2016/17 Knowledge Sharing Program (Industry & Trade) with

IRAN 2 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2

Project Title 2016 Knowledge Sharing Project (KSP) Industry/Trade Policy Consulting: Iran 2

Project performed by Electronics and Telecommunications Research Institute (ETRI)

Supported by Ministry of Strategy and Finance (MOSF), Republic of Korea Korea Trade-Investment Promotion Agency (KOTRA)

Prepared for The Government of the Islamic Republic of Iran

In cooperation with Vice Presidency for Science and Technology (VPST), Iran KOTRA Teheran Office

Project Directors Won S. Yun, Executive Vice President for Biz info & Trade, KOTRA Sang Y. Hong, Director General, Development Cooperation Office, KOTRA

Project Manager Sun Y. Chang, Manager, Development Cooperation Office, KOTRA

Project Officer Chang S. Kim, Development Cooperation Office, KOTRA

Authors Young B. Choi, Senior VP, ETRI Principal Investigator Chapter 1. Young K. Kim / Jong S. Kim (ETRI) Chapter 2. Myung S. Kim / Chang S. Park (ETRI) Chapter 3. Seung Ku Hwang / Hyung G. Roh (ETRI)

Government Publications Registration Number 11-1051000-000808-01 ISBN 979-11-6097-675-5 (93320) 979-11-6097-676-2 (95320)(PDF) Copyright ⓒ 2018 by Ministry of Strategy and Finance, Republic of Korea IRAN 2

2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Securing the Means for the Development of the Iranian ICT R&D Center

Background and Progress of 2016/17 KSP (Industry/Trade) (Iran 2) Implications and Expected Effects of the 2016/17 KSP Industry/Trade (Iran 2) Chapter 1. Iran's ICT Policies and ICT Industry Chapter 2. Suggestions for the Development of Iran's ICT Research Institutes Chapter 3. Proposals for the Expansion of Technology Commercialization in Iran Preface

The Knowledge Sharing Program (KSP), sponsored by the Ministry of Strategy and Finance, is the representative knowledge-based development cooperation program in Korea that supports the economic and social development of partner countries and establishes a friendly economic cooperation base with Korea. Since the initiation of KSP in 2004, we have provided customized policy advisories to 59 countries based on Korea’s development experience and knowledge, and reached many accomplishments, such as promoting institutional improvement of partner countries and linking businesses to follow-up with economic cooperation.

KSP has been used strategically for economic cooperation and the demand for creating new growth engines in overseas markets has increased in recent years. As such, KOTRA has been participating as a joint general organization of KSP since 2014, providing advice to promising industries such as trade and investment and contributing to the project, making KSP a cornerstone of bilateral economic cooperation.

KOTRA has been carrying out nine KSP projects including the project for the Vice Presidency for Science and Technology (VPST) of Iran as a general organization of ‘2016/17 KSP Industrial and Trade Investment Policy Advisory Program’ and focuses on the following two aspects. First, we emphasized the importance of knowledge sharing gained during the economic development process of Korea with partner countries and provided meaningful policy advice in accordance with KSP’s goals. Rather than delivering the experience of Korea to Iran unilaterally, KOTRA sought to find common implications through communication and cooperation with various participants, including senior officials of Iran.

Second, we have improved the effectiveness of policy advice by upgrading the KSP project to lead to practical economic cooperation and allowing Korean companies to participate. Particularly, VPST demands a high level of cooperation in transferring ICT technology as well as joint study with Korean companies. Therefore, we held the ‘Iran ICT R&D seminar’ as a follow-up for finding cooperative projects and specific technical cooperation needs between Korean companies and VPST, expanding public-private partnerships. This report is organized by the Ministry of Strategy and Finance and directed by KOTRA. It is conducted by the Electronics and Telecommunications Research Institute (ETRI) and releases the research results. The KSP project with Iran was conducted for the first time this year and KOTRA carried out the project under the title of “Establishment of ICT Research Center and its Operation in Iran” as the Iranian government is pursuing the development of ‘information technology and telecommunications’ in the sixth five-year development plan after the economic sanctions were lifted.

We have selected three sub-contracts while sharing Korea’s experiences and drawing implications for Iran’s policy—first, research on ICT policy and industry in Iran; second, the suggestions for Iran’s ICT research institutes; and third, proposals for the expansion of technology commercialization in Iran.

Prior to the publication of this report, I would like to express my sincere appreciation to Dr. Bong Tae Kim, Dr. Seung Ku Hwang, and Young Bum Choi, vice presidents of ETRI; Young Bum Choi, vice president Mr. Jong Seo Kim, Mr. Chang Sik Park, Mr. Young Kwon Kim, Dr. Myung Soon Kim, and Mr. Hyung Gyun Roh, researchers of ETRI for working on this project. I am also grateful to Dr. Tae Ho Park, professor of Seoul National University, senior advisor of this project.. I also thank KOTRA’s overseas offices in Tehran and the Korean Embassy in Iran. Furthermore, I am thankful to those who have given valuable advice for the completion of the report, such as Mr. Sung-Jun Yoo, Mr. No-Taek Park, Mr. In-Su Kang, Mr. Dal-Seung Yu and Mr. Sun-Hui Han.

Lastly, I’d like to disclose that the contents of this report are opinions of the experts who had participated in the project, and are not official opinions of KOTRA.

August, 2017 Wonsok Yun Executive Vice President for Business Information & Trade Affairs, KOTRA Contents

Background and Progress of 2016/17 KSP (Industry/Trade) (Iran 2) ···························· 1 Implications and Expected Effects of the 2016/17 KSP Industry/Trade (Iran 2) ········· 8

Chapter 1

Iran's ICT Policies and ICT Industry

1. Introduction of Iran ·························································································································· 12

2. ICT Policies and Industry of Iran ···································································································· 19 2.1. ICT Policies of Iran ··················································································································· 19 2.2. Iran's ICT Development Plans ································································································ 20 2.3. Iran's ICT Industry ···················································································································· 24

3. Korea's ICT Policies ··························································································································· 32 3.1. Cyber Korea 21 (1999-2001) ···································································································· 33 3.2. e-Korea (2002-2006) ················································································································· 39 3.3. u-Korea (2006-2010) ················································································································· 47 3.4. K-ICT (2015-2020) ····················································································································· 54

4. Implications and Recommendations ···························································································· 63

Reference ·············································································································································· 65 Contents

Chapter 2

Suggestions for the Development of Iran's ICT Research Institutes

1. National Vision and Science and Technology Development Strategies of Iran ···················· 68 1.1. An Overview of Iran's Science and Technology Policies ····················································· 68 1.2. Science and Technology Governance of Iran ······································································· 74 1.3. Iran's R&D Investments ············································································································ 76 1.4. Techno Park and Company Support System ········································································ 79 1.5. Iran's ICT-devoted Research Institute (ITRC) ········································································· 85

2. Korea's National R&D Strategies ··································································································· 93 2.1. Korea's National R&D Policies and Implementation Systems ··········································· 93 2.2. Development process of national R&D programs ······························································ 97 2.3. Current Status of R&D Investments ····················································································· 102

3. A Case Study on the Activities of Korea's ICT Research Institute (ETRI) ······························· 104 3.1. Establishment of Government-funded Research Institute (ETRI) ····································· 104 3.2. Organizational Operation ······································································································ 107 3.3. Representative Research Achievements ·············································································· 119 3.4. Economic Impact ····················································································································· 129

4. Implications and Suggestions ······································································································ 132 4.1. Korea's Innovative Growth Model ························································································ 132 4.2. Suggestions for Iran's ICT Development ············································································· 139

Reference ············································································································································ 145 Contents

Chapter 3

Proposals for the Expansion of Technology Commercialization in Iran

1. ICT Technology Commercialization ····························································································· 150 1.1. The Concept of Technology Commercialization ································································ 150 1.2. Trends of Technology Commercialization Policies ····························································· 154 1.3. Technology Commercialization Strategies ·········································································· 157 1.4. Technology Commercialization Support Programs ··························································· 158 1.5. Technology Commercialization Ecosystem ········································································· 160

2. Current Status of ETRI Technology Commercialization Support ············································ 164 2.1. The Establishment and Operation of ETRI's Technology Commercialization System ····· 164 2.2. Technology Commercialization Platform ············································································· 166

3. Surveys on Current Status to Promote Korea-Iran ICT Technology Commercialization ···· 172

4. Recommendations ·························································································································· 174

Reference ············································································································································ 178 Contents┃List of Tables

[Table 1] Researchers in charge of policy consulting tasks for the 2016/17 KSP (Iran 2) ·········· 5 [Table 2] On-site project launch meeting ··························································································· 6 [Table 3] Surveys on local conditions to promote technology commercialization ····················· 6 [Table 4] Contents of the interim meeting and training workshop held in Korea in 2017 ········ 7

Chapter 1

[Table 1-1] Major macroeconomic goals specified in the 6th 5-year development plan ········ 17 [Table 1-2] SWOT analysis of Iranian society ···················································································17 [Table 1-3] ICT promotion goals of the 5th 5-year development plan ······································· 21 [Table 1-4] Iran's 5-stage e-Government promotion plan ····························································· 23 [Table 1-5] Size and prospects of Iran's ICT market ······································································· 26 [Table 1-6] Current status of Iran's wired and wireless communications markets ····················· 27 [Table 1-7] No. of mobile subscribers and market share of Iranian telecom carriers ··············· 30 [Table 1-8] Comparison of the major characteristics of informatization promotion plans ······ 33 [Table 1-9] Increasing Internet usage among the ‘information service disadvantaged’ (1998-2001) ························································································································ 46 [Table 1-10] Comparison of informatization results (1995-2001) ················································· 46 [Table 1-11] Details of key tasks ······································································································· 52 [Table 1-12] Amount of ICT convergence investment (2015-19) ················································· 58 [Table 1-13] Annual Budget for the K-ICT Plan (2015-19) ····························································· 62 [Table 1-14] Key indicators of Iran's science and technology ······················································· 63

Chapter 2

[Table 2-1] Summary of Iran’s major science and technology policies ······································· 70 [Table 2-2] S&T and ICT Policies in the Law of the 6th Development Plan ······························· 72 [Table 2-3] Iran's investments in science and technology (2011-2013) ······································· 77 [Table 2-4] Amounts of R&D investment with government budgets (2007-2013) ··················· 77 Contents

[Table 2-5] Iranian government's ICT budgets ················································································· 78 [Table 2-6] IPF investments in knowledge-based firms (2012-2016) ··········································· 78 [Table 2-7] Iran's major techno parks ································································································ 80 [Table 2-8] Promising new future technologies (6T) ······································································· 93 [Table 2-9] Roles of the NST's affiliated research institutes ························································ 100 [Table 2-10] R&D investment in Korea's promising new future technologies ························· 103 [Table 2-11] Evolution of mobile communication technologies ················································· 123 [Table 2-12] Development process of mobile communication technologies ··························· 125 [Table 2-13] DRAM technology development process ································································· 127 [Table 2-14] Supercomputer development process ······································································ 128 [Table 2-15] The TICOM series developed by ETRI ······································································· 129 [Table 2-16] Current status of Korea's GII by area ········································································ 132 [Table 2-17] Strength and weakness analysis of Korea's GII ······················································· 134 [Table 2-18] Iran's GII rankings by area ·························································································· 134 [Table 2-19] Status of R&D investments ·························································································135 [Table 2-20] Strength and weakness analysis of Iran's GII ··························································· 143

Chapter 3

[Table 3-1] Types of government support activities for technology commercialization ········ 153 [Table 3-2] Comparison of policy directions and promotional strategies for the technology transfer and commercialization acceleration plans ·················································· 155 [Table 3-3] The MSIP's plan to promote technology commercialization for the diffusion of R&D achievements ········································································································· 156 [Table 3-4] Promotional strategies and detailed promotion tasks for the 6th T/T and technology commercialization ····················································································· 157 [Table 3-5] Types of technology commercialization support policies ······································· 159 [Table 3-6] Trends of T/T achievements ·························································································· 165 [Table 3-7] Major Contents of Local Surveys on Iran's ICT Situation ······································· 172 [Table 3-8] Major Contents of the 3rd Local Survey (July 2-7, 2017) ········································ 172 Contents┃List of Figures

[Figure 1] Industry/trade/investment KSP with partner countries ·················································· 4

Chapter 1

[Figure 1-1] Iran's geographical location ·························································································· 13 [Figure 1-2] Iran's power structure ····································································································· 15 [Figure 1-3] Iran's past economic growth rates and prospects ···················································· 16 [Figure 1-4] Organizational chart of Iran’s MICT ············································································· 20 [Figure 1-5] Iran's ICT operational policy framework ····································································· 21 [Figure 1-6] TAFKA Plan implementation system ············································································ 24 [Figure 1-7] Iran's IT market growth pattern by area (2015) ························································· 26 [Figure 1-8] Iran's major IT businesses ······························································································ 31 [Figure 1-9] Cyber Korea vision ·········································································································· 34 [Figure 1-10] e-Korea vision ··············································································································· 40 [Figure 1-11] Inter-company collaboration and the knowledge-sharing model ······················· 42 [Figure 1-12] Realization of a one-stop service through the establishment of a government-wide portal ······························································································································ 43 [Figure 1-13] Trends of Internet users (1995-2001) ········································································ 45 [Figure 1-14] Expansion from e-Korea to u-Korea ·········································································· 48 [Figure 1-15] Informatization development stages ······································································· 48 [Figure 1-16] u-Korea Vision ··············································································································· 50 [Figure 1-17] u-Korea promotion stages and detailed objectives ··············································· 51 [Figure 1-18] u-Korea key tasks ········································································································· 52 [Figure 1-19] K-ICT Strategies ··········································································································· 55 [Figure 1-20] Key K-ICT Promotion Strategies ················································································· 57 [Figure 1-21] Diagnosis of current status of major strategic ICT products ································ 59 [Figure 1-22] The K-ICT Strategy Promotion System ······································································ 62 Contents

Chapter 2

[Figure 2-1] Evolutionary stages of Iran's S&T policies ·································································· 69 [Figure 2-2] Iran's S&T governance ··································································································· 75 [Figure 2-3] Status of Iran's techno parks (2002-2016) ·································································· 80 [Figure 2-4] No. of companies based in Iran's techno parks (2012-2016) ·································· 80 [Figure 2-5] Status of Iran's incubation centers ···············································································82 [Figure 2-6] Nationwide distribution of Iran's incubation centers (2014) ··································· 82 [Figure 2-7] Status of labs designated by Iran's Ministry of Science, Research and Technology ··········································································································································· 83 [Figure 2-8] Status of KBF designation in Iran (2014-2016) ·························································· 84 [Figure 2-9] Exports by KBFs based in techno parks and startup incubation centers ············ 84 [Figure 2-10] ITRC organizational chart ···························································································· 87 [Figure 2-11] Conceptual map of the NIN ······················································································· 88 [Figure 2-12] NIN service map ··········································································································· 89 [Figure 2-13] CT Lab organizational chart ························································································ 90 [Figure 2-14] ICTS Lab organizational chart ····················································································91 [Figure 2-15] Major research areas of the ITRC ·············································································· 92 [Figure 2-16] Organizational chart for the promotion of national R&D projects ····················· 95 [Figure 2-17] National R&D project planning process ··································································· 96 [Figure 2-18] National R&D operating system ················································································ 98 [Figure 2-19] Current Status of the NST ··························································································· 99 [Figure 2-20] Status of Korea's R&D Investments ········································································· 102 [Figure 2-21] ETRI timeline ··············································································································· 106 [Figure 2-22] Management philosophy from the 1980s to the beginning of the 1990s – [IMPH] ······································································································································· 108 [Figure 2-23] Management philosophy at the end of the 1990s - [Innovative Management] ······································································································································· 108 [Figure 2-24] Management philosophy at the beginning of the 2000s - [Refreshed Management] ······································································································································· 109 Contents

[Figure 2-25] [Creative Management] at the end of the 2000s ················································· 110 [Figure 2-26] ETRI R&D organizational chart (2017) ···································································· 112 [Figure 2-27] Status of ETRI patent application ············································································ 115 [Figure 2-28] The IPIQ scorecard ranks ETRI #1 ············································································ 116 [Figure 2-29] ETRI’s virtuous R&D cycle ························································································· 117 [Figure 2-30] Status of ETRI’s T/T and royalty income ································································ 117 [Figure 2-31] ETRI’s research-based spin-off companies ····························································· 119 [Figure 2-32] Major achievements of ETRI R&D ··········································································· 120 [Figure 2-33] Overview of TDX development ················································································ 121 [Figure 2-34] Comparison of telephone subscribers before/after the launch of the TDX system ······································································································································· 121 [Figure 2-35] Overview of CDMA development ············································································ 124 [Figure 2-36] Overview of DAM development ·············································································· 126 [Figure 2-37] Economic ripple effects of ETRI R&D ····································································· 130 [Figure 2-38] ICT R&D achievements ······························································································ 131 [Figure 2-39] Virtuous cycle of the government's R&D investments ········································ 131 [Figure 2-40] Major countries' total R&D expenditure and GERD ratio ··································· 136 [Figure 2-41] Korea's R&D investment index ················································································· 137 [Figure 2-42] Iran's demographic composition by age ································································ 139 [Figure 2-43] The number of Iran's ISI articles (posted on Web of Science) ··························· 140 [Figure 2-44] The number of Iran's ISI articles by area (posted on Web of Science) ············· 141 Contents

Chapter 3

[Figure 3-1] Technology commercialization process ···································································· 152 [Figure 3-2] Business ecosystem related to T/T and technology commercialization ············· 161 [Figure 3-3] ETRI technology commercialization platform ·························································· 167 [Figure 3-4] ETRI technological support model ············································································ 168 [Figure 3-5] ETRI technology consulting services ········································································· 168 [Figure 3-6] ETRI alumni businesses and achievements ····························································· 169 [Figure 3-7] Current status of ETRI research-based spin-off firms ··········································· 171 [Figure 3-8] The ETRI Holdings model ···························································································· 171 [Figure 3-9] ICT Technology Commercialization Support Model of Korea ······························· 174 [Figure 3-10] Korea-Iran Technology Commercialization Cooperation Models ······················· 176 Background and Progress of 2016/17 KSP (Industry/Trade) (Iran 2)

Young B. Choi (ETRI)

1. Background

Under the direction of KOTRA, a state-funded trade and investment promotion organization operated by the government of Korea, the Electronics and Telecommunications Research Institute (ETRI) of the Republic of Korea carried out the 2016 knowledge sharing project (KSP) in industry/trade/investment in partnership with the Vice Presidency for Science and Technology (VPST) of the Islamic Republic of Iran. Since the lifting in January 2016 of the UN economic sanctions imposed on Iran as a result of its efforts to acquire nuclear development capacity, Iran has expanded its economic cooperation with the international community and, most notably, has designated the ICT (information and communication technology) industry - which has developed rapidly across the world over the past decade - as a key element of the national agenda, with the focus on searching for a partner country with which to lay the groundwork for the country's ICT industry. As such, the KSP is intended to transfer the know-how required to run ICT research institutes—which have been and remain the driving force behind the development of Korea's information and communications technology, which is highly recognized around the world—to Iran, and to enhance, on the basis of the trust built through the process, cooperation between Korea and Iran and thereby help Korean businesses to expand their presence in Iran.

With a population of approximately 80 million and more, Iran was able to continue its pursuit of economic development with the focus on self-sufficient light industry even

Background and Progress of 2016/17 KSP (Industry/Trade) (Iran 2) 1 while the UN economic sanctions were still in force. As it now has the vision of becoming a top-tier nation in Islamic community and the African economies combined by 2025, Iran is in desperate need of technology and manpower to realize its vision. Although the UN economic sanctions were lifted in January 2016, Iran still remains on the US list of state sponsors of terrorism and the US list of countries where there are grave concerns about violations of human rights. As a result, Iran is having difficulty securing a partner country with which to pursue the development of its information and communication technology (ICT) sector in particular and new technologies in general.

Currently, the most prominent areas of Iran’s science and technology efforts are nanotechnology and life sciences, in which Iran ranks 5th and 6th in the world respectively. In the field of ICT, however, Iran has yet to catch up with many other countries in both technological development and service provision. The fact remains, however, that Iran’s overall science and technology base is excellent: the output of engineering and scientific papers by Iranian researchers is rising markedly; the number of students majoring in science and technology continues to increase; and the future of Iran’s science and technology sector is very bright.

Iran's supreme leader and the Iranian government have repeatedly declared their commitment to strengthening Iran's science and technology capacity with the goal of transforming Iran into a knowledge-based society. They have also stressed that, in line with the United Nation's lifting of economic sanctions against Iran and the subsequent thaw in its relationship with the international community, they will focus on improving the efficiency of its various social systems to the level of an advanced country by making concerted efforts to improve efficiency and eliminate corruption at the same time. The Iranian government’s commitment has been substantiated in the form of various science and technology promotion programs, including its support for the creation of techno parks and its financial support for knowledge-based firms (KBF), and its unsparing efforts to offer institutional support for industry-academia collaboration through which corporations can make the best use of universities' research results.

In the field of ICT, the Iranian government has set a series of ambitious goals designed not only to expand its ICT infrastructure, including the fiber-optic cable project, but also to develop its software industry through the realization of e-government among other goals. More importantly, the government is legislating the mandatory investment of a certain percentage of the country’s annual oil export revenues in science and technology research with the aim of increasing the country’s overall spending on science and technology research. All of these developments point to the fact that Iran will make significant improvements in its science and technology. Under these circumstances, it

2 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 would be most appropriate for Korea to cooperate Iran for applying the Korean model of ICT R&D and commercialization to Iran's ICT industry development efforts through the KSP initiative, and thereby assist the development of not only Iran’s ICT industry but those of other developing countries based on its successful experience in Iran.

2. Progress

In 2004, the South Korean Ministry of Strategy and Finance launched “Knowledge Sharing Project (KSP),” Korea’s unique knowledge-intensive development cooperation program that combines policy research and consultation with education and training, with the aim of supporting the economic and social development of Korea's partner countries on the basis of its economic development experience, including the development of customized policies and the provision of advisory and capacity building support programs that take into account the unique conditions of the partner countries.

The KSP consists of three parts: (1) a national policy advisory project, (2) a joint consulting project in partnership with international organizations, and (3) an economic development experience modularization project. The results of each element of the KSP are published in the form of a report and used as basic data for future knowledge-based international cooperation programs. The KSP is also aimed at establishing channels for cooperation and information exchange with the various policy institutes of Korea's partner countries, at expanding the international network through which Korea can share its policy experiences, and at facilitating the economic and social development of numerous developing countries around the world.

Background and Progress of 2016/17 KSP (Industry/Trade) (Iran 2) 3 [Figure 1] Industry/trade/investment KSP with partner countries

Source: A presentation material used at the KSP commencement meeting, ETRI, 2016.

The KSP with Iran is focused on providing consulting services on the partner country's national policies. The 2016 KSP (Iran 2) promoted in collaboration with the Vice Presidency for Science and Technology (VPST) of Iran was the country's first economic development experience sharing project to be implemented after the lifting of the UN sanctions against Iran. It was intended to carry out the Korean government’s economic development experience sharing project with the focus on Korea’s world-class ICT industry and ICT technologies, and, based on the results, to explore ways of applying Korea’s ICT-related technologies and industrial resources to the Iranian industry.

The consulting project, promoted under the main theme of ‘Establishing a Plan for the Development of a Research Institute Dedicated to Iran’s ICT Industry’, consisted of three core tasks: (1) to conduct a survey on the current status of Iran’s ICT policies and ICT industry, (2) to establish a plan for the development of an Iranian ICT-devoted research institute, and (3) to establish a plan for the commercialization of Iran’s ICT technologies. The three tasks were selected jointly by the officials of the VPST and the representatives of Korean researchers on the basis of feedback from policy practitioners and experts in the relevant fields.

Policy consulting for the 2016 Trade/Investment KSP (Iran 2) was directed by Professor Tae Ho Bark of the Graduate School of International Studies of Seoul National University

4 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 in his capacity as chief counselor. Professor Bark became deeply involved in the selection of research cooperation tasks and the arrangement of highest-level talks between Korea and Iran. Meanwhile, Young B. Choi, VP of ETRI, assumed responsibility for implementation of the project. The research team for the KSP was composed of experts in ICT policies (including Bong T, Kim, senior VP of ETRI) who are fluent in English to ensure smooth communication with Iran.

[Table 1] Researchers in charge of policy consulting tasks for the 2016/17 KSP (Iran 2)

Key Task Name Organization PI (Principal Investigator) Young B. Choi VP, ETRI Task 1: Bong T. Kim Senior VP, ETRI To conduct a survey on the Iran’s ICT Young K. Kim Director, ETRI policies and ICT industry Jong S. Kim Director, ETRI S. Lee Researcher, ETRI Task 2: Chang S. Park Executive director, ETRI To establish a plan for the Myung S. Kim Principal member, ETRI development of an ICT-dedicated research institute in Iran Hye Y. Jeong Researcher, ETRI Sin W. Yun Researcher, ETRI Task 3: Seung K. Hwang Senior VP, ETRI To establish a plan for the Gyu H. Seo Principal member, ETRI commercialization of Iran’s ICT technologies Hyung G. Roh Researcher, ETRI PM Sun Y. Chang Director, KOTRA PO Chang S. Kim Researcher, KOTRA Overall control of local affairs in Iran Seung W. Kim Director, KOTRA Tehran Chief counselor Tae Ho Bark Prof., Seoul National Univ.

The Iranian counterpart of the KSP is the VPST. The heads and key personnel of public ICT organizations such as the Iran Telecom Research Center (ITRC) and the Communications and Information Technology Commission (CITC)—both of which are research institutes under the Ministry of Information and Communication Technology of Iran—and the representatives of private firms like TEM also took part in the KSP initiative. Local institutions and companies were selected at the recommendation of the VPST. The KSP was launched in September 2016, and the entire project schedule was subsequently shared between ETRI and its Iranian counterparts shortly afterwards. The on-site project launching meeting was held in Iran in October 2016.

Background and Progress of 2016/17 KSP (Industry/Trade) (Iran 2) 5 [Table 2] On-site project launch meeting

Date Venue Contents Agenda: Directions of cooperation with the VPST on the detailed KSP promotion plans Iranian participants: Oct. 22 – 24, VPST Dr. S.M.H. Sajjadi Nayeri (General Secretary) 2016 (Tehran) Mr. Seyed Amir Mohaghegh (Executive Director) Mr. Hossein Ahmadi (Manager) Dr. Sadeghi Abolghasem (Advisor)

Thereafter, Korean experts visited Iran three times (December 2016, January 2017, and July 2017) to discuss possible ways of boosting cooperation on technology commercialization with major Iranian telecom companies, SMEs in the ICT sector, and universities, and to conduct a survey on the current state of local conditions.

[Table 3] Surveys on local conditions to promote technology commercialization

Date Implemented Tasks Discussion on promotion directions of KSP Iran (VPST) Ways of promoting technology commercialization (TEM, PAYA, AVA Comm.) Dec. 1-6, Discussion on ways of promoting cooperation with ICT ventures (e-Barakat 2016 Ventures) Discussion on ways to promote education and training (Teheran University) / K.N. Toosi Univ.) Discussion on the communication service and equipment market (Paya Communications) Discussion on a data center and mobile payment (Arya Hamrah) Discussion of ways of cooperating to build a data center and launch an Jan. 19–24, operating system based on the MAHA system in the field of bio industry 2017 (Tadblir Group) Introduction of technologies in ETRI's possession, and discussion on cooperation in the areas of solar power generation, LRD, etc. (Markazi Provincial Government) Discussion on ways to promote KSP Iran Discussion on technology commercialization in the field of wireless communications (Mobinnet) Discussion on the construction of the whitespace-based XHaul July 2–7, Discussion on ways to promote technology commercialization (Teheran 2017 University) Discussion on technology commercialization in the fields of medical IoT and bio technologies (e-Barakat) Discussion on technology commercialization in the field of neutralized OS

6 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 From December 2016, ETRI held weekly teleconference meetings with VPST to check progress and share information. In April 2017, ETRI held a workshop and an interim report meeting in Seoul and Daejeon respectively to present an interim report on the progress of the KSP initiative on the occasion of the training course for Iranian experts in Korea. A total of six Iranian representatives participated in the event, during which ETRI representatives introduced the contents of ETRI’s research to the Iranian staff. The Iranian delegation gave presentations on such topics as 'Iran’s latest ICT policies' and 'The operational status of the ITRC'.

The final report meeting was held on July 24, 2017 in Tehran, Iran at the final stage of the research in order to share and discuss the outcome of the project. Iran was represented by the working-level officers of the VPST, while Korea was represented by KOTRA officers and ETRI researchers. The participants discussed various topics—such as ICT policies, the cultivation of research institutes, and technology commercialization—in a seminar format. At the two-hour event, the Korean delegates shared the country's ICT development experiences with the Iranian representatives. The delegations of the two countries agreed to take various follow-up measures, including the provision of detailed technical information and the preparation of proposals, regarding cooperation on technology commercialization, which is under discussion between the two parties on the basis of the results of the three local surveys conducted thus far.

[Table 4] Contents of the interim meeting and training workshop held in Korea in 2017

Date Contents Seminar on Iran's ICT Policies - Innovation eco-system of Iran's KBFs - ITRC's major roles in the 6th five-year development plan April 20, - Introduction of ITRC 2017 Interim report on KSP Iran and discussion - ICT policies of Korea and Iran - Operations of an ICT-devoted research institute (ETRI) - Suggestions for technology commercialization in Iran Presentation of the final KSP report - Current status of the ICT policies of Iran and South Korea - Suggestions concerning Iran's ICT development policies July 24 – Discussion about cooperation for technology commercialization 26, - Cooperation for BTS establishment - Establishment of the TVWS-based xHaul 2017 - Paya Comm.: MSPP (MultiService Provisioning Platform) / Media Gateway) Establishment of a pilot system - FARASSO: Data Center technologies and NOS (Neutral OS) related T/T - Kavoshcom Asia: Promotion of IoT chip design-based cooperation, etc.

Background and Progress of 2016/17 KSP (Industry/Trade) (Iran 2) 7 Implications and Expected Effects of the 2016/17 KSP Industry/Trade (Iran 2)

Young B. Choi (ETRI)

Since the lifting of the UN economic sanctions against Iran in January 2016, countries around the world have entered into a fierce competition to secure the Iranian market. Despite the economic sanctions imposed on Iran by the UN in 2008, it is still one of the major resource-rich countries in the Middle East, along with Saudi Arabia, boasting the world's fourth largest oil reserves and second largest gas reserves. As such, Iran has great potential to achieve remarkable economic development based on the revenues it raises through the exportation of its resources, and it is this very growth potential that drives the governments of many countries around the world to strive in various ways to assist the efforts of their competitive industries to establish a firm footing in Iran. The competition is all the more intense in the ICT sector where the world has witnessed rapid growth and innovative technological development over the past twenty years, whereas the Iranian ICT industry came to a virtual standstill while the UN economic sanctions were in place.

Iran's VPST, as the agency responsible for the nation’s science and technology policies, is making all-out efforts to develop the country's ICT industry (0.1% of GDP), which fell behind due to the country’s isolation from the West while the sanctions were in force. Fully aware that R&D conducted by excellent human talents is critical to the development of Iran's ICT industry, the VPST is seeking ways of making significant progress in the area within a short period of time. The KSP (Iran 2) is crucial to Iran in the sense that Korea can provide Iran with policy consulting on the developmental directions that Iranian R&D institutes must pursue, on the basis of its world-renowned technological superiority in the

8 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 ICT industry, and in the sense that Korea and Iran can expand their mutual cooperation in the ICT industry, including more human exchanges between the two countries, joint research, and the transfer of technologies required by Iranian ICT firms.

Through this project, the ETRI and the VPST have agreed to promote three key tasks under the main theme of 'Establishing the Plan for the Development of a Research Institute Dedicated to the Iranian ICT Industry.' The first task consists in “conducting a survey on the current status of Iran’s ICT policies and ICT industry,” the second in “establishing a plan for the development of an Iranian ICT-devoted research institute” and the third in “establishing a plan to commercialize Iran’s ICT technologies” so that Iran can apply the outcomes of its R&D investments to its ICT industry and create positive synergistic effects.

Chapter 1 focuses on the current status of Iran’s ICT industry and outlines the country's major policy issues, on the basis of domestic and international publications, in order to conduct an analysis of Iran’s ICT policies and ICT industry and present the implications in a comparison with Korea's ICT policies.

Chapter 2 presents the Iranian government's national vision, strategies for science and technology development, and various science and technology promotion programs. It also examines the specific action plans for innovations in science and technology that the country has promoted since being subjected to severe international economic sanctions. The chapter also covers the current status of ICT-devoted research institutes supported or operated by the Iranian government, and presents concrete measures that Iran could consider adopting on the basis of Korea's experience in setting national R&D promotion policies and running state-funded research institutes for more than forty years.

Chapter 3 explores ways of maximizing potential synergistic effects by integrating the results of research conducted by state-funded research institutes with the operations of state-owned enterprises; and presents a series of commercialization strategies that Iran could benchmark through the ETRI's technology commercialization framework.

Implications and Expected Effects of the 2016/17 KSP Industry/Trade (Iran 2) 9

2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Chapter 1

Iran's ICT Policies and ICT Industry

1. Introduction of Iran 2. ICT Policies and Industry of Iran 3. Korea's ICT Policies 4. Implications and Recommendations  Chapter 1

Iran's ICT Policies and ICT Industry

Young K. Kim / Jong S. Kim (ETRI)

1. Introduction of Iran

Iran is the second largest country in the Middle East and the eighteenth largest in the world, and is seven and a half times the size of the Korean peninsula. Iran is bordered by seven countries—Pakistan and Afghanistan to the east, Azerbaijan, Turkmenistan and Armenia to the north, and Iraq and Turkey to the west. Geographically, Iran connects Eurasia to Western Asia from West to East, and faces the Persian Gulf and the Arabian Sea to the south and the Caspian Sea to the north. Thus, Iran sits in an important geopolitical position as a hub of logistics connecting Asia, the Middle East and Europe. This geopolitical strength enables Iran to combine short-haul shipping across the Caspian Sea with inland rail transport, which reduces time and costs by 30-40% compared with the Suez Canal route.

As can be seen from the country's official name—the Islamic Republic of Iran—Iran is an Islamic state in which religion and state are not separate. Most notably, Iran is a stronghold of Shia Islam, with 98% of its population being Muslim (89% Shia, 9% Sunni) and the remaining 2% belonging to other religions (Zoroastrianism, Judaism, and Christianity). Iran's population is about 80 million, and is composed of diverse ethnic groups including Persians (51%), Azerbaijanis (24%), Gilaks and Mazandarani (8%), Kurds (7%), Arabs (3%) and Armenians (1%). The proportion of young people is relatively high. The country’s official language is Farsi.

12 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 1-1] Iran's geographical location

Source: Yahoo Travel

Iran's political power structure, which combines the spirit of the Islamism and republicanism, is reflected in the country's state management patterns and economic policies through a variety of political organizations. Although power is formally divided among the three branches of government consisting of numerous organizations, the ultimate power lies in the hands of the Supreme Leader. The Supreme Leader is also the Supreme Islamic Jurist who is responsible for transmitting the spirit and value of the Islamic Revolution known as “the rule of law and economic independence.”1) The head of government is the president as set forth by the Iranian Constitution. The president is elected for a four-year term by direct vote and is permitted to run for reelection once. Presidential candidates must obtain the approval of the Guardian Council of the Constitution, which is led by Muslim clerics. The parliament, which is the chief legislative body of Iran, consists of 290 members (5 seats are allocated to a few religious people), and the term of office is also four years. The Islamic Consultative Assembly is also one of the country's legislative bodies. All legislation from the assembly must be approved by the Council and the President. The Guardian Council of the Constitution consists of twelve members, six of whom are nominated by the Supreme Leader and the rest by the Chief Justice, subject to approval by the Iranian Parliament. The Council interprets the constitution and reserves the right to veto bills (which must comply with Sharia, i.e.

1) Kwon Hyung Lee et al., Political Structure and Economic Policy of Iran, World Economy Update, Vol. 3, No. 55, KIEP, Dec. 2013.

Chapter 01_Iran's ICT Policies and ICT Industry 13 Islamic, law). The Expediency Discernment Council of the System set up to resolve differences or conflicts between the Parliament and the Guardian Council plays an advisory role to the Supreme Leader. Its members are elected by a popular national ballot for a term of four years.

Iran's political system is based on Islamic democracy which combines the rule of the Islamic Jurist and democracy. Administration is carried out by the president and the Islamic Consultative Assembly. However, the Supreme Leader has absolute authority in matters pertaining to state governance. The Supreme Leader is appointed by the Assembly of Experts, which controls both the legislative and executive branches of Iran. The direct cause of such a unique political structure was the Islamic Revolution of 1978-1979 coupled with the country's socio-cultural context of Islamic religion. The Islamic Republic of Iran was formed in April 1979 as a direct result of the Islamic Revolution. It is a transitional system on the path to becoming an Islamic state. In this respect, “Islam” refers to the contents of the system, while “Republic” refers to the form of the system.2) In other words, the Islamic Republic of Iran has incorporated the core values of Islam into a Western democratic system, and thus the country's mandate boils down to the materialization of the Islamic spirit in the real world while maintaining a balance between the ideals of Islam and the limits of reality.

2) Yoo Dal-seung, “A Study on Democracy in Iran with the Focus on the Combination of Islam and Western Democracy, ” Journal of Middle Eastern Affairs, Vol. 11, No. 2, 2009.

14 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 1-2] Iran's power structure

Source: Lee Gwon-hyung et al., Political Structure and Economic Policy in Iran, KIEP 2012, p. 28.

In response to the successful Islamic Revolution of 1979, the international community, including the United States, responded by imposing economic sanctions against Iran, which brought its trade with the West to a virtual standstill. Iran engaged in economic exchanges with a limited number of countries (China, North Korea and the Soviet Union). Following the 9/11 terror attacks, the anti-Islamic sentiment of the West intensified further still, leading the USA, UN and EU to ban the trade of commodities including crude oil with Iran, as well as prohibiting financial transactions. The Iranian economy inevitably suffered greatly as a result. The triple sanctions imposed on Iran by the USA, the UN and the EU

Chapter 01_Iran's ICT Policies and ICT Industry 15 hurt Iranian oil exports, the primary source of funding for the country's major economic and industrial development projects. Iran's GDP growth rate decreased while its inflation rate skyrocketed. Its economy shrank for two consecutive years in 2012 and 2013 by 6.6% and 1.9% respectively. However, things began to turn around when Iran achieved positive economic growth in 2014, and this upsurge continued with the conclusion of the Iran nuclear negotiations in 2015 and the first lifting of the West’s economic sanctions in 2016. The Iranian economy is estimated to grow at an average rate of 3-5% per year for the foreseeable future. (See Fig. 1-3)

[Figure 1-3] Iran's past economic growth rates and prospects

Source: Iran Telecommunications Report, BMI Research, Q4 2016. p. 8 (e/f: estimates/forecasts).

The IMF has predicted that Iran's GDP will grow at an average annual growth rate of 4 to 5.5 percent for the foreseeable future as a result of the lifting of the economic sanctions against Iran3). This rate is higher than that of many other countries including those in the Middle East. The positive outlook for the Iranian economy is based on the fact that, following the conclusion of the nuclear negotiations and the lifting of economic sanctions, the Iranian economy will re-enter the global economy and perform impressively in the oil, gas and automobile industries in particular. The IMF forecasts that the lowered costs of international transactions due to the lifting of financial sanctions alone will contribute 0.75-1% to national economic growth. The Iranian economy will definitely recover and grow in the near future, as predicted by the IMF. The Iranian government has set a growth target of 8% during the 6th 5-year Economic Development Period (2016-2021).

3) Islamic Republic of Iran, IMF Country Report No. 15/346, IMF, 2015. p. 8.

16 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 1-1] Major macroeconomic goals specified in the 6th 5-year development plan

Description Estimated growth rates GDP Grwoth 8% Unemployment rate 7% Budget dependency on oil expert revenue 22% Share of tax revenue in GDP 11.5% Government revenue to expenditure 105% Inflation rate 8.9%

Source: Bijan Khajehpour, “Will mew 5-year plan solve Irans economic problems?,”June 10, 2016, downloaded Feb. 21, 2017 (http://www.almonitor.com/pulse/originals/2016/06/iransixthfiveyeardevelopmentplanrouhaniparliam ent.html)

[Table 1-2] SWOT analysis of Iranian society

(In the wake of the collapse of the Pahlavi

regime in 1979) (W) Weakness • Criticism about human rights status tegh (S) Strength • Slight reduction in wealth concentration • Decisions are hard to reach due to • Reduction in the scale of political division in the highest decision-making corruption body • Efforts of the Islamic Guard to secure • Instability in the constitutional system Politics social stability (rigged elections, etc.) • Reduction of sanctions

potnt (O) Opportunity • Complete lifting of sanctions difficult to

• Strong aspiration of the Parliament and (T) Threat expect (including potential reimposition the Executive for economic revitalization of sanctions) • Improved relations with the West • Increasing youth unemployment • High-caliber workforce • Influence of the Islamic Guard on • Mitigation of sanctions political and economic issues

• Shortage of workforce for oil and gas • Resource-rich country with the world's exports 2nd largest oil and gas reserves

Economy S W • Oil production controlled by global oil • Abundant resources for other industries majors (due to a shortage of drilling including agriculture equipment, manpower, etc.)

• High development potential for gas • Strong influence of oil price fluctuations O • High investment opportunities for T • Capital control risks if nuclear program housing construction negotiations fail

Chapter 01_Iran's ICT Policies and ICT Industry 17 [Table 1-2] Continued

• Excellent work force in engineering, architecture and science • High-cost labor(force) market structure • Strong public logistics networks linkable • Increasing interior transport costs as well S to neighboring countries W as traffic congestion • Developed citizen-oriented finance/credit • Widespread corruption and bureaucracy

Society business • Conflict (potential) with Iraq • Social stability and security

• Emigration of professionals • Low illiteracy • Power and water shortage: High • Convenient road and rail transport to proportion of energy- and water neighboring countries (East-West Trade O T resources-intensive industries Hub) • Infringement on intellectual properties • Increasing inflow of foreign capital • Difficulties with investment due to high following mitigation of sanctions taxes and widespread corruption

• Low average profitability (weak • High mobile/Internet service subscription purchasing power) growth rate • Government censorship and filtering • Competition (growth and innovation) S W • Restrictions on cooperation with among companies

Communications overseas partners • Promotion of 3G/4G mobile data services • Difficulties in attracting international (limited) investment

• Increased FDI following the lifting of • Limited potential for market growth and sanctions in January 2016 service profitability due to the • Low smart device penetration rate government's control of mobile • Rising number of prepaid smartphones communications and Internet markets O T (potential new customers) • Unstable political and security • Initial-stage services with high market environment growth potential • Investment difficulties due to • Efforts to lift government controls high tax rates and corruption

Source: Iran Telecommunications Report, BMI Research, Q3 2015. p. 9–14.

In conclusion, Iran suffered greatly due to the imposition of widespread economic sanctions by the international community, which had a negative impact on the entire range of the country's national economy for several decades. However, Iran has great potential for sustainable national growth based on technological development due to its abundant natural resources combined with its high ratio of young people and large pool of human talent in the fields of science and engineering (based on the number of university graduates).

18 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 2. ICT Policies and Industry of Iran

2.1. ICT Policies of Iran

Iran's industry was forced to rely on its domestic industries because of the sanctions imposed on Iran by the United Nations in 2006, coupled with the United States' Act on Comprehensive Iran Sanctions, Accountability and Divestment of 2010 (CISADA), which had the effect of isolating the country from the world stage, and the ban on international trade between Iran and the major global powers. Nevertheless, Iran was able to maintain a sizeable national economy, recording GDP of US$413.2 billion in 2015, primarily because of the continuous growth of its light industries, which have been rolling out consumables and commodities based on the purchasing power of its 80 million population. Since the lifting of the UN sanctions in early 2016, the Iranian government has been seeking various ways to develop its ICT industry and the related technologies in particular.

The Ministry of Information and Communication Technology (MICT)4) is charged with setting up and implementing Iran's overall ICT policies. Currently, Iran has additional ICT-related government organizations such as the Supreme Council of Information and Telecommunication (MSICT), the Supreme Council of Cyber Space (SCC), and the High Council of Informatics (HCI). The Communications Regulatory Authority of Iran (CRA) is responsible for formulating and implementing ICT policies and regulations. In addition, the Communications Regulatory Authority of Iran (CRA) is responsible for setting up ICT policies and overseeing the ICT-related regulations while the Radio Communications and Regulations Organization (RCRO) selects telecom carriers and performs frequency management.

4) The MICT (Ministry of Information and Communication Technology) was launched in December 2003 to take charge of all ICT policies and tasks on behalf of the MPTT (Ministry of Post, Telegraph and Telephone, established in 1876) to meet the demand for post, telegraph and telephone services.

Chapter 01_Iran's ICT Policies and ICT Industry 19 [Figure 1-4] Organizational chart of Iran’s MICT

Source: -2015 Telecommunication Report (Middle East, Africa), Ministry of Science, ICT and Future Planning, NIPA, 2015.

2.2. Iran's ICT Development Plans

Iran's ICT policies are reflected in government projects according to the goals and directions set by the state itself. The latest major strategic policy directions include e-government, e-commerce and electronic document approval, Islamic-Iranian culture in cyberspace, e-health and e-welfare, ICT infrastructure, information security, and ICT-related legislation.

20 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 1-5] Iran's ICT operational policy framework

Source: ITU BTD WTIS 2013, ICT Measurement for Iran: A Progress Report, WTIS, Dec. 6, 2013.

The Iranian government aimed to increase the number of broadband subscriptions to 36 million in the ICT sector development plan of its 5th Five-Year Development Plan (2010- 2015). In the first stage, the government established and operated a closed nationwide broadband network. For communication with the outside world, it allocated a total budget of US$540 million for the construction of a national information network— over all of whose contents it will exercise complete control—over a five-year period.

[Table 1-3] ICT promotion goals of the 5th 5-year development plan

Description Goals ICT Development Index 0.226% E-Readiness Development Index 0.8% High-Speed Port Development (215Kbps) 50% of all households Introduction of inter-machine electronic service 100% of total service Introduction of machinery and e-business to the public 70% of total service Replacement of circulating/deposited currency with 80% electronic transactions E-health construction 100% of total population Establishment of a national intelligent card for 100% of total population e-government system Development of electronic (remote) education 30%

Chapter 01_Iran's ICT Policies and ICT Industry 21 [Table 1-3] Continued

Description Goals Development in urban/local housing registration and 100% auditing Building National Spatial Data Infrastructure (NSDI) 100% Development of systematic resources management 60% Increase in IT product/service exports 1.5% of non-oil exports

Source: 2015 Telecommunication Report (Middle East, Africa), Ministry of Science, ICT and Future Planning, NIPA, 2015.

According to the 20-year national economic development plan set up in conjunction with the 5th 5-year Development Plan, Iran aims to become the second strongest science and technology powerhouse in Western Asia by 2025, by which time four successive 5-year development plans will have been fully implemented. The Iranian government has announced its intention to increase the proportion of R&D investment to GDP to 4% by 2030 (compared with just 0.6% in 2006), a clear indication of its commitment to developing new technologies and building systematic national innovation systems. In addition, Iran has established a mid- to long-term national innovation strategy that will focus on implementing innovation strategies by sector; enhancing research capacity through joint ventures and licensing agreements; providing support for entrepreneurs and researchers as well as SMEs in the fields of science and technology; creating a venture startup-friendly business environment; and prioritizing budget allocation to future-oriented technologies on the basis of improvements to the existing R&D selection and evaluation systems.

Meanwhile, under the 6th 5-year Development Plan (2016-2021), Iran is engaged in the development, improvement and completion of e-government and the National Information Network based on its existing national information network, with the objective of developing Iran into the regional ICT hub by taking advantage of its strategic geographical location. It is clear that Iran will continue to make investments in R&D and ICT infrastructure until it has caught up with the major global powers in the ICT sector. The Ministry of Information and Communications Technology (MICT) has set up its major implementation tasks as follows:

22 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 1-4] Iran's 5-stage e-Government promotion plan

Stage Contents and Goals Stage 1 E-documentation of the performance record of government (Information Dissemination) and public agencies to ensure wider access to information Stage 2 Construction of a system for posting the e-documents of (Information Upgrade) government and public agencies on the web Stage 3 Facilitation of communication between government/public (Two-way Communication) agencies and citizens Construction of a web-based public service system and Stage 4 integration of information of government and public (Task Completion) agencies to ensure easier public access to information Stage 5 Integration of all available information available for easy (Transformation and public access Integration)

Source: 2010 Telecommunication Report, Middle East, Africa, CIS, KOTRA, NIPA< 2010.

2.2.1. e-Government

The MICT is currently executing the e-government project in five stages, each one according to a specific goal, and plans to run it on the national information network (NIN) upon its completion. The main goals of the project include e-documentation, e-document web-posting, two-way communication via private-public networks, and the integration of e-government systems to improve the efficiency of the Iranian government’s operations and boost public access to information. The Ministry's goals for each stage are as follows: (Stage 1) information dissemination, (Stage 2) information upgrade, (Stage 3) private-public two-way communication, (Stage 4) task completion, (Stage 5) service provision through information integration and processing.

2.2.2. e-Banking

Iran is promoting the construction of an e-banking system through a nationwide inter-bank network. The only electronic banking and automated payment system currently in use in Iran is Shtab, a unified Iranian banking system launched in 2002 that supports ATM, POS and other card transactions. It was in 2005 that the Iranian government obligated the central bank and state-owned banks to build the infrastructure required for the widespread use of e-money. Progress has been slow, however, and the use of credit cards in Iran remains limited as the payment and settlement systems are not connected to the Western world.

Chapter 01_Iran's ICT Policies and ICT Industry 23 2.2.3 TAKFA Plan

Iran implemented the 'TAFKA Plan' between the end of 2009 and April 2012 as its first full-fledged national ICT development plan. Designed by telecommunication experts under the supervision of the SCICT5) with the aim of promoting the development of Iran's ICT industry, the TAKFA Plan was granted the authority to establish and implement ICT strategies in seven areas including government administration, education, higher education, services, business and economy, culture, the Persian language (Farsi), and SMEs. Included in the 5th 5-year development plan, TAKFA played an important role in creating an environment for the sustainable development of ICT in Iran.

[Figure 1-6] TAFKA Plan implementation system

Source: 2010 Telecommunication Report, Middle East, Africa, CIS, KOTRA, NIPA< 2010.

2.3. Iran's ICT Industry

The Iranian telecommunications market has been characterized by high investment risks due to disruptions of international trade and exchange in the ICT industrial field combined with the negative views about new ICT services expressed by Iranian political leaders who are wary of Western culture. Consequently, despite the boom in the global ICT market, the Iranian ICT market has not grown significantly. Following the lifting of

5) The SCICT (Supreme Council of Information & Communication Technology) is Iran's highest decision-making body that reports directly to the President.

24 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 economic sanctions, global telecom investors began to pay keen interest to the future growth potential of the country's ICT market. Most notably, Iranians under the age of 30 account for 70% of the total population. Compared to other Middle Eastern countries, Iran boasts a high level of education and a low illiteracy rate. These facts are important factors in the assumption that demand for new information and communications technologies will be particularly strong among Iran’s young and middle-aged population.

Therefore, consumer spending on communication devices and services is also expected to increase down the road. The Iranian government is focusing its ICT policies on development of the industry in the capital area and subsequent gradual expansion into other regions with the ultimate goal of minimizing the ICT service gap between regions. The Iranian government is also committed to expanding the proportion of R&D investment in new information and communications technologies and sharply increasing investment in cutting-edge technologies and service markets in a bid to boost the level of telecom service usage across the country. In this regard, it is extremely timely for Iran to pursue close cooperation with Korea, a country that has accumulated top-notch ICT technology and experience over the last four decades.

2.3.1. ICT Market Size and Prospects

Iran boasts the fastest growing ICT market in the Middle East, with the strong growth pattern of its relatively weak telecom infrastructure market being particularly notable. Iran's ICT market is expected to grow at an annual average rate of 8.9% to reach US$29.8 billion by 2020, representing an increase of 66% compared to the US$17.9 billion recorded in 2014. (See Table 1-5) Meanwhile, Iran's IT market alone is forecast to continue growing at an average annual growth rate of 12.7% (higher than 8.9% of the entire ICT market) to reach US$10.4 billion by 2020, largely due to the growth of its software and IT service markets.

Chapter 01_Iran's ICT Policies and ICT Industry 25 [Table 1-5] Size and prospects of Iran's ICT market

(Unit: US$ billion, %) Description 2014 2015 2016 2017 2018 2019 2020 17.9 19.4 21.2 23.1 25.1 27.4 29.8 ICT market (100) (100) (100) (100) (100) (100) (100) Communication 12.8 13.7 14.7 15.8 16.9 18.2 19.4 market (71.5) (70.6) (69.3) (68.4) (67.3) (66.4) (65.1) 5.1 5.7 6.5 7.3 8.2 9.2 10.4 IT market (28.5) (29.4) (30.7) (31.6) (32.7) (33.6) (34.9) 1. IT services 1.1 1.2 1.4 1.6 1.8 2.0 2.3 2. Software 0.9 1.0 1.2 1.3 1.5 1.7 1.9 3. Hardware 3.1 3.5 3.9 4.4 4.9 5.5 6.2

Source: Iranian ICT Market Snapshot, Frost & Sullivan, 2015.

[Figure 1-7] Iran's IT market growth pattern by area (2015)

Source: Iranian ICT Market Snapshot, Frost & Sullivan, 2015.

26 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 In the wired and wireless communication markets, it is expected that the wired market will grow from 36.9 subscribers per 100 people in 2013 to 39 subscribers by 2020, and that voice communication in the mobile field will increase from 130 lines in 2013 to 172 lines in 2016, representing a growth rate of 32% during the period. The number of subscribers in the 3G and 4G markets, which are dominated by data services, reached 33,659,000 in 2016, i.e. twenty times the number (1,600,000) recorded in 2013. The proportion of 3G and 4G in the entire mobile communication market is estimated to have grown from 1.6% in 2013 to 24.4% in 2016, clearly indicating that the share of data communication is rapidly increasing in the mobile communication market. Given this sharp upward trend, it is safe to predict that the share of data communication in the mobile communication market will reach 38.1% by 2020.

[Table 1-6] Current status of Iran's wired and wireless communications markets

Classification 2013 2014 2015 2016f 2017f 2018f 2019f 2020f No. of lines 28,462 29,316 30,049 30,650 31,120 31,587 32,050 32,509 Wired (1,000 lines) comm. No. of lines per 36.9 37.5 38.0 38.3 38.4 38.6 38.8 39.0 100 persons No. of subscribers 100,966 114,410 129,055 137,701 143,209 147,506 150,456 151,960 Mobile (1,000 persons) comm. No. of subscribers per 130.9 146.4 163.1 172.0 176.9 180.3 182.1 182.2 100 persons No. of subscribers 1,600 9,920 23,213 33,659 41,737 47,997 53,037 57,916 3G&4G (1,000 persons) Mobile market 1.6 8.7 18.0 24.4 29.1 32.5 35.3 38.1 share (%) No. of subscribers 3,695 4,531 5,417 6,403 7,482 8,642 9,865 11,127 Broadband (1,000 persons) Internet No. of subscribers per 4.8 5.8 6.8 8 9 11 12 13 100 persons

Source: Iran Telecommunications Report, BMI Research, 2015.

Iran's major telecom carriers are TCI (Telecommunications Company of Iran), MTN Irancell, Taliya and MTCE (Mobile Telecommunications Company of Esfahan). TCI, which currently holds a monopoly in the wired communication market, has penetrated into the wireless communication market to provide data communication services. MTN Irancell, Taliya and MTCE, all of which started as wireless telecommunication carriers, have now expanded into the broadband Internet and other forms of wired/wireless telecommunication service markets.

Chapter 01_Iran's ICT Policies and ICT Industry 27 2.3.2. Wired Communications Market

Iran's wired communications are led by TCI, a state-run corporation, together with more than ten SMEs. TCI monopolizes Iran's wired communication through its monopoly of the country's fixed telephone lines. However, it has been challenged by the government to increase its investment in new technologies and make improvements in its service quality and price competitiveness. The Iranian government is encouraging it to compete with private companies through the privatization of the country's VoIP services. Iran’s mobile communication market continues to expand in line with the improved price competitiveness of mobile telecommunication services over fixed line services. Thus the number of subscribers to landline telephone services per 100 citizens has not made and will not make any significant increases in the near future (36.9 in 2013, 38.3 in 2016 and 39.0 in 2020), as the market seems to have reached saturation point. The virtual stalled growth of the fixed-line market is due to the expansion of the rapidly developing broadband Internet market along with mobile communications.

The number of broadband Internet subscribers in Iran jumped from 3,695,000 in 2013 to 6,403,000 in 2016, which means that the number of subscribers per 100 citizens increased by 170% during the period, i.e. from 4.8 to 6.8 per 100 citizens. The increase rate is estimated to reach 300% by 2019.

Iran has three types of licensing regimes for broadband operators, namely, private access providers (PAP), Internet service distribution providers (ISDP) that serve as wholesalers, and Internet service providers (ISP) that function as retailers. One outcome of this particular government policy, however, is the fierce intensification of competition in the broadband market. Currently, PAP is provided by TCI and ten other operators that can design and operate the national wired and wireless Internet infrastructure, and it is placed under the jurisdiction of the Islamic Network. Iranian provincial governments are major players in the ISDP market. ISDP is responsible for transmission between PAP and ISP. Most PAPs and ISDPs have ISP licenses. Iran has over 100 licensed ISDPs and 1,200 licensed ISPs at present.

Since December 2012 Iran has been operating the Europe-Persia Express Gateway (EPEG) through a consortium composed of Roselecom of Russia, Cable & Wireless Co. of the UK, Omantel of Oman and TIC of Iran, with the aim of building an optical network connecting Europe and the Middle East. Iran plans to expand its international network bandwidth to 100 Gbps in line with the operation of the 10,000-kilometer fiber optic network extending from Frankfurt in Germany to Eastern Europe, Russia, Azerbaijan, Iran, the Persian Gulf and Oman.

28 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 WiMAX business licenses were granted to four companies in each province in March 2009, with MTN Irancell receiving licenses in Tehran, East Azarbaijan, Isfahan, Razavi Khorasan, Fars and Khuzastan. Irancell, MTN's subsidiary, totaled about 230,000 WiMAX subscribers in June 2012 after achieving a 33% increase over the previous year, and about 300,000 subscribers one year later in June 2013, i.e. an increase of 30% in one year. In December 2013, MTN Irancell expanded its WiMAX service network to thirty-eight cities including Khorramshahr, the capital of Khorramshahr County. As for the other WiMAX service providers, Espadan and Rayaneh Danesh Golestan are focused on Isfahan and Golestan Provinces, while MobinNet has become the fourth company to secure a business license to serve in all thirty-one provinces. In 2013, Iran Net, the country's Internet communications and electronic services network, announced a plan to construct the FTTx (fiber to the x) network and received FTTx network licenses for Mashhad, Tehran, Shiraz, Karaj, Qom, Isfahan and Tabriz.

2.3.3. Mobile Communication Market

Iran's mobile communication market is forecast to maintain its growth streak until 2020. The number of subscribers to the 3G/4G mobile communication service in Iran increased from 9.9 million in 2014 to 33.7 million in 2016, registering an increase of 23 million subscribers in just two years. This two-year increase of 340% is indicative of the fact that, in line with the rapid growth of mobile networks and services, the focus of the Iranian market is rapidly shifting from voice and text messaging to data services. Iran's mobile data communication market is expected to register remarkable growth in the areas of e-commerce, e-learning and digital entertainment contents services in particular. Major service providers include TCI, MTN Irancell and Taliya. As of September 2014, the market share of TCI, a provider of both 3G and 4G services, was 56.8% while that of MTN Irancell, a provider of 4G services, was 41.8%, with the remaining market share taken by other 3G service providers. To sum up, Iran's mobile communication market is divided between MC I6), a local company, and MTN Irancell, a joint venture of the MTN group of South Africa and an Iranian government-controlled consortium.

6) Brand name: Hamrahe Aval

Chapter 01_Iran's ICT Policies and ICT Industry 29 [Table 1-7] No. of mobile subscribers and market share of Iranian telecom carriers

No. of Subscribers Carrier Market Share (%) (1,000 persons) MCI 61,812 56.8 MTN Irancell 45,533 41.8 Tallya (e) 1,400 1.3 MTCE (e) 70 0.1 TKC (e) 19 0 Total 108,834 100

Source: Iran Telecommunications Report, BMI Research, 2015 (e: estimates)

MCI, a public company, is the largest mobile operator in Iran. In an attempt to expand the country's public service, the company provides services to local governments and rural areas that lack communication services. By contrast, MTN Irancell focuses on providing telecommunication services to public institutions and schools in Tehran and other major cities in Iran, thereby maintaining a higher level of subscriber returns than the market average. MTN Irancell launched its first 3G service in Iran in August 2014 with the approval of the MICT and launched its 4G service in some areas in December of the same year. As the leader of the country’s data market, the company is now providing 3G services in more than 200 cities and 4G services in more than 50 cities, and is continuously expanding its service areas. Meanwhile, MCI, which used to provide 2G services centered on voice communication, launched its 3G services for data communication in June 2015. MCI now has the largest number of 3G service subscribers in Iran with many of its 2G subscribers upgrading their services to data communication-oriented 3G and 4G services, thus leading the growth of the country's mobile data communication market.

2.3.4. Other Markets

Iran's ICT market situation varies considerably depending on the government-led initiatives. For instance, at present the Iranian government is aggressively promoting a number of large-scale projects for the development of electronic information systems, the establishment of standards and regulations, the enhancement of information security, and the construction of national tax information systems. Iran's IT services market, which is a typical software market, is among the fastest growing markets in the Middle East. It is expected to grow at an average annual growth rate of 13.6% for the foreseeable future thanks to the nation's high Internet and mobile phone penetration rates combined with

30 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 the government's initiatives for digitalization. The market will expand further once the country's e-commerce and e-government projects are in full swing and the cloud and IOT user base has expanded.

In Iran, competition between IT companies and local suppliers is fierce. In addition to IT providers, telecom operators also provide IT or data center services as part of their P2P business. Due to the economic sanctions, most foreign operators are not allowed to do business in Iran, but some have nonetheless managed to do so through their informal business partners and licensed resellers. Telecom operators are most likely to strengthen their position in the Iranian cloud market within the next three to four years. Out of seven licensed companies, only five are currently operating, with three of them, namely MCI, MTN Irancell and RighTel, each having more than one million subscribers. The top three companies are continuing to seek new subscribers, expand their infrastructure and improve their services, while MCI and MTN Irancell have an interest in the public cloud and are providing small-scale public cloud solutions to end users.

[Figure 1-8] Iran's major IT businesses

Source: Iranian ICT Market Snapshot, Frost & Sullivan, 2015.

Chapter 01_Iran's ICT Policies and ICT Industry 31 3. Korea's ICT Policies

Korea's ICT industry has grown into a national core industry over the past fifty years. In 2015, it accounted for 32.8% of the country's total exports, and Korea became the fifth largest ICT exporter in the world. It was the Korean government's ICT development plans and policies that drove the country's ICT industry to reach its current world-class level while playing a crucial role in the continuous development of the national economy. From the 1960s, when Korea founded the Postal Affairs Administration, to the present day, when the world is faced with the fourth industrial revolution based on AI+IBCM, the Korean government has laid out specific policies for nurturing the development of the country's ICT industry according to the needs of each era. Korea has continued to invest heavily in its ICT industry even in the midst of various crises such as the petrol crisis of the 1970s, the Asian financial crisis of 1997, and the global financial crisis of 2008, which has helped the country to achieve continuous GDP growth for several decades. This section will look into the major ICT policies implemented by the Korean government over the past twenty years and the present policy implications that Iran can take into account in its efforts to development its ICT industry down the road.

Back in the mid-1990s, advanced countries including the United States competed to build the national information infrastructure (NII) ahead of their competitors. The policies needed to help Korea catch up with the advanced countries' level of national informatization. Thus the Ministry of Information and Communication established the 'Basic Plans for National Informatization' based on the Framework Act on National Informatization. The Basic Plans included plans for each of three 5-year stages from 1996 to 2010 as follows (in addition to the fact they later served as the basis for Cyber Korea 21, e-Korea Vision 2006, and Broadband IT Korea Vision 2007):

ㅇThe first phase (1996-2000) focused on the 'Creation of a Platform for Informatization' with the aim of laying the groundwork for active information utilization by each sector of Korean society. Korea promoted the completion of ten key tasks, in particular, during this period with the aim of developing the local ICT industry to the level of the ICT industries of the G7.

ㅇ The second phase (2001-2005) focused on the 'Expansion of Information Utilization' among the general population. Korea aimed to stabilize citizen-initiated informatization in order to create sufficient demand to realize a highly sophisticated information society. To that end, Korea expanded user-centered information services offered through high-speed public networks in order to provide information services to the general public at the lowest prices possible

32 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 ㅇ The third phase (2006-2010) focused on the 'Sophistication of Information Utilization' with the aim of enabling Korea to enter the maturity stage of information utilization, whereby citizens can access information anytime anywhere. To that end, Korea began to provide a high-speed network service that integrates wired and wireless communication, satellite TV and CATV.

[Table 1-8] Comparison of the major characteristics of informatization promotion plans

Description June 1996 March 1999 April 2002 December 2003 Basic Plans for Broadband IT Korea Plan National Cyber Korea 21 E-Korea Vision 2006 Vision 2007 Informatization Time 1996-2000 1999-2002 2002-2006 2003-2007 Realization of Transformation into Construction of world-class a creative Construction of Vision global leader informatization by knowledge-based Broadband IT Korea e-Korea 2010 nation Selection of and support for top-10 Job creation and Establishment of the Reflection of the tasks with great economic new informatization main plans for each ripple effects from revitalization vision and goals in area, including 'the Characteristics critical and urgent IT through line with the early E-government projects to lay the informatization to completion of key roadmap' and 'the foundations for an overcome the 'Cyber Korea 21' BcN basic plan.' advanced so-called IMF crisis. goals. information society.

Source: Cyber Korea 21 Planning, KRNIC Homepage, KISA. (https://xn--3e0bx5euxnjje69i70af08bea817g.xn--3e0b707e/jsp/business/application/dispPolicyDetail. jsp?exh_serial=2926)

3.1. Cyber Korea 21 (1999-2001)

3.1.1. Background and Goals

The development of information technology began to further accelerate in the 2000s, thereby triggering a great shift in the history of civilization. The world is rapidly moving towards a knowledge-based society in which information and knowledge themselves have become one of the main sources of value creation. Advanced countries adopted policies concentrated on knowledge and informatization to maintain their superiority in the new knowledge-driven economy. The United States started building the Information Superhighway in 1993, creating a total of seventeen million jobs in the country in just six years. In February 1999, the US President's Council of Advisors on Information Science recommended that the federal government double its investment in information

Chapter 01_Iran's ICT Policies and ICT Industry 33 technology R&D over the next five years for a variety of programs, including the development of software and the expansion of information infrastructure. The UK also announced plans to invest an additional £1.4 billion in building an information infrastructure and upgrading its science and technology infrastructure to improve its national competitiveness. For its part, Korea enacted the Framework Act on Informatization Promotion in 1996 and the government took the lead in facilitating the transition to an information society.

[Figure 1-9] Cyber Korea vision

Source: Cyber Korea 21 Planning, KRNIC Homepage, KISA. (https://xn--3e0bx5euxnjje69i70af08bea817g.xn--3e0b707e/jsp/business/application/dispPolicyDetail. jsp?exh_serial=2926)

34 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Cyber Korea 21 was promoted with the aim of constructing a knowledge-based nation through informatization. To that end, Korea accorded top priority to boosting the country's Internet speed and improving its citizens' computer literacy by 2002. Based on cutting-edge information and communication network technology, Korea sought to raise the productivity and transparency of all its economic actors, including the government, companies and individuals, while striving to create new business areas. The vision of Cyber Korea 21 consisted in enhancing the foundation for a creative knowledge-based country and improving both its national competitiveness and its citizens' quality of life through informatization. The goals of Cyber Korea 21 were 'to increase the knowledge-based industries share of GDP to the OECD level by 2002' and 'to develop Korea into one of the world's top ten knowledge information-oriented developed countries by 2002.' To achieve these goals, Korea established and implemented the following strategies:

ㅇ Accelerate the construction of the information infrastructure to lay the foundations for a knowledge-information society - Increase the speed of the Internet 100 times by 2002 by upgrading the country's information communication network - Transform Korea into the most computer-literate country in the world - Provide information education to all citizens (and secure 10 million Internet users by 2001)

ㅇ Pursue industrial development based on information technology - Enhance the productivity, transparency and job creation ability of all economic actors such as the government, corporations and individuals while creating new jobs by expanding the information network and information technology utilization -Break away from traditional transaction and business practices and adopt knowledge management in order to transform existing industries such as agriculture and fisheries and manufacturing into knowledge-based industries - Develop the Internet space as a 'second territory' in order to foster new types of industries and strike a balance between existing industries and new industries.

ㅇ Promote ICT development and increase exports - Designate competitive ICT products as strategic export items and export them with concentrated support

Chapter 01_Iran's ICT Policies and ICT Industry 35 3.1.2. Major Contents and Priority Projects

To build the national information infrastructure, Cyber Korea 21 was focused on spreading the high-speed Internet service and on speeding up and upgrading the information communication network. With the purpose of improving the level of its citizens' computer literacy and usage, Korea concentrated on expanding information education to all its citizens and on delivering a universal service to eliminate the digital divide. In addition to expanding the human and material base for infrastructure construction, Cyber Korea 21 sought to make all the necessary legislative and institutional amendments required to realize a knowledge-based society, make innovations in various administrative procedures, and develop information protection technologies and support the development of the information security industry with the purpose of developing a sound information culture and improving personal information protection systems. To improve productivity, Korea developed an informatization plan designed to boost the efficiency of the country's social overhead capital through the realization of e-government, advances in the informatization of the industrial base including logistics, and the construction of an intelligent transportation system. Cyber Korea 21 sought to create new jobs based on the transition to the information society as part of the government's efforts to mitigate the country's dire unemployment situation caused by the Asian financial crisis. The Korean government carried out the following projects for Cyber Korea 21:

ㅇ Expansion of the information infrastructure to establish a creative knowledge-based nation: Realization of an environment in which anybody can access broadband information and communication services any anytime anywhere - Connect all the 144 local call areas across the country with fiber optic cable and expand the ATM switch installation - Complete the digitalization of semi-electronic exchangers by 2002 - Improve the optical fiber cable network for large-scale residential complexes and large buildings - Build a high-speed Internet network with the Mugunghwa telecommunications satellite for islands and remote areas - Provide the 1.5/2Mbps high-speed service at low cost starting in 2002 - Allocate the budget of KRW 10.4 trillion as follows: KRW 8 trillion for the establishment/improvement of the high-speed network (backbone network / subscriber network) and KRW 2.4 trillion for the replacement of semi-electronic telephone exchanges

36 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 ㅇ Improvement of nationwide productivity by utilizing the knowledge-information base: Digitalization of administrative work to improve productivity in the public sector → Realization of e-government - Issue e-mail IDs to all civil servants, promote the use of e-documents in all government agencies, abolish the written approval system, and exchange e-documents between government agencies - Set up an integrated national financial information system for annual revenue and expenditure accounting, state-owned property management, etc. - Encourage contracting-out to the private sector, except for the government's key functions, support private companies' informatization efforts in order to apply full-fledged EDI to public procurement procedures, and encourage suppliers' informatization - Operate an IT department responsible for the design, development and maintenance of information systems and build a knowledge management system to improve the productivity of existing industries: Integrate information technology into existing industries such as the agriculture and fisheries, manufacturing, and service industries to increase productivity and create high value-added - Improve public service via the electronic processing of civil affairs: Sharing key information on residents, real-estate and automobiles among government agencies → Establishment of the National Basic DB Information Center - Develop comprehensive administrative information systems for cities, counties and districts and install/operate Unmanned Integrated Public Service Kiosks in public places frequently visited by citizens, such as bus terminals, subway stations and post offices

ㅇ Enhancement of individuals' capacity through the ‘Highly Intelligent Person’ campaign so that they can create knowledge-based values, irrespective of their educational backgrounds, and improve their working methods - Promote the 'Highly Intelligent Person' campaign, identify and publicize successful cases, and spread the initiative nationwide - Offer online education programs, develop/distribute Cyber Home Learning Systems, improve distance education conditions, and establish lifelong learning systems - Designate 300 universities nationwide as cyber universities and cultivate them as adult education centers

Chapter 01_Iran's ICT Policies and ICT Industry 37 ㅇ Fostering of new business based on information infrastructure: Creation of new jobs through the development of Internet-based new industries - Build electronic marketplaces where information suppliers and consumer meet - Support information distribution companies and simplify licensing procedures for Internet brokerage firms and venture start-ups - Support the commercialization of creative ideas produced by universities and research institutes in an effort to create a venture business start-up boom - Support the cultural industries by building a cultural industry infrastructure, developing core technologies, and digitizing old visual materials: Foster cultural industries which produce video games, animation films, movies and music - Select promising export items: Actively support the exportation of CDMA equipment, IMT-2000 terminals, ADSL chips, ASICs and satellite broadcasting receivers - Launch digital TV broadcasting in Korea by 2001 in line with the launch of the digital TV service in the USA and Japan, and promote the export of digital TV sets

The principal purpose of Cyber Korea 21 was to transform the country's information resources and systems into Internet-based assets so that everyone in the country could freely exchange knowledge and information with anyone else in the world, and so that no one will be left behind in the process of national transition into a knowledge information society. The government made sure that all of the country's primary, middle and high schools would be equipped with computer classrooms, local area networks and satellite-based Internet services. It supported the training of teachers who would take the lead in promoting informatization efforts according to the characteristics of each school. It built numerous Internet plazas in the spare spaces of public institutions, including post offices, to allow the public to access the Internet free of charge during their working hours with the specific goal of making Koreans the most computer-literate people in the world.

3.1.3. Legislative and Institutional Amendments

To facilitate Korea’s transition to a digital economy, the government decided to create an environment in which funds and manpower would flow freely into the knowledge-based industries, and improved the country's legislation so as to promote e-commerce and enhance the transparency of the country's intellectual property evaluation processes. To guarantee the security of electronic transactions and document distribution, Korea enacted a law on the use of cryptography and modified the Information Disclosure Act and the Copyright Act to promote the joint utilization of

38 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 information. Through advances in the information and communication infrastructure, Korea created an environment conducive to Internet-based telecommuting. Korea accelerated its educational reforms with the focus on prioritizing creative talents in college entrance examinations and improving the university research infrastructure. It also assisted the development of a youth culture in which personality and diversity are respected by prompting students to participate in creative circle activities at middle and high school. Korea also laid emphasis on the importance of foreign language education including Chinese and English, placing particular emphasis on English education for young Koreans in view of the widespread use of English in the cyber world.

3.2. e-Korea (2002-2006)

3.2.1. Background and Goals

In an effort to promote nationwide informatization, the Korean government set up the Basic Plans for National Informatization in 1996 and launched Cyber Korea 21 in 1999. As a result, the country has succeeded in equipping itself with world-class information infrastructure. However, the government determined that informatization had yet to be spread more extensively across all walks of life in order for Korea to become a world leader in informatization. Korea specified the following as the most urgent tasks:

- Innovation of various systems and common practices associated with practical effects of information technology - Enhancement of the ability to respond to social changes associated with informatization - Enhancement of external competitiveness to cope with the globalization of the world economy

As a specific means of successfully implementing the abovementioned tasks, the Korean government sought to realize the following three strategic transitions: (1) from 'quantitative expansion' to 'qualitative enhancement,' (2) from 'government-led industrial development' to 'laying the groundwork for new industries,' (3) from 'catch-up' to 'lead' approaches. Korea's main policy directions during the period included enhancing informatization-based industry-wide competitiveness and creating new industries, promoting innovation of the public sector through informatization, upgrading the foundation for future knowledge information development, and enhancing international cooperation on the establishment of the global information society.

Chapter 01_Iran's ICT Policies and ICT Industry 39 [Figure 1-10] e-Korea vision

Source: e-KOREA Vision 2016, Ministry of Information and Communication, Rep. of Korea, April 2002.

40 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 3.2.2. Major Contents and Priority Projects e-Korea (2002-2006) carried out the following priority projects:

ㅇ Establishment of an environment that enables the high-speed broadband Internet service in any part of the country by 2005 - Distribute ICT devices free of charge to social welfare facilities and the information disadvantaged to expand opportunities to use information for the underprivileged - Develop and distribute contents customized for people with disabilities, the elderly and farmers and fishermen - Support the online education of children from low-income households and orphaned teens - Set up a portal site for the disadvantaged (including the disabled, the elderly and farmers and fishermen) and improve their ability to search for information

ㅇ Facilitate on-line telework free from time-space constraints - Expand ICT-based telework (also known as working from home, remote work, or smart work) - Improve the legislation to protect the rights and interests of irregular workers. - Establish telework regulations for civil servants to promote their telework - Raise the female economic activity rate to the OECD’s average level by supporting women's employment and start-ups in the ICT sector

ㅇ Enhancement of industrial competitiveness through ICT proliferation - Proliferate and sophisticate B2B transactions - Enhance productivity and transparency through collaboration and knowledge-sharing across the enterprise value chain - Promote the global e-business of the local electronics industry by providing integrated information on overseas e-marketplaces

Chapter 01_Iran's ICT Policies and ICT Industry 41 [Figure 1-11] Inter-company collaboration and the knowledge-sharing model

Source: Global Leader, 3rd Basic Plans for National Informatization for the Construction of e-Korea (2002-2006), Ministry of Information and Communication, 2002

ㅇ Construction of an online environment that enables citizens to trade with confidence - Enhance online corporate reputation: Introduce the online certification mark system - Lay the groundwork for the distribution of high-quality agricultural products by providing quality information on agricultural and marine products - Increase the information supply to consumers, expand consumer education, enhance consumers' competency, and prevent consumer damages - Provide counseling on consumer damages incurred by cross-border e-transactions and provide consumer education, etc. - Enhance personal information protection, protect individual privacy, promote password usage, and maintain the confidentiality of e-trade details in all e-transactions - Enhance website monitoring and field surveys - Enhance the activities of the Personal Information Dispute Mediation Committee, including its dispute settlement function - Upgrade the Personal Information Protection Act on a continuous basis and establish and disseminate detailed standards of personal information protection

42 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 ㅇ Promotion of public sector informatization and establishment of the e-government's unified service platform - Increase the speed and transparency of administrative services through online civil service as well as enhancing the overall digital public service - Make continuous improvements to IT-based government functions and improve transparency in the public sector - Realize 'open administration' through ICT-based innovations in government operations - Integrate the management of government computer resources, and promote the joint use of administrative information, etc. - Integrate the online civil services offered by various departments and provide all the services at the e-government site - Provide the DB service through the government-wide portal

[Figure 1-12] Realization of a one-stop service through the establishment of a government-wide portal

Source: Global Leader, 3rd Basic Plans for National Informatization for the Construction of e-Korea (2002-2006), Ministry of Information and Communication, 2002.

ㅇ Laying the foundations for mobile government - Provide mobile-based administrative services: Provide personal mobile terminals such as PDA to civil servants responsible for civil service and implement policies for the introduction of the wireless e-document approval system - Establish a civil service channel that is accessible anytime anywhere: Provide civil services such as bill payment, announcements, and notices via e-mail, text and voice messages - Utilize wireless ICT in various government service areas: Focus on areas where mobility is important, such as control of parking violations, monitoring of environmental pollution, and firefighting

Chapter 01_Iran's ICT Policies and ICT Industry 43 ㅇ Improvement of the electronic certification system - Introduce the electronic official seal necessary for e-government realization by public agencies - Complete interoperability between agencies through technology standardization among accrediting agencies to make registration with an agency sufficient for all public transactions - Upgrade and internationalize the electronic signature certification to prepare for active introduction of electronic transactions at home and abroad - Secure the interoperability of the cross-border electronic signature authentication system and resolve disputes related to electronic transaction authentication

In addition, Korea established the intellectual property and patent information service to promote informatization in industrial and science and technology fields. Korea improved the efficiency of its various national systems through the nationwide diffusion of informatization, resulting in the launches of an information service for agriculture and stockbreeding, a science and technology information service, the National Geographic Information Service (NGIS), a real estate information service, a fertility database, and a labor information service.

3.2.3. Implementation Results

The results of e-Korea can be summed up in the following three categories:

3.2.3.1. Building the world's best ICT infrastructure

Korea built the world's best high-speed Internet access environment (as of the end of 2001) with 24.83 million Internet users and 781 household subscribers for the broadband Internet. It also completed the construction of the network infrastructure8 required for the new knowledge-based information society and, as a result, anyone could access the broadband Internet from anywhere in the country by 2002.7) Mobile communication spread quickly, too. By 2002, Korea had 30.31 million mobile phone subscribers against 22.95 million landline subscribers, indicating that mobile communication had emerged as one of the country's main means of communication.

7) Broadband Internet penetration rate among households: Korea (54.3%), UK (0.8%), USA (13.1%), Japan (6.3%)

44 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 1-13] Trends of Internet users (1995-2001)

Source: Global Leader, 3rd Basic Plans for National Informatization for the Construction of e-Korea (2002-2006), Ministry of Information and Communication, 2002.

3.2.3.2. Nationwide improvement of informatization level

With the informatization of all government works, Korea not only improved the efficiency of its public service but also laid the basis for the realization of e-government. Korea saved over KRW 500 billion in logistics costs annually through the informatization of customs clearance; provided internships for more than 1.9 million people from 1999 to 2001 through the Employment Stability Network scheme (job placement, job training, etc.); and shortened the document processing time from 2 days to 30 minutes through informatization in the field of procurement. As a consequence, the country's mainstay industries—such as steel, electronics, shipbuilding, automobiles and textiles—made significant progress in their informatization, which not only cut down their production costs but also improved the nation's overall competitiveness in the international markets8). Korea also consolidated the foundations of the universal broadband Internet service by establishing the nationwide high-speed Internet connection in all schools and providing free ICT education accessible to the entire population.

8) POSCO supplying over 70% of iron and steel in Korea saves KRW 230 annually through ICT utilization including e-transactions.

Chapter 01_Iran's ICT Policies and ICT Industry 45 [Table 1-9] Increasing Internet usage among the ‘information service disadvantaged’ (1998-2001)

Description 1998 1999 2000 2001 Citizens over 50 1.2 1.0 4.9 20.7 HS grads or less 1.7 2.8 11.9 48.9 KRW 1M annual income or less 5.0 8.3 24.5 36.0

Source: Global Leader, Information Plan for E-Korea, MICT Korea, 2002.

3.2.3.3. Improving Korea's industrial competitiveness with the ICT industry serving as a new growth engine

Korea's IT industry continued to grow rapidly. In 2001, its gross output reached KRW 150 trillion (13% of GDP), with Korea's CDMA, semiconductors and TFT-LCDs emerging as the world's best products and IT industry exports accounting for 26.8% of the country's total exports. The IT industry served as the driving force behind Korea's continued export growth, and increased youth employment. Venture businesses in the IT sector created a large number of jobs including professional jobs. Many young talented people contributed to improving the competitiveness of traditional industries on the basis of IT fluency. The number of IT venture companies reached 5,073 in 2001 (44.5% of the total number of venture companies in all industries), while the number of IT industry employees increased by 150,000 between 1997 and 2001 - from 1.01 million to 1.16 million.

[Table 1-10] Comparison of informatization results (1995-2001)

Basic Plans Cyber Korea 21 e-Korea Description End of 1995 End of 1998 End of 2001 Government e-approval (%) - 21.2 80.6 Public e-procurement (%) - 19.3 87.5 Online stock trade (%) - 3.7 66.6 Users of Internet banking (10K) - - 1,131 ICT exports (US$100M) 317 3051) 384 IT industry output (KRW trillion) 51.4 88.1 150.3 No. of broadband Internet subscriber -1.4781 households (10K) No. of Internet users (10K) 37 310 2,438 No. of PCs in use (10K) 535 827 2,070 No. of mobile phone subscribers (10K) 164 2,682 2,904 Amount of e-transactions (KRW trillion) - 0.05 88.52)

Source: Global Leader, 3rd Basic Plans for National Informatization for the Construction of e-Korea (2002-2006), Ministry of Information and Communication, 2002.

46 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 3.3. u-Korea (2006-2010)

3.3.1. Vision and Basic Directions

The u-KOREA Plan was proposed as a revolutionary new vision for constructing the world’s most advanced ubiquitous infrastructure and thereby realizing the world’s first ubiquitous society. Its basic concept was “to utilize IT technology to meet the new economic and social demand and stimulate nationwide innovations required by the ubiquitous era.” A “ubiquitous network” refers to the next-generation national information infrastructure where wired and wireless networks, fixed and mobile networks, broadcasting networks and communication networks, and chip and sensor networks are all connected together, and where terminals, devices and appliances are connected and utilized freely. Physical space and electronic space are integrated into the ubiquitous network information base, which leads to the creation of ubiquitous goods and ubiquitous services and the maximization of their values. A ubiquitous network country9) is the 21st century type of nation in which computing and networks are systematized in terms of government, society and economy, among others, as can be seen in u-government, u-business, u-city, u-life, etc.

9) The concept of 'u-Korea' is defined as 'a new national management strategy that utilizes ubiquitous computing and network technology to implant invisible microcomputers in places and objects such as houses, facilities, commodities, machines, etc. so as to link all people, things and computers with one another through the wired/wireless broadband information and communication network and to “intellectualize” all the elements that constitute a nation (i.e. government, economy, society, and everyday living spaces) in order to enhance national competitiveness and introduce wide-ranging innovations to improve the quality of life. Progress is affected by such factors as the development of information technologies and the maturity of social demand for technology utilization. u-Korea was proposed as a follow-up stage of e-Korea. (Ha Won-gyu, "u-Korea Building Strategies and Action Plans: Vision, Issues, Tasks, Systems," Telecommunications Review, Vol. 13 No. 1, 2003).

Chapter 01_Iran's ICT Policies and ICT Industry 47 [Figure 1-14] Expansion from e-Korea to u-Korea

‘u-Korea’ Main actors = people + things + space

chips/sensors/tags and ubiquitous networks

(integration of electrinic and physical space)

Main actors=people Voluntary/unconscious Edited information Space informatization of information service Intentional utilization situational awareness

Centered on PCs and the wired Internet (Integration of information and systems)

‘e-Korea’

Source: Ha Won-gyu, "u-Korea Building Strategies and Action Plans: Vision, Issues, Tasks, Systems," Telecommunications Review, Vol. 13 No. 1, 2003.

[Figure 1-15] Informatization development stages

Any thing Desire : Ubiquitous u-Korea Maturity eie auiy level maturity Desire services stage eeomn stages development informatization National

Any where Desire : Popularization of u-Korea mobile/wireless internet services Commencement stage

Any time Desire : