely because of technical limitations on processing power, image
resolution and communication bandwidth. The inflection point means that those
limitations should eventually disappear.
Looking ahead, the virtual reality of cyberspace promises to become steadily
more important not only to Korea, to accomplish its national goals, but also to its
partners around the world to cooperatively solve global problems. Korea’s Vision
2025, issued before the turn of the century, seemed to envision this future, as it
called for a transition from a closed R&D system to a globally networked system.
Cyberspace and Future Economic Growth

Present and future economic transactions in cyberspace have implications for the
real economy. As widely noted in tech blogs, many people in developing nations
are earning a living creating goods to be bought and sold in virtual realities such
as Cyworld and Second Life. The “acorns” that have become such a popular
commodity on Cyworld appeared approximately four years before Second Life
arrived in the U.S.
It is no great leap to imagine the virtual reality of cyberspace enhancing health
care, business and the environment across a broad range of activities. Take,
for example, the new phenomenon of health tourism, popular in some Southeast
Asian destinations such as Thailand and recently introduced in Korea. Using a
social-networking/medical-care sort of web portal, such health tourism visits
to Korea for needed surgery or care could be greatly enhanced. Not only could
medical records be handled electronically, but remote consultations with
doctors and hospital staff could take place prior to the patient’s actual visit to
Korea. Likewise, a cyber community could assist greatly with follow-up and
long-term care.
In January of 2009 the South Korean government announced that it would try
to focus the nation’s efforts on seventeen growth engines. These new national
growth engines comprised six projects in green technology industries, including
new renewable energies, low-carbon energies, LED (light-emitting diode) appli-
cations and green transportation systems; six in state-of-the-art fusion or conver-
gence industries, such as IT fusion systems, robot applications and biomedicines;
and five in high valued-added industries, including global healthcare, global
education services, green financing, MICE (meetings, incentives, conventions
and events) and the tourism industry.36
In all of South Korea’s future growth areas there will inevitably be a vast
expansion of the nation’s presence in cyberspace. In the future era of ubiquitous
networking and computing, it seems certain that cyberspace will become even
more important relative to the real world.
The Languages of Cyberspace

The era is coming when well-made software and well-established venture compa-
nies will raise a country’s GNP. It seems we are approaching an era in which all
countries will be fighting for territory and position in cyberspace. Will Korea be
able to meet this challenge appropriately?
As we have documented in this book, South Korea has constructed the neces-
sary hardware and infrastructure. However, it continues to lag behind in software
and development of what we might call the information mind. A significant part
of this problem involves language.
Computer and internet literacy is one part of the linguistic challenge. At the
stage when Korea was approaching 10 million internet users and 20 million hand
phones there was a delay in developing the capacity to use information. Until that
point about half of South Korea’s citizens were completely unable to deal with
computers and could be classified as computer illiterate and internet illiterate. At
that time the only practical use of computers for many people was simple web
forms or playing games.
A second part of the language challenge has to do with the use of Korean
versus English, Chinese or other languages of the internet. While it is natural that
Koreans are most comfortable surfing the internet using their native language and
alphabet, it is equally apparent that new applications, services and software must
be developed in English and other dominant languages of the internet in order to
succeed in the global marketplace.
In certain parts of cyberspace, South Korea has already established a strong
presence. In the future, what will be the salient features of Korea’s place in
cyberspace?
We have addressed some of the answers above. Several things seem certain:
• The information and communications revolution that transformed South

Korea is continuing apace.
• Education, innovation and technology change not only drive South Korea’s
economy but link it inextricably to nations all over the world.
• Korea’s future information society will be increasingly multicultural,
multilingual and global.
• Korea’s place in cyberspace will depend far more on innovative software,
applications and content than upon manufacturing of hardware for the
underlying networks.
It appears that Korea’s leadership in shaping the global information society

will ultimately be most profoundly exerted in cyberspace. This seems like the
appropriate space in which to envisage a society in which information flows
freely among the many cultures of the world, yet with respect for diverse cultural
traditions.
In the future global information society, the clear challenge for Korea will be
to transform itself from a monolingual, relatively homogeneous culture into a
multilingual, multicultural and more outward-looking nation. At this stage, early
in the 21st century, there are signs that the nation is on such a path.
The Geography of Cyberspace

In the real world, South Korea occupies a certain amount of physical space, about
the size of the U.S. state of Indiana. However, it might soon occupy significantly
more “space” in cyberspace than in the real world. After all, it built the digital
networks that make cyberspace possible and did so earlier than most other
countries. It also began homesteading in the frontier of cyberspace through
Cyworld and other social networking sites, and by way of the massive
multiplayer online games that became so popular as a professional sport in
South Korea. These are clearly promising developments.
The geographical contours of a nation in cyberspace bear an interesting
relationship to the real world. In the Korean conception of cyberspace, whether
Yi-eo Do or Arirang going over the mountain ridge, there can certainly be no
division of the nation, and no divided families. In cyberspace, as distinct from
real space, there is much more to unite the nation than to divide it. Everyone
speaks the same language and shares a common history. From the vantage point
of cyberspace, Korea’s national division can be seen clearly for what it was, a
tragic aberration caused by world politics in an older, outmoded era. Some parts
of cyberspace may also play an important role in maintaining contact, and a sense
of cultural unity, with the over six million overseas Koreans around the world.
We might also speculate with some certainty that there will be mountains in
cyberspace. These mountains, like those that cover the Korean peninsula,
symbolically represent the challenge that faces the nations of the world to build
an information society. Korea’s place in that information society will be shaped,
as in the past, by the mountains and by the vision of cyberspace presented in the
treasured Arirang myth.
In retrospect, South Korea took the path of cyber-development, which tremen-
dously boosted the nation’s economic development. However, the rapid develop-
ment of high speed digital networks also meant an early entry into the realm of
cyberspace, with many unanticipated negative effects. These include, among
others, pornography, infringement on personal privacy, hacking, viruses, spam,
and denial-of-service attacks.
In the future, all of the countries working to create a global information society
will have to jointly put forth great effort to solve the problems created by these
unanticipated effects. The world will need courses on internet ethics to be taught
at all levels from grade school through tertiary education.
The global community and individual countries will also need a legal system
to support the future healthy growth of the information society. Furthermore,
while the world has not yet come into a full-scale confrontation with cyber-
warfare, all countries can consider that they have been fortunate. So, looking to
the future of cyberspace, whether in education, law, or cyber security, it is time
for everyone to quickly look squarely at the emerging environment and make
preparations for it.
In addition to the unanticipated and adverse secondary effects of rapid digital
development, more problems are forecast for the future. If we clearly reflect on
these, it is apparent that solutions will require efforts by individual countries as
well as cooperative international efforts. Special attention should be paid to plans
for preventing or solving the various problems posed for the world’s developing
nations.
To effectively address all of these emerging issues, we think a new interna-
tional organization should be established. By means of such an organization, the
global community could have a fundamental impact on the shape of the world’s
information society through the effective development and operation of interna-
tional educational programs.
At the same time this new international organization could help developing
countries implement strategies to build both information culture and their econo-
mies. International standards and best practices need to be further developed in
this field. In particular, strategies should be developed for building a telecom-
munications foundation for economic development. The single most important
mission of the newly established international organization would be to play
a role in supporting the growth of education and of organizations that foster
genuine and positive digital development.
The challenges inherent in digital development are clear, and we have not
avoided addressing some of them. However, the future prospect is that informa-
tion technology and information culture can make an epochal contribution to
raising human welfare and helping people reach the next stage of development.
Appendix
Dr Myung Oh’s Education and Career

Education
1958 Graduated from Kyunggi High school
1962 Graduated from Korea Military Academy
1966 BS in Electronic Engineering, College of Engineering, Seoul National University
1972 PhD in Electronic Engineering, The State University of New York at Stony Brook
1997 Honorary doctoral degree in humanities from the State University of New York at
Stony Brook
1999 Honorary doctoral degree in business administration from Wonkwang University
in Korea
2009 Honorary doctoral degree from Universidad Nacional de Asuncion of Paraguay
Career
Mar. 1966 – Jan. 1979 Professor of Electronic Engineering in Korea Military Academy
Jan. 1979 – Oct. 1980 Research Fellow of the Agency for Defense Development
Oct. 1980 – May. 1981 Presidential Secretary for Economy and Science
May 1981 – Jul. 1987 Vice Minister of Communications
Jul. 1987 – Dec. 1988 Minister of Communications
Nov. 1989 – Dec. 1993 Chairman of the Taejon International EXPO Organizing
Committee
Apr. 1992 – Dec. 1993 Chairman of Korea Institute of Nuclear Safety
Nov. 1993 – Dec. 1993 Commissioner of KBO (Korea Baseball Organization)
Dec. 1993 – Dec. 1994 Minister of Transportation
Dec. 1994 – Dec. 1995 Minister of Construction and Transportation
Mar. 1996 – Jan. 1999 Chairman of DACOM
Jun. 1996 – Jul. 2001 President/Chairman of Dong-a Daily Newspaper
Mar. 2002 – Dec. 2003 President of Ajou University
Dec. 2003 – Oct. 2004 Minister of Science and Technology
Oct. 2004 – Feb. 2006 Deputy Prime Minister and Minister of Science and Technology
Sep. 2006 – Aug. 2010 President of Konkuk University
September 2010-present. Chairman, Woongjin Energy
September 2010-present. Chairman, Woongjin Polysilicon
September 2010-present. Chairman, Korea Advanced Institute of Science and Technology
(KAIST)
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Notes

