Solidify as IT powerhouse

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Solidify as IT powerhouse


2005-04-22


Information technology will have fundamental impact on the way people live and do business

 

Electronic communication has played an integral part in developing Korea`s economy over the past four decades. Now with the country becoming one of the most advanced info-tech markets in the world, policymakers and businesses are facing the challenge of keeping growth alive in the matured telecom sector.

 

"The advancement of information technology will have a fundamental impact on the way people live and do business. It would be an understatement to say that no industry segment or technology in the past, whether it`s the introduction of electricity, automobiles and electronic goods, ever had a greater influence on society or the course of history the way information technology is doing now," said Chin Dae-je, the minister of information and communication, during a policy report to the presidential office last month.

 

"We are now approaching an environment where people could stay connected anytime, anywhere and on any device. The boundaries between industries are becoming irreverent and this trend of digital convergence is generation new markets and products," he said.

 

It was 121 years ago today that Korea started its first modern postal services, after King Gojong of the Joseon Dynasty announced the establishment of a state-run post office. The post office was forced to halt services just 18 days later, after its building was burned down during a coup attempt. It was another 10 years before the country printed stamps again.

 

The humble beginning of Korea`s public communication services is deceptive considering the current situation where the country finds itself at the cutting edge of the information society. Korea has made major strides in information and communication technology over the past few decades, progressing as a global trendsetter with one of the world`s highest wired and wireless penetration rates.

 

In 1960, Korea had a telephone penetration rate of 0.36 per 100 inhabitants, barely one-10th of the then world average. By 1981, Korea had caught up with the world average and at the end of 2002 the country had more than 48.8 telephone subscribers per 100 inhabitants, which was almost three times more than the world average.

 

Today, more than 92 percent of Korean households have a fixed-line telephone, while the mobile penetration rate exceeds 75 percent. As of March, the number of fixed-line telephone users was 22.9 million, while the mobile-phone population grew to 37.1 million out of a population of 48 million. Broadband Internet penetration, which was 59.4 percent in 2003, now stands at 70.2 percent.

 

The information-technology sector also plays an important part in the nation`s export-driven economy. Info-tech exports reached $74.7 billion last year, up 29 percent from 2003, with increasing sales for mobile phones and semiconductors. Added-value generated by info-tech products and services accounted for 37 percent of gross domestic product in 2003, up from 12.1 percent in 1994.

 

"The development of a series of innovative technologies from TDX in the 1980s to CDMA and broadband Internet since the 1990s has established Korea as a global IT powerhouse. As a result the IT industry has emerged as a key driving force of the Korean economy," said Chin.

 

"However, we cannot afford to be complacent with the past achievement of the Korean IT industry, since today`s winner-takes-all society allows only a company or a country with the world`s best technologies to survive the fierce competition across international borders. We are focusing on adopting new info-tech services ahead of competitors, commercialize them and preoccupy the IT service market to secure future growth," he said.

 

National IT strategy

 

Since 2003, the government had been pushing a new national info-tech strategy, dubbed IT839, designating eight new services, three network new infrastructures and nine manufacturing sectors as the next-generation, high-tech growth engines. The government hopes the new growth engines will lead the economy for the next decade, adding strength to the national drive toward achieving $20,000 per capita income.

 

The eight new services are portable Internet (WiBro), mobile television (DMB), home networking, vehicle-based information systems (telematics), radio-frequency identification (RFID) technology, W-CDMA mobile telephony, digital television broadcasting and voice-over Internet protocol (VoIP) services.

 

To provide the backbone network for the new services, the government and industry will develop three advanced infrastructures including the broadband convergence network (BcN), a massive Internet protocol providing connections speeds between 50 mbps to 100 mbps, sensor-based computing networks and the next-generation Internet platform Internet protocol version 6 (IPv6).

 

By enhancing the aforementioned technologies and network infrastructure, the government hopes to foster production in nine industrial sectors comprising 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 robot products.

 

The IT839 strategy is an essential part of the government`s roadmap plan to integrate information and communication technology infrastructure with urban development and build an environment where people can enjoy access to high-speed networks and advanced communication services anywhere and anytime through a ubiquitous computing network.

 

Through the comprehensive rebuilding project, dubbed U-Korea, the government hopes to facilitate further economic growth and lay the foundation for the national initiative toward achieving $20,000 per capita income.

 

"U-Korea is what I would call a `national meta plan,` where the roles and realms of government, businesses and individuals expand in different ways and dimensions from what is now. Strengthening the relationship between the public and private sector, as with academia and industry, and building a communication structure that could add efficiency in planning and management will be critical in achieving what we envision through U-Korea," said Ha Won-gyu, from the Electronics and Telecommunications Research Institute.

 

Broadband convergence

 

The deployment plan for the broadband convergence network is seen as the government`s most notable attempt to create an enhanced info-tech environment to cope with the trends of media convergence, providing an environment where wired and wireless communication may combine seamlessly under computing networks.

 

The broadband convergence network is conceived as a massive Internet protocol that provides connections at speeds of 50 mbps to 100 mbps, or about 50 times faster than conventional broadband services now offered. Designed to enable people to connect from a wide range of terminals from nearly anywhere, policymakers hope the system can provide the backbone for future technologies by overlapping voice, video and data on a single platform.

 

Industry watchers expect Internet protocol-based television, next-generation mobile telephony and portable Internet to be the killer applications for the new network.

 

"The broadband convergence network is the core of our national info-tech strategy. By successfully integrating the broadband convergence network with advanced end-user applications, Korea will be at least five years ahead of other developed countries in information-based consumer services," said Seo Seok-jin, director of the Communication Ministry`s broadband convergence network division.

 

Consortia picked

 

In August last year, the government picked three consortia, respectively led by telecom operators KT Corp., SK Telecom Co. and Dacom Corp., to conduct the broadband convergence network trial operations that are scheduled to run in 1,350 households in the cities of Seoul, Busan, Daegu, Gwangju and Daejeon through the end of this year, while attracting around 2 million users. Commercial services are expected to go online in 2006. Nationwide coverage is expected by 2010.

 

The government plans to generate 8 trillion won ($7.7 billion) in private sector investment for the pilot projects this year. About 5.5 trillion won of the investment will come from the country`s major telecom operators - KT, SK Telecom, Hanarotelecom Inc. and Dacom. The remainder of the budget will be provided by land-based television stations and cable program providers planning to have a part in the high-speed network project.

 

However, the government-backed pilot projects for the broadband convergence network recently hit a snag when the country`s four television stations hinted at pulling out of the trial operations. The broadcasters - KBS, MBC, SBS and EBS - had originally planned to develop services and business models with telecom operators for Internet protocol-based television.

 

The sudden reluctance of the television companies toward the broadband convergence network pilot projects are related to a recent conflict between the country`s broadcast and telecommunication regulators over the jurisdiction of IP-based television.

 

The Korean Broadcasting Commission, the broadcast regulator, announced plans earlier this month to start trial operations for IP-based television, intensifying its lengthy debate with the Ministry of Information and Communication over the legal boundaries of the new multimedia services.

 

Television stations are now facing the decision whether to join both IP-based television pilot projects or step out of the broadband convergence network scheme, according to industry watchers.

 

The Ministry of Information and Communication says that IP-based television services should be considered as an extension of telecommunications. The Communication Ministry even adopted a new name for the futuristic broadcasting services - I-COD for Internet content on demand - in an attempt to promote their logic in setting up legal boundaries.

 

By taking the lead in the industrialization efforts for IP-based television, the Korean Broadcasting Commission said it will seek to achieve a competitive balance between cable service providers and telecom companies in the nascent market. Cable companies fear the possibility of being forced to compete with telecom carriers, such as fixed-line telephony giant KT, which holds more than 50 percent of local Internet customers, for the same market.

 

U-City project

 

The U-City project is another integral part of the country`s drive toward U-Korea. U-City is a national urban development project that focuses on strengthening the role of information and communication technologies in civic planning and management.

 

The Ministry of Information and Communication recently announced plans to establish the Korea U-City Forum next month, joined by high-tech industry heavyweights such as KT, Samsung SDS Co. and public agencies such as the Korea Land Corp. The forum will focus on delivering industry standards for next-generation city projects and designing a supportive administrative framework. "We hope the forum can provide a floor for better communication and interaction between the government and companies. The idea is to take the separate U-City projects

 

pushed by regional governments and private companies and fully integrate them with the national development policy," said Lee Geun-ho, a Soonchunhyang University professor and senior vice president of the Korea U-City Promotion Association. Lee said the forum will release a detailed policy outline and budget during the second half of the year.

 

The next-generation city project is aimed at building industry-wide partnerships between the high-tech and construction sectors to integrate advanced info-tech infrastructure to support the sustainable development of cities.

 

The idea is to create environments in cities where residents can enjoy access to high-speed networks and enhanced information services at anytime regardless of location through a ubiquitous computing network.

 

The government hopes the U-City project will strengthen Korea`s status as an international technology powerhouse and establish itself as regional cluster and test bed for world-class companies here and abroad. The project is also seen as critical to providing the infrastructure and generating a larger service market for next-generation communication technologies, such as sensor-based computing, radio-frequency identification applications and mobile Internet.

 

According to a report by KT, the market for U-City development projects will be worth between $15 billion to $22 billion by 2010. The company signed a memorandum of understanding with the city government of Busan last month to head its U-City project.

 

"The U-City project will become the centerpiece of the government and private sectors` effort in sustaining growth for the country`s economy," said Lee.

 

"The matured information and communication sector is already seeing the trend of jobless growth. If we could link information and communication technology with construction and urban development activities, we will be able to increase the overall level of investment while luring more foreign companies to come here."

 

Regional governments have been laying out comprehensive plans to integrate advanced info-tech infrastructure in urban areas. Seoul has been pushing its Digital Media City project since 1998, which aims to develop the city`s western district of Sangam-dong as a research and development hub for the high-tech industry.

 

Providing an advanced networking environment is also a part of Incheon`s intentions for New Song-do City, the next-generation city project scheduled for completion in 2014, while the island of Jeju has similar plans to develop itself as the country`s next high-tech boomtown, focusing on developing vehicle-based information services and infrastructure.

 

Promoting radio-frequency identification dechnology

 

Among the eight service sectors promoted under the IT839 strategy, many industry watchers expect radio-frequency identification technology, or RFID, to have the most significant long-term impact on the industry.

 

RFID describes a method of identifying items using radio waves through an electronic reader communicating with a microchip embedded on objects that hold information. The technology is designed to improve efficiency in supply-chain management and inventory for companies in the manufacturing and retail sectors, while opening new market opportunities for electronic equipment and semiconductor industries.

 

Last year, the government announced plans to invest 162 billion won through 2010 to support the commercial deployment of RFID technologies in both the public and private sectors. The government expects the domestic market for RFID will grow to 4 trillion won by 2007 in equipment sales, while generating $760 million in exports.

 

The Ministry of Information announced a plan that runs through 2010 to develop RFID networks at government agencies to support the technological development.

 

Under the project, the National Veterinary Research and Quarantine Service plans to attach RFID tags to imported beef products during the first half of this year, strengthening the monitoring systems and guarding against emergency situations such as bovine spongiform encephalopathy (mad cow disease) outbreaks.

 

The Korea Airports Corp., an affiliate of Korean Airlines Co., plans to invest 700 million to use RFID for freight control. The Defense Ministry said it is preparing to adopt RFID systems to manage its inventory of munitions and supplies starting this year.

 

"It won`t be long before RFID becomes a defining infrastructure of the country`s manufacturing base. Interest in RFID is increasing here as companies continue to search for ways to improve productivity while reducing costs at the same time," said Kim Shin-bae, chief executive of Korea`s largest mobile-phone carrier SK Telecom.

 

Kim also heads the Korea Association of RFID/USN (ubiquitous sensor network) that is joined by government agencies and 105 companies involved with telecommunications, software and consumer electronics.

 

In a policy report to the President Roh Moo-hyun earlier this year, Communication Minister Chin Dae-je announced plans to push a 790 billion won ($784 million) project to build an industrial park for RFID technology in Songdo, west of Seoul, by 2010.

 

Songdo, near the western coast city of Incheon, will host facilities for research and development, engineering and manufacturing of electronic tags and readers. Construction of major facilities will be completed by 2007 and production of active RFID tags and sensors will begin in 2008. The government will finance about 320 billion won of the budget, while the rest will be funded by the private sector.

 

"The global equipment market for RFID will grow to about $90 billion in 2015, which is about the size of the current wireless handset market," said Chin, meeting with reporters shortly after the presidential briefing.

 

"The deployment of RFID will be critical in the country`s initiatives of developing into a Northeast Asian trade hub. With Incheon becoming the country`s most critical trade and logistics center, it was a natural decision to locate the RFID hub in Songdo where the deployment process could be more efficient," he said.

 

The ministry is leading nine RFID pilot projects with other government organizations such as the Ministry of National Defense and the Public Procurement Office that runs through the fourth quarter. Last week, the The Songdo RFID complex will be the centerpiece of the government`s initiatives to build eight high-tech industrial hubs nationwide by 2010.

 

The Songdo RFID complex will lead the government`s plan to build high-tech industrial parks across the country to promote balanced regional development and lure more foreign technology investment.

 

Aside from Songdo, the government is planning to complete a research and development base for software and digital content in Sangam-dong, Seoul, by 2007 under a 430 billion won project.

 

Jeju is being promoted as a test bed for vehicle-based information services, while Gangwon Province will be developed as the heart for the country`s biotechnology industry.

 

Other plans include building an industrial complex for embedded software technology in North Gyeongsang Province, a research and development base in Chungcheong Province, a manufacturing base for optical fiber communications in South Jeolla Province and an industrial park for computer network-based logistics in South Gyeongsang Province.

 

"The idea is to increase the role of information and communication technology to the existing industries that have grown separately in each region. This would help achieve further economic growth and balanced regional development as it would make companies here and abroad spread their technology investment that has been heavily concentrated in metropolitan areas," said Seok Ho-ik, director of the planning and management office.

 


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