1 Benkler, Yochai. The Wealth of Networks: How Social Production Transforms
Markets and Freedom. New Haven: Yale University Press, 2006, p. 37.
2 The following section is largely based on Kim, Jung-Soo, “Myung Oh: Leader of
the Telecommunications Revolution,” pp. 13–24 (translation of a section of Public
Entrepreneurs in a Time of Turbulence: Models for Leadership in Korea. Seoul:
Nanam Publishing House, 1994, pp. 243–281).
3 Choe, Chungho, “Korea’s Landscape and Mindscape,” Koreana 8(4), Winter 1994.
<http://www.koreana.or.kr>
4 Berkman Center for Internet and Society. Next generation connectivity: a review of
broadband internet transitions and policy from around the world. The Berkman Center
for Internet and Society at Harvard University, February 2010. Final Report, p. 13.
5 Kelly, Tim, Vanessa Grayand Michael Minges. Broadband Korea: Internet Case
Study. International Telecommunications Union, March 2003, p. 1.
6 World Bank. Republic of Korea Transition to a Knowledge-Based Economy, Report
No. 20346-KO. World Bank East Asia and Pacific Region, June 29, 2000.
7 Cowhey, Peter F. and Jonathan D. aronson. Transforming global information
and communication markets: the political economy of innovation. Boston: MIT Press,
2009, p. 7.
8 FCC. Connecting America: The National Broadband Plan. Federal Communications
Commission, 2010.
9 World Summit on the Information Society, Document WSIS-03/Geneva/DOC/
4-E, December 12, 2003. <http://www.itu.int/wsis/docs/geneva/official/dop.html>
(accessed August 3, 2010).
10 “Moore’s Law: Made Real by Intel Innovation,” page on Intel Corporation web site
<http://www.intel.com/technology/mooreslaw/index.htm> (accessed August 3, 2010).
11 Metcalfe’s Law was first published on Forbes ASAP in 1993. It is reproduced on the
University of Pennsylvania web site at: <http://www.seas.upenn.edu/~gaj1/metgg.
html> (accessed August 3, 2010).
12 <http://mcguireslaw.com/> (accessed August 3, 2010).
13 Larson, James F. The Telecommunications Revolution in Korea. New York: Oxford
University Press, 1995, pp. 63–4.
14 Soubbotina, Tatyana P. Beyond Economic Growth: An Introduction to Sustainable
Development. Washington, DC: The World Bank, 2004, p. 84.
15 <www.rsf.org> (accessed September 15, 2009).
16 Lee, Yong-sung, “Strong National Brand Can Help Weather Crisis.” The Korea
Herald, July 24, 2009.
17 OECD. OECD Reviews of Innovation Policy: Korea 2009. Organization for Economic
Cooperation and Development, 2009, p. 56.
208 Notes
18 Onodera, Osamu and Hann Earl Kim. Case Study 5: Trade and Innovation in the
Korean Information and Communication Technology Sector. OECD Trade Policy
Working Paper No. 77, September 26, 2008, p. 7.
19 Atkinson, Rob. “Globalization, New Technology and Economic Transformation,” in
Social Justice in the Global Age. Olaf Cramme and Patrick Diamond, eds. London:
Policy Network, 2009.
20 Wang, Tina. “South Korea Graduates to ‘Developed’ Status.” Forbes, September 18,
2008. <http://www.forbes.com/2008/09/18/korea-developed-ftse-markets-equity-cx_
tw_0918markets03.html> (accessed August 3, 2010).
21 OECD. OECD Reviews of Innovation Policy: Korea 2009. Organization for Economic
22 Choi, Byung-il. “Government-led ICT-Fostering Policy in Korea.” Graduate School of
International Studies, Ewha Woman's University, Seoul, April 2008.
23 ITU. Measuring the Information Society 2010. Geneva: ITU, 2010, p. 18.
24 <http://www.ibiblio.org/icky/speech2.html> (accessed August 3, 2010).
25 2006 Korea IT Industry Outlook. Korea Information Society Development Institute,
2006, p. 79.
2006, “Message from the President.”
2006, p. 79.
28 Suh, Joonghae and Derek H.C.Chen, eds. Korea as a Knowledge Economy:
Evolutionary Process and Lessons Learned. Washington, DC: The World Bank,
2007, p. 6.
29 Porat, Mark Uri, May 1977. The Information Economy: Definition and Measurement.
Washington, DC: United States Department of Commerce.
2007, p. 41.
31 OECD Communications Outlook. OECD, 2009, pp. 314–18.
32 OECD Communications Outlook. OECD, 2009, p. 327.
33 Measuring the Information Society 2010. Geneva: ITU, 2010, p. 18.
34 Suh, Joonghae and Derek H. C. Chen, eds. Korea as a Knowledge Economy:
Evolutionary Process and Lessons Learned. Washington, DC: The World Bank,
2007, p. 27.
35 <http://blogs.zdnet.com/ITFacts/?p=13813> (accessed August 3, 2010).
36 United Nations E-Government Survey 2010. Leveraging e-government at a time of
financial and economic crisis. New York: United Nations, 2010, p. 60.
37 West, Darrell M. Improving Technology Utilization in Electronic Government Around
the World. Governance Studies at Brookings, 2008, p. 3.
38 West, Darrell M. Improving Technology Utilization in Electronic Government
Around the World. Governance Studies at Brookings, The Brookings Institution,
August 2008, p. 1.
39 Schramm, Wilbur. Mass Media and National Development: The Role of Information in
the Developing Countries. Stanford: Stanford University Press, 1964.
40 Johnson, Chalmers. “The Developmental State: Odyssey of a Concept,” in
Woo-Cumings, Merredith, ed. The Developmental State. Ithaca: Cornell University
Press, 1999, pp. 38–39.
41 Kang, C.S. Eliot. “Segyewha Reform of the South Korean Developmental State,” in
Samuel S. Kim, ed. Korea’s Globalization. Cambridge: Cambridge University Press,
2000, pp. 76–79.
42 Webster, Frank. Theories of the Information Society, third ed. London: Routledge,
2006, p. 5.
43 During his time in that Ministry he wrote a highly readable book titled The Thousand
Faces of the Information Society.
Notes 209
44 Webster, Frank. Theories of the Information Society, third ed. London: Routledge,
2006, pp. 8, 9.
45 Machlup, Fritz. The Production and Distribution of Knowledge in the United States.
Princeton, NJ: Princeton University Press, 1962.
46 Porat, Marc Uri. The Information Economy: Sources and Methods for Measuring
the Primary Information Sector (Detailed Industry Reports). OT Special
Publication 77-12 (2). Washington, DC: U.S. Department of Commerce, Office of
Telecommunications, 1977.
47 Castells, Manuel. The Rise of the Network Society, Volume 1 of The Information
Economy, Society and Culture. Oxford: Blackwell, 1996.
48 Bell, Daniel. The Coming of Post-Industrial Society: A Venture in Social Forecasting.
Basic Books, 1973, p. xxxvii.
49 bang is the Korean word for room, so its internet cafes or PC cafes are commonly
referred to in the Korean language as PC bangs. We will refer to them throughout as
PC cafes or internet cafes, the more common English usage.
50 Wilson, Ernest J. III. The Information Revolution and Developing Countries.
Cambridge, MA: The MIT Press, 2004, p. 39.
52 Lee, Ki-baik. A New History of Korea. Translated by Edward W. Wagner with Edward
J. Shultz. Seoul, Korea: Ilchokak Publishers,1984, p. 170.
53 Lee, Ki-baik. A New History of Korea, pp. 192–3.
54 Winchester, Simon. “Han-Gul: The Korean Alphabet.” Koreana, Summer 1988, p. 22.
55 Lee, Ki-baik. A New History of Korea, p. 57.
56 “A question of character.” The Economist, Technology Quarterly, December 12,
2009, p. 7.
57 Kelly, Tim, Vanessa Gray and Michael Minges. Broadband Korea: Internet Case
Study. ITU, March 2003, p. 2.
58 Kelly, Tim, Vanessa Gray and MichaelMinges. Broadband Korea: Internet Case
59 <http://www.lgmobileworldcup.com/index.jsp> (accessed August 3, 2010).
60 Found in these documents dealing with Korean cultural patterns. <http://www.imt.org.
au/docs/ITF%20patterns%20explanation.htm> (accessed August 3, 2010).
61 Kim Eun-Ju. “Changing telecommunications policies and infrastructure in the
Republic of Korea.” Telecommunication Journal, 59(12), 1992, p. 574.
62 Lee, Jae Kyu, Choonmo Ahn and Kihoon Sung. “IT Korea: Past, Present and Future,”
Chapter 2.2 in The Global Information Technology Report: Mobility in a Networked
World. INSEAD and the World Economic Forum, 2009, p. 124.
63 “Switch is On: Korea,” in Sharing Innovative Experiences, Volume I, UNDP, 1999.
<http://tcdc.undp.org/experiences/vol1/content1new.asp>
64 Oh, Myung. Let’s Dream about Korea 30 Years from Now (Korean language book).
Seoul: Woongjin Knowledge House, 2009, p. 97.
2 On the Shoulders of Giants

1 See, for example, Larson, James F. The Telecommunications Revolution in Korea. New
York: Oxford University Press, 1995.
2 Wilson, Ernest J. III. The Information Revolution and Developing Countries. Cambridge,
MA: The MIT Press, 2004, p. 39.
3 Kim, Kihwan. “Kim Jae Ik: His Life and Contributions,” preface in Krause, Lawrence
B. and Kim KiHwan, eds. Liberalization in the Process of Economic Development.
Berkeley: University of California Press, 1991, p. xvii.
4 Oh, Myung. History of the1980s Telecommunications Revolution. Unpublished Korean-
language manuscript, p. 73.
210 Notes
5 Kim Jae Ik was a Stanford-trained PhD. who was widely regarded to be one of Korea’s
most gifted economists and a highly influential policymaker, until his tragic death in
the Burma bombing of 1983. The story of this dinner meeting has been told and re-told
countless times by leaders in South Korea’s telecommunications sector.
6 Mathews, John A. and Dong-Sung Cho. Tiger Technology: The Creation of a
Semiconductor Industry in East Asia. Cambridge: Cambridge University Press, 2000,
pp. 119–120.
7 In Korean, chongbo bokji sahhoe.
8 Kim, Jung-Soo. Leader of the Telecommunications Revolution of the 1980s: A Study
on Oh, Myung. Seoul, 1994, p. 19. This book is a translation of Dr Myung Oh’s
segment (pp. 243–81) of Public Entrepreneurs in a Time of Turbulence: Models for
Leadership in Korea. Seoul: Nanam Publishing House, 1994.
9 Noam, Eli. “A Grand Communication Bargain.” Financial Times, FT.com,
November 12, 2008. <http://www.ft.com/cms/s/0/62dbac56-b0d9-11dd-8915-
0000779fd18c.html>
10 Dr Hwang, Jong Sung, National Information Society Agency NIA Vice President,
Interview, July 10, 2009.
11 Mytelka, Lynn Kreiger. “The Telecommunications Equipment Industry in Korea and
Brazil,” in Competition, Innovation and Competitiveness in Developing Countries,
Lynn Kreiger Mytelka, ed. Paris: OECD Publishing, 1999, p. 117.
12 “Switch is On: Korea,” in Sharing Innovative Experiences, Volume I. UNDP, 1999,
p. 26. http://tcdc.undp.org/experiences/vol1/content1new.asp
15 Oh, Myung. History of the 1980s Telecommunications Revolution, unpublished
Korean-language manuscript, p. 181.
University Press, pp. 180–182.
20 Mahlich, Jorg C. and Werner Pascha. Innovation and Technology in Korea: Challenges
of a Newly Advanced Economy. Physica-Verlag, 2007, p. 273.
24 Mahlich, Jorg C. and Werner Pascha. Innovation and Technology in Korea: Challenges
of a Newly Advanced Economy. Physica-Verlag, 2007, p. 275.
25 Mathews, John A. and Dong-Sung Cho. Tiger Technology: The Creation of a Semi-
conductor Industry in East Asia. Cambridge: Cambridge University Press, 2000, p. 40.
p. 112.
Notes 211
27 “The Father of Korean Electronics Industry: A Retrospective” in Korea IT Times, July
10, 2008, online at http://www.kdcstaffs.com/it/main_view.php?mode=view&nNum=
5084&page=1&parts=People&This_Issue=200604
Korean-language manuscript, pp. 199–207.
29 Kim, S. Ran. “The Korean System of Innovation and the Semiconductor Industry: A
Governance Perspective.” Paper in the Science Policy Research Unit/Sussex European
Institute joint project ”Innovation Dynamics of Pacific Asia: Implications for Europe,”
December 1996, p. 15.
Semiconductor Industry in East Asia. Cambridge: Cambridge University Press,
2000, p. 105.
2000, pp. 121–22.
2000, p. 121.
2000, p. 126
34 E.g., Kim, S. Ran. “The Korean System of Innovation and the Semiconductor Industry:
A Governance Perspective.” Paper in the Science Policy Research Unit/Sussex
European Institute joint project “Innovation Dynamics of Pacific Asia: Implications
for Europe,” December 1996, pp. 30–31.
pp. 126–127.
37 LG Electronics – A 50 Year History, Volume 4. English Edition, 2008.
38 For details, see Larson, James F. and Heung Soo Park. Global Television and the
Politics of the Seoul Olympics. Boulder: Westview Press, 1993.
3 Government-led ICT Development in South Korea

2 Kelly, Tim, Vanessa Grayand Michael Minges. Broadband Korea: Internet Case Study.
International Telecommunications Union, March 2003.
3 Korea as a Knowledge Economy: Evolutionary Processes and Lessons Learned.
Washington DC: The World Bank, Overview, p. 4.
4 Jho, Whasun. “Liberalization as a Development Strategy: Network Governance in the
Korean Mobile Telecom Market.” Governance: An International Journal of Policy,
Administration and Institutions, 20(4), October 2007, 633–54.
5 Henderson, Gregory. Korea: The Politics of the Vortex. Cambridge, MA: Harvard
University Press, p. 5.
6 OECD Economic Surveys: Korea, 2004. Organization for Economic Cooperation and
Development, 2004, p. 167.
7 Kushida, Kenji and Seung Youn Oh. “Understanding South Korea and Japan’s Spectacular
Broadband Development: Strategic Liberalization of the Telecommunications Sectors.”
BRIE Working Paper 175, June 29, 2006, p. 13.
8 OECD Reviews of Innovation Policy: Korea 2009. Organization for Economic
Cooperation and Development, 2009, pp. 178–9.
212 Notes
9 2009 Informatization White Paper. Seoul, Korea: National Information Society
Agency, October 2009.
Agency, October 2009, p. 16.
Agency, October 2009, pp. 16–17.
12 Kim, Tong-hyung. “KT Boss Goes One Up on KCC Chairman,” Korea Times, July 6,
2009. <http://www.koreatimes.co.kr/www/news/biz/2009/07/123_48025.html>
15 Lee, Nae-Chan and Han-Young Lie. “Korea’s Telecom Services Reform through
Trade Negotiations,” Chapter 8 in Takatoshi Ito and Anne O. Krueger, eds. Trade
in Services in the Asia Pacific Region, NBER–East Asia Seminar on Economics,
Vol. II. Chicago, IL: The University of Chicago Press, 2004, p. 244.
16 Wilson, Ernest J. III. The Information Revolution and Developing Countries,
17 Hyun, Daiwon and John Lent. “Korean telecom policy in global competition:
Implications for developing countries.” Telecommunications Policy, 23 (1999), p. 393.
18 “No U.S. Retaliation on Trade,” New York Times, February 26, 1990.
Implications for developing countries.” Telecommunications Policy, 23 (1999),
p. 392.
20 Farnsworth, Clyde. “Sanctions Reported Possible against Europe and Korea,”
New York Times, January 24, 1989, p. D1.
21 Lee, Nae-Chan and Han-Young Lie. “Korea’s Telecom Services Reform through
Trade Negotiations,” in Ito, T. and Krueger, A.O., eds. Trade in Services in the
Asia Pacific Region, NBER–East Asia Seminar on Economics, Vol. II. Chicago, IL:
The University of Chicago Press, 2004, pp. 243–75.
Implications for developing countries.” Telecommunications Policy, 23 (1999),
p. 393.
23 Tcha, Dong-Wan, June S. Park, Suk-Gwon Chang and Kwan Ho Song. “Korean tele-
communication industry in transition.” Telecommunication Systems, 14 (2000), p. 4.
Implications for developing countries.” Telecommunications Policy, 23 (1999), p. 394.
25 Tcha, Dong-Wan, June S. Park, Suk-Gwon Chang and Kwan Ho Song. “Korean tele-
communication industry in transition.” Telecommunication Systems, 14 (2000), p. 7.
26 Friedman, Alan. “Trade Success in Singapore Helps WTO Come of Age.” New York
Times, December 14, 1996.
27 Manyin, Mark E. “South Korea–U.S. Economic Relations: Cooperation, Friction and
Future Prospects.” CRS Report for Congress, received through the CRS Web, updated
July 1, 2004, p. 6.
28 Tcha, Dong-Wan, June S. Park, Suk-Gwon Chang and Kwan Ho Song. “Korean
telecommunication industry in transition.” Telecommunication Systems, 14 (2000),
p. 11.
29 Manyin, Mark E. “South Korea–U.S. Economic Relations: Cooperation, Friction and
Future Prospects.” CRS Report for Congress, received through the CRS Web, updated
July 1, 2004, p. 16.
30 Kim, Jung-Soo. Leader of the Telecommunications Revolution of the 1980s: A Study
on Oh, Myung. Seoul, 1994, p. 16. This book is a translation of Dr Myung Oh’s
segment (pp. 243–81) of Public Entrepreneurs in a Time of Turbulence: Models for
Leadership in Korea. Seoul: Nanam Publishing House, 1994.
Notes 213
32 Jin, Dal Yong. “Political and economic processes in the privatization of the
Korea telecommunications industry: A case study of Korea Telecom, 1987–2003.”
Telecommunications Policy, 30 (2006).
33 This stands in rather stark contrast to the United States, where there were only two
major telecommunications acts passed in the twentieth century.
34 Park, Kwang Bae. “Telecommunications in Korea – Law and Regulation,” in The
Preston Gates Guide to Telecommunications in Asia, December 2003, p. 2.
35 “Enactment and Amendment of Informatization-related Laws.” Unpublished
document, National Information Society Agency.
36 “GNP unilaterally passes three media related bills.” The Hankyoreh, July 23, 2009.
http://www.hani.co.kr/arti/english_edition/e_national/367405.html
37 2009 Informatization White Paper. National Information Society Development
Agency, Seoul, Korea: October 2009, pp. 15–16.
Administration and Institutions, 20(4), October 2007, p. 636.
39 Jho, Whasun. “Liberalization as a Development Strategy: Network Governance
in the Korean Mobile Telecom Market.” Governance: An International Journal of
Policy, Administration and Institutions, 20(4), October 2007, p. 634.
41 Leader of the Telecommunications Revolution of the 1980s: A Study on Oh, Myung.
Jung-Soo Kim, 1994, p. 37.

1 President Kim Young Sam, January 6, 1995. Seoul KBS1 Television in FBIS-EAS-95-
004-6 January 1995 (Internet version).
2 Kim, Samuel S. “Korea and Globalization (Segewha): A Framework for Analysis,”
in Samuel Kim, ed. Korea’s Globalization. Cambridge: Cambridge University Press,
2000, pp. 1–28.
3 President Kim Dae Jung’s inaugural speech, February 25, 1998.
4 Lee, Choongok and Silvia M. Chan-Olmsted. “Competitive advantage of broad-
band Internet: a comparative study between South Korea and the United States.”
Telecommunications Policy, 28 (2004), 649–77.
5 Next Generation Connectivity: A review of Broadband Internet transitions and policy
from around the world. The Berkman Center for Internet and Society at Harvard
University, October 2009, draft, p. 16.
6 Getting Broadband. FCC Consumer Facts Sheet. http://www.fcc.gov/cgb/
consumerfacts/highspeedinternet.html
7 <www.oecd.org>
8 Fransman, Martin. “Introduction” in Martin Fransman, ed. Global Broadband Battles:
Why the U.S. and Europe Lag while Asia Leads. Stanford: Stanford University Press,
2006, pp. 2–4.
9 Ethernet is today the world’s dominant local area network.
10 Gilder, George. Forbes ASAP, September 13, 1993.
214 Notes
12 Measuring the Information Society: The ICT Development Index. Geneva: International
Telecommunications Union, 2009, p. 9.
15 Measuring the Information Society 2010. Geneva: International Telecommunications
Union, 2010, p. 11.
16 Measuring the Information Society 2010. Geneva: International Telecommunications
Union, 2010, p. 11.
17 World Economic Forum. The Global Information Technology Report. <http://www.
weforum.org/en/initiatives/gcp/Global%20Information%20Technology%20Report/
index.htm>
18 E-Readiness Rankings 2009: The Usage Imperative. A Report by the Economist
Intelligence Unit, 2009.
19 Atkinson, Robert D., Daniel K. Correa and Julie A. Hedlund. “Explaining International
Broadband Leadership” The Information Technology and Innovation Foundation, May
2008, pp. 5–6.
20 “Broadband Quality Score: A Global Study of Broadband Quality 2009.” Said
Business School at the University of Oxford, Universidad de Oveido and Cisco.
University, February 2010, Final Report, p. 53.
26 Akamai. The State of the Internet, Volume 2, No. 4, Fourth Quarter 2009. Akamai, p.
11. http://www.akamai.com/stateoftheinternet/
28 <http://www.usdoj.gov/atr/cases/exhibits/20.pdf>
29 Shadbolt, Nigel and Tim Berners-Lee. “Web Science: Studying the Internet to Protect
Our Future.” Scientific American, September 15, 2008.
30 Chon, Kilnam Hyunje Park, Kyungran Kang and Youngeum Lee. A Brief History of
the Internet in Korea, n.d.
Study. ITU, March 2003.
34 Hazlett, Thomas W. “Broadband Miracle.” The Wall Street Journal, August 26, 2004,
p. A12.
Notes 215
35 Forge, Simon and Erik Bohlin. “Managed Innovation in Korea in telecommunica-
tions – Moving towards 4G mobile at a national level.” Telematics and Information,
25 (2008), p. 302.
36 Yoo, Jeong Ju, Hyeong Ho Lee and Chu Hwan Yim. “National Information
Infrastructure in Korea.” Daejon: Switching and Transmission Technology Laboratory,
ETRI, 1999, p. 1.
37 Picot, Arnold and Christian Wernick. “The role of government in broadband access.”
Telecommunications Policy, 31 (2007), p. 667.
38 Informatization White Paper 1996. National Computerization Agency, Republic of
Korea, p. 13.
39 Kim, Youngbae, Hoeel Jeon and Soonhoon Bae. “Innovation patterns and policy
implications of ADSL penetration in Korea: A case study.” Telecommunications
Policy, 32 (2008), p. 312.
Policy, 32 (2008), pp. 307–25.
Policy, 32 (2008), p. 314.
Policy, 32 (2008), pp. 315–16.
Policy, 32 (2008), p. 315.
44 Kushida, Kenji and Seung-Youn Oh. “The Political Economies of Broadband
Development in Korea and Japan.” Asian Survey, 47(3) (2007), p. 494.
Policy, 32 (2008), p. 317.
46 Informatization White Paper 1996. National Computerization Agency, Republic
of Korea, p. 8.
47 2002 Korea Internet White Paper. National Computerization Agency and Ministry
of Information and Communication, p. 16.
48 2002 Korea Internet White Paper. National Computerization Agency and Ministry
of Information and Communication, p. 16.
Study. ITU, March 2003.
of Korea, p. 16.
51 Interview with Dr Kim Seang-Tae, President, National Information Society
Development Agency, Seoul, December 3, 2008.
of Korea, p. 16
53 2004 Broadband IT Korea Informatization White Paper. National Computerization
Agency, p. 27.
54 Yoo, Jeong Ju, Hyeong Ho Lee and Chu Hwan Yim. “National Information
Infrastructure in Korea.” Paper presented at World Telecom 99, Geneva, October
10–17, 1999.
University Press, 1995, pp. 149–69.
216 Notes
57 Nora, Simon and Alain Minc. L'Informatisation de la société: Rapport à M. le
Président de la République, 1980.
Korea, p. 6.
Korea, p. 7.
60 2002 Korea Internet White Paper. National Computerization Agency and Ministry of
Information and Communication, p. 26.
Policy, 32 (2008), pp. 322–3.
64 Falch, Morten. “Penetration of broadband services – The role of policies.” Telematics
and Informatics, 24 (2007), 246–58.
65 Hong, Dongpyo, Sangwon Ko and Alexy Volynets, “Information and Communication
Based Technologies for a Knowledge-based Economy.” Chapter 5 in Suh, Joonghae
and Derek H.C. Chen, eds. Korea as a Knowledge Economy: Evolutionary Process
and Lessons Learned. Korea Development Institute and World Bank Institute, 2007,
pp. 88–9.
66 Hazlett, Thomas W. “Broadband Miracle,” The Wall Street Journal, August 26, 2004,
p. A12.
67 Chung, Inho. “Broadband, Information Society and National Systems: The Korean
Case.” Chapter 3 in Global Broadband Battles: Why the U.S. and Europe Lag while
Asia Leads. Palo Alto: Stanford University Press, 2006, p. 89.
68 Crandall, Robert W. “Broadband Communications,” in Majumdar, Sumit,
Martin Cave and Ingo Vogelsang, eds. Handbook of Telecommunications
Economics: Technology Evolution and the Internet. Emerald Group Publishing,
2005, p. 182.
69 Crandall, Robert W. “Broadband Communications,” in Majumdar, Sumit,
Martin Cave and Ingo Vogelsang, eds. Handbook of Telecommunications
Economics: Technology Evolution and the Internet. Emerald Group Publishing,
2005, p. 182.
5 The Mobile Revolution

1 Kim, Joon Bae. “Korean WiBro and DMB Approach Latin America.” Jeonja Shinmun,
etnews.co.kr, March 5, 2009.
2 McGuire, Russ. “The Law of Mobility.” Sprint/Nextel, December 2005, p. 5. The
law is named after Russ McGuire, Director of Business Strategy for Sprint/Nextel,
who is credited with first stating it. As he elaborates, “Thanks to a combination of
Moore’s Law, scalability resulting from Metcalfe’s Law, device convergence and the
increasing ubiquity of 3G wireless networks, the cost of making any product (especially
one involving information) available all the time is plummeting. Therefore, just as
computing power and the internet have been built into virtually every product, mobility
is beginning to be built into every product.”
3 Choe, Chungho. “Korea’s Landscape and Mindscape.” Koreana, 8(4), Winter 1994.
http://www.koreana.or.kr
4 ITU. Ubiquitous Network Societies: The Case of the Republic of Korea. International
Telecommunications Union, April 2005, p. 18.
Notes 217
5 Gruber, Harold. The Economics of Mobile Telecommunications. Cambridge: Cambridge
University Press, 2005, p. 140.
6 ITU. Ubiquitous Network Societies: The Case of the Republic of Korea. International
Telecommunications Union, April 2005, p. 18.
7 The ITU report does contain a cautionary note that the measure of mobile broadband
subscriptions does not equate to use. However, there is no specific reference to the
Korean case.
8 ITU. Measuring the Information Society 2010. Geneva: International Telecommunications
Union, 2010, p. 11.
Administration and Institutions, 20(4), October 2007, p. 638.
10 Kushida, Kenji Erik. “Wireless Bound and Unbound: The Politics Shaping Cellular Markets
in Japan and South Korea.” BRIE Working Paper 179a, February 1, 2008, p. 26.
11 Jho, Whasun. “Global political economy of technology standardization: A case of the
Korean mobile telecommunications market.” Telecommunications Policy, 31 (2007),
p. 129.
12 Kushida, Kenji Erik. “Wireless Bound and Unbound: The Politics Shaping Cellular
Markets in Japan and South Korea.” BRIE Working Paper 179a, February 1, 2008,
pp. 28–9.
13 Gruber, Harold. The Economics of Mobile Telecommunications. Cambridge, Cambridge
14 Han, In-Soo, “Success of CDMA Telecommunications Technology in Korea: The
Role of the Mobile Triangle,” in Malich, Jorg C. and Werner Pascha, eds. Innovation
and Technology in Korea: Challenges of a Newly Advanced Economy. Physica Verlag
HD, 2007, p. 290.
15 Mani, Sunil. Keeping Pace with Globalization: Innovation Capability in Korea’s
Telecommunications Equipment Industry. Working Paper 370. India: Centre for
Development Studies, March 2005, p. 14.
16 Han, In-Soo, “Success of CDMA Telecommunications Technology in Korea: The
Role of the Mobile Triangle,” in Malich, Jorg C. and Werner Pascha. Innovation and
Technology in Korea: Challenges of a Newly Advanced Economy. Physica Verlag HD,
2007, p. 287.
17 Dr Hwang, Jong Sung, National Information Society Agency NIA Vice President
Interview, July 10, 2009.
Development Studies, March 2005, pp. 45–7.
23 “Handset Royalties Costing Arm, Leg.” Chosun Ilbo, English.chosun.com, September
18, 2003.
24 “Samsung Electronics Decides to Go Abroad,” Chosun Ilbo, English.chosun.com, May
16, 2007. <http://english.chosun.com/site/data/html_dir/2007/05/16/2007051661014.
html>
218 Notes
25 “Fine on Qualcomm.” The Korea Times, July 24, 2009. <http://www.koreatimes.co.kr/
www/news/opinon/2009/11/202_49039.html>
26 Kim Yoo-chul. “Samsung, Qualcomm Renew Wireless License.” The Korea
Times, November 5, 2009. <http://www.koreatimes.co.kr/www/news/biz/2009/
11/123_54940.html>
p. 31.
28 Han, In-Soo. “Success of CDMA Telecommunications Technology in Korea: The
2007, p. 291.
pp. 32–33.
p. 33.
2007, p. 289.
p. 30.
33 Ahmad, Majeed. “Qualcomm’s CDMA hegemony revisited.” EETimes Asia, December
15, 2008. www.eetasia.com
2007, p. 287.
35 O’Brien, Kevin. “Mobile TV’s Last Frontier: U.S. and Europe.” The New York
Times, May 30, 2010. <http://www.nytimes.com/2010/05/31/technology/31mobiletv.
html?pagewanted=1&th&emc=th>
36 Kim, Tong-hyung. “Mobile TV may be Off Air on Subways.” The Korea Times, February
15, 2009. <http://www.koreatimes.co.kr/www/news/nation/2009/02/133_39561.
html>
37 Yun, Gun-Il. “SK Telecom in Joint Development with GCT for Combined DMB
Chip.” Jeonja Shinmun, etnews.co.kr, July 2, 2009.
38 Hwang, Ji-hye. “Three Big Mobile Carriers will Open DMB Two-way Data
Broadcasting.” Jeonja Shinmun, etnews.co.kr, June 30, 2009
39 Han, Jung-Hun. “Terrestrial DMB will find way to survival with specialization.”
Jeonja Shinmun, etnews.co.kr, June 9, 2009.
40 Mun, Bo-Kyeong.”DMB Appliance Vendors Thrive Well in Global Mobile TV
Market.” Jeonja Shinmun, etnews.co.kr, June 4, 2010.
41 Mun, Bo-Kyeong.”Terrestrial DMB will be Changed Dramatically Next Year.” Jeonja
Shinmun, etnews.co.kr, October 27, 2009.
42 Mun, Bo-Kyeong.”Two-way DMB Service in Android Phone.” Jeonja Shinmun,
etnews.co.kr, February 11, 2010.
43 <http://www.koreatimes.co.kr/www/news/biz/2007/10/123_12212.html>
44 “Wibro Technology Opens a New Chapter.” Korea IT Times, November
30, 2007.
45 Cho, Jin-seo. “WiBro to Put Korea on IT Leadership Map.” The Korea Times, August
10, 2006. http://www.asiamedia.ucla.edu/article.asp?parentid=50672
Notes 219
46 Hong, Ki-bum. “SEC’s WiBro Business Seeking Leadership Beyond Globalization.”
Electronics Newspaper, July 10, 2009. <http://english.etnews.co.kr/news/detail.
html?id=200907100008>
47 Hong, Ki-bum. “SEC’s WiBro Business Seeking Leadership Beyond Globalization.”
Electronics Newspaper, July 10, 2009. <http://english.etnews.co.kr/news/detail.
html?id=200907100008>
48 Hong, Ki-Bum. “Samsung Electronics will export WiBro equipments through Nokia
Siemens.” Jeonja Shinmun, etnews.co.kr, September 8, 2009.
49 Heng, Eric. “South Korea Boosts Telecom Sector with a US$5.4 billion Budget.”
Telecommunications Online, December 30, 2008. <http://www.telecommagazine.com/
article.asp?HH_ID=AR_4681>
50 “XOHM, Intel and WiMAX Partners Celebrate New 4G Broadband Era in Baltimore.”
Intel News Release, October 8, 2008. <http://www.intel.com/pressroom/archive/
releases/20081008comp.htm>
51 <http://www.clearwire.com/store/service_areas.php>
52 Ihlwan Moon. “Digital South Korea’s Wireless World.” Business Week, March 12, 2007.
<http://www.businessweek.com/globalbiz/content/mar2007/gb20070312_592167.htm>
53 Fehrenbacher, Katie. “It’s a WiBro World.” Gigaom, July 3, 2006. <http://gigaom.
com/2006/07/03/its-a-wibro-world/>
54 Cho, Jin-seo. “WiBro to Put Korea on IT Leadership Map.” The Korea Times, August
10, 2006. <http://www.asiamedia.ucla.edu/article.asp?parentid=50672>
55 “24% Increase in WIMAX Patents Anticipates Rapidly Accelerating Market
Expansion.” Reuters, February 29, 2008. <http://www.reuters.com/article/press
Release/idUS227283+29-Feb-2008+BW20080229>
56 “The Battle for the Smart-phone’s Seoul.” The Economist, November 20, 2008. www.
economist.com
57 “The Battle for the Smart-phone’s Seoul.” The Economist, November 20, 2008. www.
economist.com
58 Kim, Tong-hyung. “SK Telecom App Store Looks Disappointing.” The Korea
Times, September 21, 2009. <http://www.koreatimes.co.kr/www/news/
biz/2009/09/133_52226.html>
59 James F. Larson, interview with Kim Shin Bae, CEO of SK C&C.
60 Kim, Tong-hyung. “Wi-Fi Phones will Slash Data Roaming Fees.” The Korea Times,
December 20, 2009. <http://211.234.100.245/www/news/nation/2009/12/133_57610.
html>
61 Moon, Ihlwan. “Apple Envy Drives Samsung Shakeup.” Business Week,
December 15, 2009. <http://www.businessweek.com/globalbiz/content/dec2009/
gb20091215_032027.htm>
62 Noam, Eli. “Coming soon: Mobile, immersive, interactive entertainment.” Financial
Times, July 17, 2009. <http://www.ft.com/cms/s/0/00ab099c-7301-11de-ad98-
00144feabdc0.html>
63 Noam, Eli. “Coming soon: Mobile, immersive, interactive entertainment.” Financial
Times, July 17, 2009. <http://www.ft.com/cms/s/0/00ab099c-7301-11de-ad98-
00144feabdc0.html>
64 Personal interview with John Kwag, Webzen, Seoul, June 4, 2008.
65 The Rise of Korean Games 2007: Guide to Korean Game Industry and Culture. White
Paper, Ministry of Culture and Tourism, Korea Game, p. 65.
66 The Rise of Korean Games 2007: Guide to Korean Game Industry and Culture. White
Paper, Ministry of Culture and Tourism, Korea Game, p. 15.
67 < http://www.virtualgoodsnews.com/2009/03/microtransaction-revenue-high-as-
90-in-korean-mobile-games.html>
220 Notes
70 Kim, Tong-hyung. “Internet Fees for Mobile Phone Users will be Cut.” The Korea
Times, October 26, 2009.
71 <http://www.itu.int/osg/spu/ni/ubiquitous/>
6 Intelligent Buildings, Sentient Cities and the Ubiquitous

Network Society
1 OECD Information Technology Outlook 2006. OECD, 2006, p. 247.
2 Gerbarg, Darcy and Eli Noam. Introduction, in Eli M. Noam, Jo Groebel and Darcy
Gerbarg, eds. Internet Television. Lawrence Erlbaum Associates, 2004, p. xxi.
3 Gerbarg, Darcy and Eli Noam. Introduction, in Eli M. Noam, Jo Groebel and Darcy
Gerbarg, eds. Internet Television. Lawrence Erlbaum Associates, 2004, p. xxii.
4 “New IT Strategy Aims to Put Convergence First.” Korea IT Times, January 17,
2009.
5 “Medicine goes digital.” Special Report, The Economist, April 16, 2009. http://www.
economist.com/surveys/displaystory.cfm?story_id=13437990
6 “HIT or miss,” A special report on health care and technology. The Economist,
April 16, 2009. http://www.economist.com/specialreports/displaystory.cfm?story_
id=13438006
7 Kim, Tong-hyung. “IT could Make a Difference in Korean Space Tech.” The
Korea Times, October 12, 2009. http://www.koreatimes.co.kr/www/news/
biz/2009/10/123_53395.html
8 “Ubiquitous Network Society.” Briefing Note, ITU Telecom World 2006, Hong Kong,
December 4–8, 2006.
9 Cowhey, Peter F. and Jonathan D. Aronson. Transforming Global Information and
Communication Markets: The Political Economy of Innovation. Boston: The MIT
Press, 2009 (Creative Commons version).
Press, 2009, p. 14 (Creative Commons version).
11 Kim, Tong-hyung. “U-Korea Envisions Next Chapter in Digital Revolution.” Korea
Herald, June 14, 2005. http://www.koreaherald.co.kr/archives/result_contents.asp
12 U-KOREA Master Plan to Achieve the World’s First Ubiquitous Society. Ministry of
Information and Communication, Republic of Korea, May 2006.
Information and Communication, Republic of Korea, May 2006, p. 3.
16 “Korean Ministries team up to build u-cities nationwide.” Korea IT Times, March
31, 2006. http://www.koreaittimes.com/story/2472/korean-ministries-team-build-
u-cities-nationwide
17 Chung, Myung-je. “Leading Global U-City.” Korea IT Times, August 7, 2009.
http://www.koreaittimes.com/story/4371/leading-global-u-city
18 “Firetide Infrastructure Mesh Enables ‘Busan u-City’ in Korea’s Second Largest
City.” Reuters, August 6, 2009. http://www.reuters.com/article/pressRelease/
idUS129050+06-Aug-2009+BW20090806
19 Kim Hyeon-cheol.”Bringing Central Park to New Songdo City.” The Korea Times,
August 5, 2009. http://www.koreatimes.co.kr/www/news/nation/2009/09/281_49677.
html
Notes 221
20 O’Connell, Pamela Licalzi. “Korea’s High Tech Utopia: Where Everything is
Observed.” New York Times, October 5, 2005.
23 Kim, Hyeon-cheol. “Three More Free Economic Zones Picked.” The Korea Times,
April 25, 2008. http://www.koreatimes.co.kr/www/news/biz/2008/04/123_23131.
html
24 “Korea’s Three Nuclei of Change.” Korea Trade and Investment, July–August 2003.
http://www.kisc.org/kti/jul_aug_03/investment/wheretoinvest.htm
25 Yoon, Ja-young. “Promotion Logo for Free Economic Zones Launched.” The
Korea Times, April 12, 2009. http://www.koreatimes.co.kr/www/news/biz/
2009/07/123_43013.html
26 Do, Je-Hae. “World’s Seventh Longest Bridge Opens in Incheon.” The Korea Times,
October 16, 2009. http://www.koreatimes.co.kr/www/news/nation/2009/10/117_53663.
html
29 Yusuf, Shahid. “Can Clusters be Made to Order?” Chapter 1 in Yusuf, Shahid, Kaoru
Nabeshima and Soichi Yamashita, Growing Industrial Clusters in Asia: Serendipity
and Science. World Bank Publications, 2008, p. 19.
30 2008–09 Accomplishments, 2008–2013 Five Year Plan. Stonybrook, State University
of New York, May 2009, p. 27.
31 http://www.newsongdocity.co.kr/Default.aspx?p=1732&d=1112
32 “Alien Technology Announces Formation of Alien Technology Asia Headquartered
in Korea.” Business Wire, December 18, 2006. http://www.allbusiness.com/services/
business-services/4019750-1.html
33 “Cisco to Help Establish ‘Global Center for Intelligent Urbanization’ in South Korea’s
Songdo International Business District.” Cisco Press Release, April 15, 2009. http://
newsroom.cisco.com/dlls/2009/prod_041609b.html
34 The forum was established on June 2 and Dr Myung Oh was elected as its first chair-
man. “Korea’s Early IT Leaders Support U-Korea Business and Create New IT Model.
“ Electronics Newspaper, June 16, 2008, http://english.etnews.co.kr/news/detail.
html?id=200806160009
35 From Korean-language web page. http://usf.seoul.go.kr/member/member_list.jsp
36 From Korean-language web page. http://usf.seoul.go.kr/intro/intro_2_01.jsp
37 “Gangnam’s ‘U-Street’ with its New Media Poles.” The Chosun Ilbo, October 23,
2009. http://english.chosun.com/site/data/html_dir/2009/04/20/2009042000916.html
38 The Cheonggyecheon project was a major hallmark of Lee Myung Bak’s term as
mayor of Seoul. It removed an old overpass and all of the concrete that covered the
Cheonggyecheon stream. The renovation proved very popular with Korean citizens
and has received international acclaim.
39 ICT E-Newsletter, Vol. 7, No. 5, June 15, 2007.
40 ICT E-Newsletter, Vol. 7, No. 5, June 15, 2007.
41 http://dmc.seoul.go.kr/english/index.jsp
42 http://dmc.seoul.go.kr/english/jsp/investment/why_dmc.jsp
43 Jin, Hyun Joo. “South Korea eases rules on media ownership.” Korea Herald, May 9,
2008, downloaded from http://www.asianewsnet.net/news.php?sec=1&id=1296
44 Jin, Hyun Joo. “South Korea eases rules on media ownership.” Korea Herald, May 9,
2008, downloaded from http://www.asianewsnet.net/news.php?sec=1&id=1296
222 Notes
45 Kim, Tong Hyung. “Media Industry Faces Big Bang.” The Korea Times,
December 22, 2008. http://www.koreatimes.co.kr/www/news/nation/2008/12/123_
36552.html
7 Education and Building Citizen Awareness

1 Dahlman, Carl and Thomas Andersson, eds. Korea and the Knowledge-based
Economy: Making the Transition. The International Bank for Reconstruction and
Development/The World Bank, and the Organization for Economic Cooperation and
Development, 2000, pp. 14–16.
2 Seth, Michael J. Education Fever: Society, Politics and the Pursuit of Schooling in
South Korea. Honolulu: University of Hawaii Press, 2002, p. 19.
3 Understanding Korean Education. Vol. 5, Education and Korea’s Development.
Korean Educational Development Institute, 2007, p. 26.
6 Kim, Linsu. Imitation to Innovation: The Dynamics of Korea’s Technological
Learning. Cambridge, MA: Harvard Business School Press, 1997, p. 60.
7 OECD. OECD Education at a Glance, 2008. p. 32.
8 Suh, Joonghae and Derek H.C. Chen. Korea as a Knowledge Economy: Evolutionary
Process and Lessons Learned. Korea Development Institute and The World Bank
Institute, 2007, p. 41.
9 Note that this indicator does not provide information about the number of graduates
actually employed and putting their skills to work.
10 Education in Korea 2007–2008. Ministry of Education and Human Resources
Development, Republic of Korea, p. 147.
11 <http://www.game.hs.kr/>
14 WTEC Report on the Korean Electronics Industry, Executive Summary, p. 8. <http://
www.wtec.org/loyola/kei/welcome.htm>
15 WTEC Report on the Korean Electronics Industry, Executive Summary, p. 8. http://
www.wtec.org/loyola/kei/welcome.htm
16 Kang, Shin-who. “Cyber Universities Solidifying Network for Growth.” The Korea Times,
July 22, 2009. <http://www.koreatimes.co.kr/www/news/special/2009/10/242_48917.
html>
17 So, Chung-hae, Joonghae Suh and Derek Hung Chiat Chen. Korea as a knowledge
economy: evolutionary process and lessons learned. World Bank Publications,
2007, p. 92.
18 Korea’s Informatization Policy to Deliver ICT Use in Everyday Life. Korea Agency
for Digital Opportunity and Promotion, Seoul, 2007, p. 8.
19 See Chapter 5, “Education, Training and Public Promotion of Information Culture,”
in James F. Larson. The Telecommunications Revolution in Korea. New York: Oxford
University Press, pp. 149–69.
20 Chun, Go-Eun. “June has Bloomed Full of Digital Festivals.” Korea IT Times, June
5, 2009. <http://www.koreaittimes.com/story/3695/june-has-bloomed-full-digital-fes-
tivals>
for Digital Opportunity and Promotion, Seoul, 2007, pp. 15–16.
Notes 223
22 So, Chung-hae, Joonghae Suh and Derek Hung Chiat Chen. Korea as a knowledge
economy: Evolutionary process and lessons learned. World Bank Publications,
2007, p. 92.
23 “Interview with KADO: Series of Fortunate Events.” Korea IT Times, June
11, 2007.
24 <http://ippso.icu.ac.kr/m1/message.jsp?Menu_Id=message>
for Digital Opportunity and Promotion, Seoul, 2007, p. 25.
for Digital Opportunity and Promotion, Seoul, 2007, pp. 21–22.
27 Broadband IT Korea: Connecting You to the Digital World. White Paper 2003,
Ministry of Information and Communication, Republic of Korea, pp. 50–51.
28 Bell, Daniel. The Coming of Post-Industrial Society. Basic Books, 1973, p. 25.
Cooperation and Development, 2009.
35 World Patent Report: A Statistical Review. World Intellectual Property Organization,
2008 Edition, p. 10. <http://www.wipo.int/export/sites/www/ipstats/en/statistics/
patents/pdf/wipo_pub_931.pdf>
36 World Intellectual Property Indicators, 2009 edition. World Intellectual Property
Organization, p. 15.
38 Source: WIPO Statistics Database.
42 Vickery, Graham and Sacha Wunsch-Vincent. “R&D and Innovation in the ICT
Sector: Toward Globalization and Collaboration.” Chapter 1.8 in The Global
Information Technology Report 2008–2009: Mobility in a Networked World. World
Economic Forum and INSEAD, 2009, p. 96.
43 Vickery, Graham and Sacha Wunsch-Vincent, “R&D and Innovation in the ICT
Economic Forum and INSEAD, 2009, pp. 97–99.
44 Vickery, Graham and Sacha Wunsch-Vincent, “R&D and Innovation In the ICT
Economic Forum and INSEAD, 2009, p. 102.
224 Notes
46 Chun, Go-Eun. “Daedok Innopolis’ Magic Hands.” Korea IT Times, March 1, 2009.
<http://www.koreaittimes.com/story/daedeok-innopolis-magic-hands>
47 Analysis of the Results of 30 Years of ETRI Research and Development. ETRI and
Technovation Partners (Korean language report), July 2006, pp. 3–5.
48 Intellectual Capital Report 2005. ETRI Electronics and Telecommunications Research
Institute, Daejon, Korea, p. 4.
49 “Intel Opens Research Center in Korea.” The New York Times, March 9, 2004.
50 “ETRI Joins German Lab for IT Research.” Joongang Daily, April 25, 2009.
<http://joongangdaily.joins.com/article/view.asp?aid=2904021>
51 In its early years, when it was still part of AT&T, Bell Labs developed telephone
switching devices. Now the research organization of Alcatel-Lucent, Bell Labs was
where the transistor was invented and over the years many of its researchers had won
the Nobel Prize.
52 On November 28, 1987 the Korea Information Society Development Institute Act
(No. 3,952) was proclaimed. On December 31, 1987 the Enforcement Decree
of the Korea Information Society Development Institute Act (Presidential Decree
No. 12,360) was proclaimed.
53 C. Fred Bergsten and Inbom Choi, eds. Korean Diaspora in the Making: Its Current
Status and Impact on the Korean Economy. Special Report 15, Washington: Peterson
Institute for International Economics, 2003, p. 15.
Institute for International Economics, 2003, pp. 16–17.
Institute for International Economics, 2003, p. 19.
56 Student Exchange and Visitor Information System (SEVIS). General Summary.
Quarterly Review for the quarter ending December 31, 2008. http://www.ice.gov/
doclib/sevis/pdf/quarterly_report_january09.pdf
57 Dr Myung Oh was one of these students.
58 Choi, Inbom. “Korean Diaspora in the Making: Its Current Status and Impact on the
Korean Economy.” Chapter 2 of C. Fred Bergsten and Inbom Choi, eds. The Korean
Diaspora in the World Economy. Special Report No. 15. Washington, DC: Peterson
Institute for International Economics, January 2003, p. 27.
8 Korea’s Information Culture and Media Ecology

1 Schramm, Wilbur and Donald F. Roberts. The Process and Effects of Mass
Communication. Urbana: University of Illinois Press, second edition,1971, p. 5.
2 Thoman, Elizabeth and Tessa Jolls, “Media Literacy: A National Priority for
a Changing World.” American Behavioral Scientist, 48(1), September 2004.
<http://www.medialit.org/reading_room/article663.html>
3 The Media Ecology Association. “What is Media Ecology?” <http://www.media-
ecology.org/media_ecology/index.html>
4 Noam, Eli. “TV or Not TV?” Financial Times, May 13, 2008. <http://www.ft.com/
cms/s/0/bb4bba6a-20de-11dd-a0e6-000077b07658.html>
5 Limb, Jae-un. “From digital screens to sculpture gardens, art the masses can enjoy.”
Joongang Daily, November 20, 2009.
6 Huhh, Jun-Sok. “Culture and Business of PC Bangs in Korea.” Games and Culture,
3(1), January 2008, p. 28.
7 The Rise of Korean Games: Guide to Korean Game Industry and Culture, 2006.
Ministry of Culture and Tourism, Korea Game Development and Promotion Institute,
p. 39.
Notes 225
8 Chee, Florence. “The Games we Plan Online and Offline: Making Wang-tta in Korea.”
Popular Communication, 4(3), 2006, p. 231.
9 “Govt Betting on Computer Game Industry.” Digital Chosun Ilbo, December 8, 2008.
<http://english.chosun.com/w21data/html/news/200812/200812040008.html>
10 Jin, Dal Yong and Florence Chee. “Age of New Media Empires: A Critical
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11 2007 The Rise of Korean Games: Guide to Korean Game Industry and Culture.
Ministry of Culture and Tourism. Korea Game Industry Agency, p. 6.
2008, 38–58.
14 “Foreign Based Korean Gambling Websites Sprout.” Korea Times, May 10, 2007.
www.koreatimes.co.kr
16 “Foreign Based Korean Gambling Websites Sprout.” Korea Times, May 10, 2007.
www.koreatimes.co.kr
18 BBC, Reuters, Media Center poll: Trust in the Media, May 3, 2006. <http://www.
globescan.com/news_archives/bbcreut.html>
19 BBC, Reuters, Media Center poll: Trust in the Media, May 3, 2006. <http://www.
globescan.com/news_archives/bbcreut_country.html>
20 <http://www.slideshare.net/Edelmankorea/2009-the-edelman-trust-barometer-korea-
report>
21 <http://www.slideshare.net/Edelmankorea/2009-the-edelman-trust-barometer-korea-
report>
22 Kolodzy, Janet. Convergence Journalism: Writing and reporting across the news
media. Lanham Maryland: Rowman and Littlefield, 2006, p. 231
23 Broadband Korea: Internet Case Study. ITU, March 2003, p. 11.
24 “Google still Struggling to Conquer Outposts.” The Financial Times, September
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25 Huer, Jon. “Has Internet Closed Korea More?” Korea Times, April 26, 2009.
http://www.koreatimes.co.kr/www/news/opinon/2009/04/272_43854.html
26 2009 Informatization White Paper, Republic of Korea. Seoul: National Information
Society Agency, 2009, p. 22.
28 <https://www.kicc.co.kr/eng/company_history.jsp> (accessed August 8, 2010).
29 Joongang Daily, Finance Section, August 20, 2008. <http://joongangdaily.joins.com/
article/view.asp?aid=2893878>
30 Koreans Fall Madly in Love with Plastic.” Business Week Online, May 13, 2002.
31 “Financial Cards in South Korea.” Euromonitor, March 2008. <http://www.euromoni-
tor.com/Financial_Cards_in_South_Korea>
32 Moon, Ihlwan. “Commentary: Korea’s Credit Card Mess Needs a Clean Sweep.”
Business Week Online, May 12, 2003.
33 Kirk, Don. “International Business: South Korea Moves to Rescue its 9 Credit Card
Companies.” New York Times online, April 5, 2003.
34 Moon, Ihlwan. “In Korea, Cell Phones Get a New Charge.” Business Week, March 2,
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226 Notes
35 2009 Korea Internet White Paper. Korea Communications Commission and the Korea
Internet and Security Agency, July 2009, p. 63.
36 Table 8.2 is from KOBACO, Introduction to Broadcast Advertising in Korea 2006,
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41 See, for example, Manfred Kochen. The Small World: A Volume of Recent Research
Advances Commemorating Ithiel de Sola Pool, Stanley Milgram, Theodore Newcomb.
Norwood, NJ: Ablex, 1989.
42 Kim, Shin Dong. “Korea: Personal Meanings.” Chapter 5 in James Katz and Mark
Aakhus, eds. Perpetual Contact: Mobile Communication, Private Talk, Public
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43 Castells, Manuel, Mireia Fernandez Ardevol, Jack Linchuan Qiu and Araba Sey.
Mobile Communication and Society: A Global Perspective. Cambridge, MA: The MIT
Press, 2006, p. 37.
44 Hall, Kenji, Moon Ihlwan and Bruce Einhorn. “In Asia, MySpace Clones Stalk
Cyberspace.” Business Week, September 11, 2006. <http://www.businessweek.com/
technology/content/sep2006/tc20060911_808191.htm>
45 Choi, Jaz Hee-jeong. “The City of Connections: Urban Social Networking in Seoul.”
MindTrek ’08, Tampere, Finland, October 6–9, 2008.
46 Hjorth, Larissa. “The Game of being Mobile: One Media History of Gaming and
Mobile Technologies in Asia-Pacific.” Convergence: The International Journal of
Research into New Media Technologies, November 2007, Volume 13 No. 4 p. 374.
47 Hjorth, Larissa. “The Game of Being Mobile: One Media History of Gaming and
Mobile Technologies in Asia-Pacific.” Convergence: The International Journal of
Research into New Media Technologies, November 2007, Volume 13 No. 4 p. 375.
48 http://en.wikipedia.org/wiki/Cyworld
49 http://gigaom.com/2008/11/09/cyworld-packs-up-from-us-retreats-to-korea/
50 Choe, Sang Hun. “The Financial Prophet Online is Vilified in Reality.” The New York
Times, May 15, 2009. http://www.nytimes.com/2009/05/16/world/asia/16minerva.
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51 “Park Dae Sung.” The New York Times, April 21, 2009. http://topics.nytimes.com/top/
reference/timestopics/people/p/park_daesung/index.html?scp=6&sq=Minerva%20in
%20Korea&st=cse
52 Fackler, Martin. “In Korea, a Boot Camp Cure for Web Obsession.” The New York
Times, November 18, 2007. http://www.nytimes.com/2007/11/18/technology/18rehab.
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53 Block, Jerald J., M.D. “Issues for DSM-V: Internet Addiction.” American Journal of
Psychiatry, 165, 306–307, March 2008. http://ajp.psychiatryonline.org/cgi/content/
full/165/3/306
html
html
56 Demick, Barbara. “Gamers Rack Up Losses.” Los Angeles Times, August 29, 2005,
A1. http://articles.latimes.com/2005/aug/29/world/fg-games29
Notes 227
57 Demick, Barbara. “Gamers Rack Up Losses.” Los Angeles Times, August 29, 2005,
A1. http://articles.latimes.com/2005/aug/29/world/fg-games29
58 “Language Cleanup Frustrates Online Gamers.” The Korea Times, February 16, 2009.
<http://www.koreatimes.co.kr/www/news/nation/2009/02/133_39688.html>
59 Jang, Dong-joon and Kim In Soon. “Cyber Gangs to Accelerate.” Korea IT News,
February 18, 2009. http://english.etnews.co.kr/news/detail.html?id=200902180006
60 2008 Yearbook of Information Society Statistics. National Information Society
Agency, part 6.
61 Computer Viruses and other Malicious Software: A Threat to the Internet Economy.
OECD Report, March 2009, p. 21.
63 2008 Yearbook of Information Society Statistics. National Information Society
Agency, part 6.
66 Choe, Sang-Hun. “Cyberattacks Jam Government and Commercial Web Sites in
U.S. and South Korea.” The New York Times, July 8, 2009. <http://www.nytimes.
com/2009/07/09/technology/09cyber.html?scp=1&sq=July%204%20cyber%20attack
s&st=cse>
67 < http://www.sophos.com/pressoffice/news/articles/2010/04/dirty-dozen.html >
(accessed July 13, 2010).
68 Kim, Yon-se. “Lee Calls Internet ‘Double-edged Sword.’” The Korea Times, June
17, 2008. <http://www.koreatimes.co.kr/www/news/nation/2009/10/116_26052.html>
(accessed July 26, 2010).
69 Choe, Sang-hun. “Korean Star’s Suicide Reignites Debate on Web Regulation.”
The New York Times, October 12, 2008. <http://www.nytimes.com/2008/10/
13/technology/internet/13suicide.html?_r=1&scp=3&sq=cyber % 20bullying %
20Korea&st=cse>
70 “Google Compromises on Internet Free Speech in South Korea.” The Hankyoreh,
March 31, 2009. http://english.hani.co.kr/arti/english_edition/e_international/346930.
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71 “Google Compromises on Internet Free Speech in South Korea.” The Hankyoreh,
English web edition, March 31, 2009. http://english.hani.co.kr/arti/english_edition/e_
international/346930.html
72 Jouhki, Jukka. “The Emotional Technology of Tomorrow: The Visual and Textual
Rhetoric of Promoting a Ubiquitous Technology Society in Korea.” Paper presented
at the IADIS Multi Conference on Computer Science and Information Systems,
Amsterdam, 22–27 July, 2008.
Amsterdam, 22–27 July, 2008.
Amsterdam, 22–27 July, 2008, p. 8.
9 Innovation Nation
1 Soubbotina, Tatyana P. Beyond Economic Growth: An Introduction to Sustainable
Development. Washington, DC: The World Bank, 2004, p. 84.
228 Notes
2 Gurria, Angel and Robert B. Zoellick, Foreword, in Chandra, Vanada, Deniz Erocal,
Pier Carlo Padoan and Carlos A. Primo Braga, eds. Innovation and Growth: Chasing
a Moving Frontier. OECD and the World Bank, 2009, p. 3.
3 Chandra, Vanada, Deniz Erocal, Pier Carlo Padoan and Carlos A. Primo Braga, eds.
Innovation and Growth: Chasing a Moving Frontier. OECD and the World Bank,
2009, p. 37.
4 Gangnes, Byron and Ari Van Assche. “China and the Future of Asian Electronics
Trade.” Scientific Series, Cirano, Montreal, February 2008, p. 2.
Trade.” Scientific Series, Cirano, Montreal, February 2008, p. 1.
7 “iPhone 4 Made in Korea.” English Chosun Ilbo, June 10, 2010. http://english.
chosun.com/site/data/html_dir/2010/06/10/2010061001059.html (accessed July
21, 2010).
9 “The Production of Electronic Components for the IT Industries: Changing Labour
Force Requirements in a Global Economy.” Report for Discussion at the Tripartite
Meeting on the Production of Electronic Components for the IT Industries. International
Labour Office, Geneva, 2007, pp. 29–30.
10 WTEC Report on the Korean Electronics Industry, Executive Summary, p. 2.
<http://www.wtec.org/loyola/kei/welcome.htm>
Trade.” Scientific Series, Montreal, February 2008, p. 19. http://www.cirano.qc.ca/pdf/
publication/2008s-05.pdf
12 Ministry of Knowledge Economy. “IT Trade Figures for 2009.” Press Release, January
11, 2010. <http://www.mke.go.kr/language/eng/economic/key_list.jsp>
13 Kim, Yoo-chul. “Investors Returning to Samsung Electronics, Hynix.” The Korea
Times, February 9, 2009.
14 See http://investkorea.org/ under Business Opportunities, Semiconductor.
15 “Samsung Plans $3.6 billion Expansion of Texas Chip Plant.” The Chosun Ilbo, June
14, 2010. http://english.chosun.com/site/data/html_dir/2010/06/11/2010061100638.
html
16 See http://investkorea.org/ under Business Opportunities, Display.
17 Masterson, Michelle. “Apple Gives LG Display a Shot in the Arm.” ChannelWeb,
January 12, 2009. http://www.crn.com/hardware/212800117
18 “South Korean Scientists Develop Large Film of Nanomaterial to Make Flexible
Electronic Devices.” Zoom Gadget, January 17, 2009. http://www.zoomgadget.
com/2009/01/south-korean-scientists-develop-large.html
19 http://marketshare.hitslink.com/search-engine-market-share.aspx?qprid=4
Press, 2009, p. 45 (Creative Commons version).
21 <http://books.google.com/googlebooks/history.html>
22 < http://www.openbookalliance.org/2010/02/how-many-more-books-has-google-
scanned-today/>
2008, p. 42.
Notes 229
25 Kim, Tong-Hyung. “Lack of Games May Hurt iPhone Popularity.” The Korea
Times, September 28, 2009. <http://www.koreatimes.co.kr/www/news/
tech/2009/09/129_52644.html>
26 Noam, Eli. “Will Internet TV be American?” in Eli M. Noam, Jo Groebel and Darcy
Gerbarg, eds. Internet Television Lawrence Erlbaum Associates, 2004, p. 235.
27 Manyika, James. “Google’s View on the Future of Business: An Interview with
CEO Eric Schmidt.” McKinsey Quarterly, September 2008. <http://www.mckinsey
quarterly.com/Googles_view_on_the_future_of_business_An_interview_with_CEO_
Eric_Schmidt_2229>
28 Keen, Andrew. “Google’s Eric Schmidt sets out the search engine’s future.” Telegraph.
co.uk, October 29, 2009 <http://www.telegraph.co.uk/technology/google/6459437/
Googles-Eric-Schmidt-sets-out-the-search-engines-future.html>
31 Larson, James F. The Internet and Foreign Policy. New York: Foreign Policy
Association, Headline Series No. 325, Spring 2004.
32 Sung, Sang Yeon. “The High Tide of the Korean Wave III: Why do Asian fans prefer
Korean pop culture?” The Korea Herald, February 4, 2008, from Asia Media News
Daily. http://www.asiamedia.ucla.edu/article.asp?parentid=86640
33 “South Korea to Spend $90 million on Pop Music Industry.” Seoul, Yonhap News
Agency, February 4, 2009.
34 Han, Jane. “Korea: Foreigners Belittle Government Image.” Korea Times, June 8,
2007.
35 “Korean Presidential Commission on National Brand Launched.” <http://www.korea.
net>
36 From the pages of the Reporters Without Borders website, www.rsf.org. North Korea
has perennially been dubbed the world’s worst internet black hole.
37 “UPDATE: 1-Egypt OT wins first N. Korea mobile phone licence.” Reuters, January
30, 2008.
38 Ko Kyungmin, Seungkwon Jang and Heejin Lee. .kp North Korea entry. The
International Development Research Center, Canada. <http://www.idrc.ca/en/
ev-127149-201-1-DO_TOPIC.html>
39 Ramstad, Evan. “Study Sees Gains in Korean Reunification.” The Wall Street Journal,
September 21, 2009. <http://online.wsj.com/article/SB125353016156627479.html>
40 Kwon, Goohon. Global Economics Paper No. 188. Goldman Sachs Global Economics,
Commodities and Strategy Research, September 21, 2009, p. 3.

1 <http://homes.eff.org/~barlow/Declaration-Final.html>
2 From course materials, Gary Stringer, University of Exeter. Conceptual Issues in
Cyberspace, 2006–2008. <http://services.exeter.ac.uk/cmit/modules/cyberspace/webct/
ch-philosophy.html#id690561>
3 Lessig, Lawrence. Code version 2.0. New York: Basic Books, 2006, p. 88.
5 From course materials, Gary Stringer, University of Exeter. Conceptual Issues in
Cyberspace, 2006–2008. <http://services.exeter.ac.uk/cmit/modules/cyberspace/webct/
ch-philosophy.html#id690561>
8 Lessig, Lawrence. Code version 2.0. New York: Basic Books, 2006, pp. 77–78.
230 Notes
9 <http://globalvoicesonline.org/>
11 Mueller, Milton. “Cyber-security for people? Or Nations?” Internet Governance
Project Blog, posted January 31, 2009. <http://blog.internetgovernance.org/blog/_
archives/2009/1/31/4076192.html>
12 Securing Cyberspace for the 44th Presidency. A Report of the CSIS Commission
on Cybersecurity for the 44th Presidency. Washington, DC: Center for Strategic and
International Studies, p. 5.
13 “International Policy Framework for Protecting Critical Information Infrastructure:
A Discussion Paper Outlining Key Policy Issues,” Center for Digital Strategies, Tuck
School of Business at Dartmouth, June 30, 2005, p. iii.
14 This section draws on material submitted by Professor Tai M. Chung of Sungkyunkwan
University.
15 <http://www.netan.go.kr/>
16 In addition to the original version, there are Jindo Arirang, from Jindo in
South Cholla province, Miryang Arirang from Miryang in South Gyeongsang
province, and so forth.
17 <http://knowledgerush.com/kr/encyclopedia/Arirang/>
18 Rao, Sandhya and Bruce C. Klopfenstein, eds. Cyberpath to Development in Asia:
Issues and Challenges. Westport, CT: Praeger, 2002.
25 (2008), p. 304.
20 Kelly, Tim, Vanessa Grayand Michael Minges. Broadband Korea: Internet Case
21 Suh, Joonghae and Derek H.C. Chen. Korea as a Knowledge Economy: Evolutionary
Process and Lessons Learned. Korea Development Institute and The World Bank
Institute, 2007, p. 85.
25 (2008), p. 305.
23 Atkinson, Robert D., Daniel K. Correa and Julie A. Hedlund. Explaining International
Broadband Leadership. The Information Technology and Innovation Foundation,
Washington, DC, May 2008, p. ix.
24 Committee on Broadband and Last Mile Technology, Computer Science and
Telecommunications Board, National Research Council. Broadband: Bringing
Home the Bits. 2002, p. 305. <http://www.nap.edu/openbook.php?record_
id=10235&page=305>
26 Noam, Eli. “Telecommunications Leadership Changes Guard.” Editorial in The
Financial Times, December 20, 2006. http://us.ft.com/ftgateway/superpage.ft?news_
id=fto122920061409279391
27 Noam, Eli. “Telecommunications Leadership Changes Guard.” Editorial in The
Financial Times, December 20, 2006. http://us.ft.com/ftgateway/superpage.ft?news_
id=fto122920061409279391
28 <http://www.nida.or.kr/kisa/eng/english_ver.html> (accessed July 20, 2010).
29 <http://www.koica.go.kr/english/aid/ict/index.html> (accessed July 20, 2010).
30 Zittrain, Jonathan. The Future of the Internet and How to Stop it. New Haven: Yale
University Press, 2008, p. 46–47.
Notes 231
33 Zetter, Kim. “Future of Cyber Security: What are the Rules of Engagement?” Wired,
July 28, 2009. <http://www.wired.com/dualperspectives/article/news/2009/07/dp_
security_ars0728>
34 Markoff, John. “Step Taken to End Impasse over Cybersecurity Talks.” The New York
Times, July 16, 2010. <http://www.nytimes.com/2010/07/17/world/17cyber.html?scp
=1&sq=international%20agreement%20on%20cyberwarfare&st=cse> (accessed July
20, 2010).
Communication Markets. Cambridge, MA: The MIT Press, 2009, pp. 11–12.
36 “Government finalizes blueprint for 17 new growth engines.” Korea.net government
news, January 14, 2009. <http://www.korea.net/news/news/newsView.asp?serial_
no=20090114004>
Index
advertising 153 restructuring 86–9; see also wireless

Agency for Digital Opportunity and broadband
Promotion 192 Brookings Institute 14
aging population 180 Brown, Gordon 48
Ahn Dong-hyun 157 Busan 120–121
Ahn Jae-hwan 162 business culture 190
aid projects 8, 133
Alien Technology 123 Castells, Manuel 16
ambient intelligence 111, 113, 116, 120, chaebol enterprises 6, 17, 26, 37, 38, 51,
Apple (corporation) 106–110, 114, 155, 55, 59, 94–95, 108, 165, 174–5, 189,
170, 171, 173, 197 191, 195
Arirang myth 186–7, 200–1 Chee, Florence 146
Aronson, Jonathan D. 2, 116–17 Cheonggyecheon project 124–5
asymmetric digital subscriber line Choi Byung Il 54, 142, 145
(ADSL) technology 79–81, 83, 87 Choi Jin-sil 162
AT&T (corporation) 26, 31, 92, Choi Kwang-Soo 27
167, 172 Choi See-Joong 125–6
Choi Soon-dal 32–3
bang phenomenon and PC bang 16, 65, chollian, use of term 64
67, 81, 145–6, 181 Chun Doo-hwan 22–3, 27, 193
banking see internet banking Cisco (corporation) 123
Barlow, John Perry 181 cloud computing 28–29, 75–6, 114,
Basic Act on Informatization Promotion 172, 197
(1995) 46, 47, 60, 85 code division multiple access (CDMA)
Basic Act on National Informatization technology 35, 63, 70, 90, 92–101, 171;
(2009) 60 commercial development of 96–8
Basic Act on Telecommunications Cold War, 5, 23, 175, 193
(1983) 59 colonial rule in Korea 128, 141
beacon system, Korean 1, 20, 194 comparative advantage 11
Bell, Daniel 16, 134–5 competition, facility-based and
Berkman Center 67, 72–4, 86, 111 price-based 88, 190–1
Berners-Lee, Tim 74 computer literacy 85–6, 89, 192, 194, 199
Blackberry phones 106–107 Confucianism 164, 193
botnets 159–60, 197 Connectivity Scorecard 72
Brin, Sergei 75 consumer culture 143, 152–153
broadband 1–3, 8, 65–89; competition convergence: in media 114–15, 125,
in 79–81; definition of 67; diffusion 143–4; of technologies 3–4, 109, 111,
of 72–7, 111, 145, 156, 161; impact 115–16, 143
of 150; mobile 106–9; and strategic country’s technology index (CTI) 168
Index 233
Cowhey, Peter F. 2, 116–17 e-government 12–14, 81, 89, 132,
credit card usage 152–3 151–152, 161, 195–6
Crick, Francis 115 electronic switching systems 3, 25–27,
culture, Korean 6, 143, 147–8, 155–6, 29–33, 42–3, 84
162–4, 187, 193–4, 200; see also Electronic and Telecommunications
business culture; consumer culture; Research Institute (ETRI) 20, 25–6,
information culture; political culture; 30–4, 39, 45–6, 96–7, 103, 139–40
popular culture “electronic wallets” 153
cyber attacks 160, 197 electronics industry 20, 25–7, 30, 36, 41,
cyber bullying 143, 162–3 64, 166–71, 179
cyber crime 157–9 English language, use of 149, 200
cyber-universities 131 e-readiness index 70–1
cyberspace: conceptions of 182–7; Ericsson (corporation) 26
definitions of 182; and future economic European Union 15, 53, 55
growth 198–9; geography of 183, export-led development 4–5, 10–11, 28,
200–1; Korea’s place in 194–202; 165–6
language of 199–200; security in exports 4–6, 10–14, 35, 42, 52, 53, 57,
185–6, 197–8; sovereignty in and 93–95, 97, 100, 105, 109–111, 142,
governance of 184, 195–6; as virtual 146, 165–171, 173–176, 193
space 184
Cyworld 19, 67, 155–6, 162, 173, 181, Fogg, B.J. 122
193–4, 199–200 Fransman, Martin 67
free economic zones (FEZs) 121–2
DACOM 54, 64, 76, 83
Daedeok Innopolis 139 Gaesong Industrial Complex 180
DaeHan Telecom 95 Gale Company 120, 123
Daewoo (corporation) 33, 37–8, 59 gambling, regulation of 147–8
decentralization 50–1, 61, 89, 189–92 game industry 46, 49, 109–11, 129,
democratization 15, 22, 41, 61, 63, 193 145–8, 158, 173
Deputy Prime Minister structure 47–9 Gates, Bill 5–6, 75
developing countries, assistance to General Agreement on Tariffs and Trade
133, 201 (GATT) 52, 55
“developmental state” concept 4, 14–15, genomics 115
44, 51, 61, 191 Gerbarg, Darcy 114
digital divide 5, 12, 23, 45, 61, 85, Gibson, William 182
131–133, 134, 152; between North global production networks 166–7
and South Korea 177–9 Global Voices Online 184
digital literacy 134, 192 globalization 2, 7, 17, 65–6, 119, 162,
Digital Media City (DMC) 166; of education 141–2; of research
development 125 and development 138–9; “third wave”
digital multimedia broadcasting (DMB) of 165
101–2, 153, 109 Goldman Sachs 180
display industry 11, 170 Goldstar (corporation) 26, 31–40
Google 75–6, 106, 110, 150, 159–60, 163,
e-commerce 12, 152, 154, 160–2 171–4, 194–5
economic planning 20, 63 Gore, Al 8, 75, 78
Economic Planning Board (EPB) 38, 94 government policies, Korean 22, 51, 57,
The Economist 106 87, 140, 189–92; see also
Economist Intelligence Unit 70–1 e-government; leadership, political
Edelman Trust Barometer survey 149 “green aware” buildings 123
education, Korean 6–8, 12, 127–42, 188, gross domestic product (GDP),
193, 196–7; globalization of 141–2; in contribution of IT to growth in 9–10
New Songdo City 122–3; role of ICT gross national income (GNI) per capita
in 130–1 7–8, 15
234 Index
hacking 143, 159, 161, 195, 201 International Monetary Fund (IMF) 55,
Han Myeong Sook 117 58–9, 174; see also “IMF crisis”
Hanaro Telecom 79–81, 87–8, 145 International Telecommunications Union
Han-gul alphabet 18–19, 144, 193–194 (ITU) 1, 8, 12, 19, 67–72, 83–4, 93,
Hazlett, Thomas 77 103, 111–12, 149, 165, 189–90,
hotspots for Wi-Fi 103–4, 107, 111, 114 194, 196
Huer, Jon 150 internet addiction 86, 143, 157–8,
Hynix Semiconductor 10, 55–6 162, 195
Hyundai (corporation) 6, 37–9, 51, internet banking 154, 160–1
59, 139 internet cafés 145–6, 179
internet shopping 154
ICT Development Index (IDI) 68–70 internet usage 4, 150–3, 161
“IMF crisis” (1997–98) 6–9, 53–6, 59, iPhone devices 70, 90, 106–9, 110, 112,
65–66, 79, 86–9, 133–4, 174, 176 155, 166–7, 170–2, 173, 195, 197
Incheon Free Economic Zone (IFEZ) iPod Touch device 107–8, 114, 173
121–3 ITT (corporation) 26, 31
inflection point in global ICT
infrastructure 198 Jho, Whasun 61
information and communication Johnson, Chalmers 14
technology (ICT): 1–12, 16–19, 22, 23, Joony Koo 110–11
27, 29, 41–42, 44–64, 66, 68–70, 72, Joukhi, Jukka 163–4
85, 93, 105, 114–117, 126–127, 142,
149, 153, 166, 169, 171, 174, 176–178, Kim Dae-jung 55, 66, 79, 86
180, 182, 185, 188–192, 195, 197–198 Kim Jae-Ik 23–9, 32, 44
diffusion of 17; education in 130–4; Kim Shin Dong 155
R&D in 135–138, international Kim Wan-hee 36
measures of development in 12 Kim Young-sam 14, 46–7, 59, 65–6, 79,
information culture 6, 49, 61, 63, 124, 85–6, 157
131–32, 134, 143–4, 148–9, 162, 188, Komi (corporation) 36
192, 193, 196, 201, 202 Korea: challenges for future development
Information Culture Committee 132 195; economic structure 13; economic
Information Promotion Committee 47 transformation 6–7, 12, 15; image of
Information Promotion Fund 132–3 175–7; Internet development in 76–7;
information society 163–4; concept misperceptions of 5–6; unification of
and definition of 15–16; dark side of 178–80
157–63, 197, 201; global 165, 181 Korea Advanced Institute of Science
information superhighways 8, 75, 78–87, and Technology (KAIST) 46, 76,
149, 181, 190, 192, 194–5 130, 139
Information Technology Agreement Korea Agency for Digital Opportunity
(ITA) 55 and Promotion (KADO) 45, 132
Information Technology and Innovation Korea Communications Commission
Foundation (ITIF) 71, 192 (KCC) 45, 48, 50, 53, 109, 125, 163
informatization 9, 13, 46, 47–50, 59–63, Korea Creative Content Agency
65, 78–80, 117, 119, 131–4, 159, 162; (KOCCA) 49
government-led promotion of 84–6; Korea Electric Power Corporation
priority given to 86–9 (KEPCO) 80–1, 88
innovation 3, 13, 16–18, 20, 26, 33, 35, Korea Fair Trade Commission (KFTC)
45, 47, 48, 50, 51, 61, 65, 71, 77, 90, 97, 99
93, 96–98, 101, 105, 122, 127, 134, Korea Game Industry Agency (KOGIA)
137–139, 165–166, 168, 189, 200 46, 158
institutional change, patterns of 44–51 Korea Information Infrastructure (KII)
intellectual property 34, 101, 105, project 65–66, 78–85
137–8, 158 Korea Information Society Development
intelligent urbanization 123 Institute (KISDI) 15, 45, 79, 140–1
Index 235
Korea Institute for Electronic Commerce migration 141–2
(KIEC) 46 Milgram, Stanley 154
Korea Institute of Science and Mine, Alain 85
Technology (KIST) 20, 29, 33, 37 “Minerva” 156–7
Korea International Cooperation Agency Ministry of Commerce, Industry and
(KOICA) 197 Energy (MOCIE) 50
Korea Internet and Security Agency Ministry of Communications (MOC)
(KISA) 49, 186, 196 23–4, 27–32, 41–2, 45–6, 57–8, 64,
Korea Mobile Telecommunications 93–6, 132, 190; see also Ministry of
Corporation (KMT) 91 Information and Communication
Korea Network Information Center 76 Ministry of Culture and Tourism 46,
Korea Science and Engineering 49, 147
Foundation (KOSEF) 130 Ministry of Education 46, 49, 129–30
Korea Telecom 27, 33, 52, 56–9, 79–83, Ministry of Education, Science and
87–8, 91, 96, 107, 111, 172, 189 Technology (MEST) 47, 136
Korea Trade and Investment Promotion Ministry of Information and
Agency (KOTRA) 176–7 Communication (MIC) 24, 46–8, 50,
Korean language, use of 69, 107, 143, 63, 86, 88, 99, 102–3, 108, 117, 132,
147, 149–50, 173, 195, 200 139, 163
Korean War, legacy of 128, 175, 192–3 Ministry of Knowledge Economy (MKE)
“Korean Wave” of popular culture 175–6 47, 50, 115, 121
Kwon, Goo-Hoon 180 Ministry of Posts and
Telecommunications 24
language as an element in culture 149–50; Ministry of Public Administration and
see also English language; Korean Security (MOPAS) 48
language Ministry of Science and Technology
leadership: 17, 21, 24, 27, 32, 35, 57, (MOST) 46, 48–9, 108, 130
87, 88, 95, 116, 117, 119, 123, 132, Ministry of Trade, Industry and Energy
133, 136, 142, 180, 192, 196, 200 in (MOTIE) 46, 94–5
Korean context 61–4; political 44, mobile telephony 3, 11, 90–112; diffusion
188–90 of 90–3; early innovation in 93–102;
Lee Byung-Chull 37–8, 192–3 social and cultural aspects of 154–6;
Lee Myung-Bak 47–50, 63, 90, 108–9, standards for 99–100
122, 125, 136, 162 “mobile triangle” 98–99
Lee Seung Seop 158 Mobile WiMAX see wireless
Lessig, Lawrence 182 broadband
LG Electronics 6, 10, 51, 59, 97, 108, mobility, law of (see McGuire’s law) 91
139, 144, 177 Moneta service 153
liberalization: economic 4–5, 44, 57–61, Moore’s Law 3, 39, 196
89; political 45, 61, 94–6, 193 Motorola 90, 92, 101
literacy 12, 13, 19, 69, 85, 128, 134, 192, mountainous terrain of Korea 91, 194
194, 199; see also computer literacy Mueller, Milton 185
and digital literacy music industry 176
local loop unbundling 88
nanotechnology 4, 115, 198
McGuire’s Law 3 “national brands” 177
malware 159–60, 197 National Information Society Agency
massive multiplayer online games (NIA) 45, 49, 124, 159
(MMOGs) 16, 146–7, 181, 183–4, 200 National Information Strategy
media ecology 143–8, 162 Committee 62
medical care 115, 199 National IT Industry Promotion Agency
Metcalf, Robert 67 (NIPA) 49
Metcalf’s Law 3, 67, 116 National Science and Technology Council
Microsoft 74–5 (NSTC) 47–8, 50
236 Index
nationalization 55 Reporters without Borders 5
Naver search engine 143, 148, 150, 160, research and development (R&D) 12,
173, 195 17, 33–34, 46, 50–51, 63, 97, 127,
NCSoft Corp. 158 130, 134–7, 141–142, 147, 165, 175,
Negroponte, Nicholas 109 188–190; globalization of 138–9
Netscape Navigator 74–5 Roh Moo-hyun 48, 156
networked readiness index 70 Roh Tae-woo 42, 95, 175
New Songdo City 113, 120–3, 179
Noam, Eli 29, 109, 114, 144, 174, 196 Said Business School 71
Nokia-Siemens (corporation) 104 Samsung Advanced Institute of
Nora, Simon 85 Technology (SAIT) 170–1
North Korea 5, 118, 175–80, 185 Samsung Electronics 6, 10, 26, 31–9, 51,
“Northern Policy” 15, 42, 175, 193 59, 79, 97–8, 103–5, 108, 124–5, 139,
166, 170, 177, 189, 193
Office of Science and Technology Sang-hyun Kyong 32, 55
Innovation (OSTI) 48 Schmidt, Eric 174
Oh, Myung 15, 25, 27, 32–3, 40, Sejong, King 18, 20
63, 203 semiconductor industry 10–11, 26–27,
Ohmynews 149, 156 35–9, 63, 115, 130, 141, 167–70, 192–3
Olympic Games 15, 41–2, 175, 193 Seoul 1, 20, 124–5, 144–5; see also
Opie, Julian 145 Olympic Games
Organization for Economic Cooperation Shinsegi Telecom 95–6
and Development (OECD) 7, 11–12, Siemens (corporation) 31; see also
15, 65–8, 71–2, 84, 127, 135, 138, Nokia-Siemens
160, 165 Silicon Valley 38
Oriental Precision Company (OPC) 26 sinkhole system 160
original equipment manufacturing SK Telecom 96, 99, 102–103, 107–8,
(OEM) 166–8 125, 153, 156, 191
Skype 106–108, 114
Page, Larry 75 smart phones 90, 106–108, 166, 170
Park Chung Hee 4–7, 14, 20, 22–3, 36, social networking 19, 67, 71, 74, 155–6,
40, 44, 61 162, 181, 183, 193–4, 199, 200
Park Dae-sung 156–7 Software Development Promotion Act
patent applications 137–8 (1987) 60
patent(s) 34, 96, 98, 105, 137–8 spam 159, 160–2, 197, 201
political culture 156–7 special telecommunication service
popular culture 175–6 providers (STPs) 56
Porat, Mark Uri 10, 16 Starbucks 111
Presidential Commission on National Starcraft game 102, 145, 173, 181
Brand 177 subsidies for handsets 98–9
Presidential Council on Information Sunkyong Group 95
Society 60–1
Presidential Council on Nation Taihan (corporation) 37–8
Branding 6 TDX Project 3, 7, 22, 24, 27, 29–36, 39,
Presidential Council on Science and 42, 45, 59, 63–64, 84, 93, 96–98, 135,
Technology (PACST) 47, 51 139, 141, 189
printing with moveable type 18 technology capability 31, 174, 189
private sector in Korea, increasing role telecommunications: legislation on 59–61;
of 51, 57, 61, 87–8, 189–90 restructuring of 16–17, 51–61
privatization 56–9, 189–90 Telecommunications Business Act
public switched telephone network (1983) 60
(PSTN) system 24, 29, 42, 57, 190 “telecommunications revolution” 3, 5,
15, 22, 27, 44, 63, 74, 84, 135, 188–93;
Qualcomm 96–101 legacy of 41–3; precursors of 18–21
Index 237
teledensity 3–4, 92, 178–9 vocabulary, control of 158
telephone backlog crisis 20–1, 23, 29 voice over internet protocol (VOIP)
telephone banking 28 telephony 28, 74, 106, 108, 114, 117
television 5, 9, 16, 36, 57, 117, 125–126,
144, 146, 153, 156–157, 163, 166–167, Watson, James 115
169–171, 173–176, 175, 182, 184, 187, Waverman, Leonard 12, 72
193; broadcasting in color 22–8, 40–1, Weiser, Mark 116
144; Internet TV 8, 114, 140; mobile Wilson, Ernest J. III 4, 17, 52, 64
90–91, 100–102, 109–110 trust in wireless broadband (WiBro) 11, 90,
148–149 102–7, 117, 139–140, 190
Thrunet 80–1, 87–8 wireless internet platform for
total factor productivity (TFP) 9–10 interoperability (WIPI) 56, 107
trust in media 148–9 World Bank 1, 7, 9, 12, 44, 127, 131, 165,
189–90
ubiquitous computing 116, 163 World Cup competition 176
Ubiquitous Dream Hall (UDH) World Cybergames Challenge
exhibition 163 (WCG) 173
ubiquitous networking 71, 111–13, World Economic Forum 12, 15, 70, 72
116–26, 132, 199 World Intellectual Property Organization
U-Cities Movement 119–21 137–8
U-Korea Master Plan 113, 117–18, 126, 132 World Summits on the Information
United Nations e-Government Survey Society 2, 14–15, 68
(2010) 13–14 World Trade Organization (WTO) 4, 17,
United States: Federal Communications 24, 52–9, 141, 167, 191
Commission (FCC) 2, 67, 196; World Wide Web 78, 192; origins
Korean students studying in 142; of 74–6
Omnibus Trade and Competitiveness worldwide interoperability for microwave
Act (1988) 53; Telecommunications access (WiMAX) 11, 90, 102–5
Industry Association 95; Trade
Representative 56 Yang Seung Taek 34
Uruguay Round of trade negotiations Yi-eo Island (yi-eo do) myth
53–4, 191 186–7, 200
U-Seoul Forum 124 Yonsei University 122–3
YouTube 163, 172–173
virtual reality 198–9
Vision 2025 198 Zittrain, Jonathan 197

Digital Development in Korea: Building An Information Society

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Digital Development in Korea: Building An Information Society

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Digital Development

Myung Oh and James F. Larson

Routledge Advances in Korean Studies

Digital Development in Korea explores the role of digital information and

James F. Larson is a communication scholar and former Deputy Director of

1. The Politics of Economic Reform in South Korea

2. Market and Society in Korea

3. Social and Economic Policies in Korea

4. North Korea in the World Economy

5. Legal Reform in Korea

6. Women, Television and Everyday Life

7. Transformations in Twentieth Century Korea

8. The Development of Modern South Korea

9. Industrial Relations in Korea

10. The Global Korean Motor Industry

12. Korea in the New Asia

13. Foreign Direct Investment in Post-Crisis Korea

14. Korea Confronts Globalization

15. Korea’s Developmental Alliance

16. Capitalist Development in Korea

17. Political Protest and Labour Movements in Korea

18. Retirement, Work and Pensions in Ageing Korea

19. South Korea Under Compressed Modernity

20. New Millennium South Korea

21. Human Rights Discourse in North Korea

22. Digital Development in Korea

Myung Oh and James F. Larson

ISBN: 978-0-415-60646-2 (hbk)

1 Digital Development as Korea’s Destiny 1

2 On the Shoulders of Giants: The 1980s Telecommunications

3 Government-led ICT Development in South Korea 44

4 Korea’s Broadband Revolution 65

5 The Mobile Revolution: Early Innovation and the

6 Intelligent Buildings, Sentient Cities and the Ubiquitous

7 Education and Building Citizen Awareness 127

8 Korea’s Information Culture and Media Ecology 143

10 Korea’s Place in Cyberspace 181

1.1 South Korea’s Teledensity, Mobile and Internet Usage Trends

1.1 Contribution of IT to GDP Growth (Unit: Percent). 9

Professor Eli Noam, Director

ADSL – asymmetric digital subscriber line

Reorganization of the Telecommunications Management System

Resolution of the Telephone Backlog and Nationwide Telephone Automation

Development of the TDX Electronic Switching System

Deregulating the Supply of Terminals

Deregulation of the Public Switched Telephone Network (PSTN)

Korea is a mountainous peninsula, with mountains occupying over 70 percent of

Technological Change and Convergence

The digitization of communication technologies is largely responsible for

International Pressure for Market Liberalization

Political and Social Change in Korea

“Scratches on our Minds”: Misperceptions of Korea

Korea’s Ascent to the Vanguard

The Strength of South Korea’s ICT Sector

Table 1.1 Contribution of IT to GDP Growth (Unit: Percent).

Source: Bank of Korea (2010)

12,000 Korea, Rep. of

Figure 1.3 Effect of Knowledge on Korea’s Long-term Economic Growth (1960–2005).

• semiconductor memory chips,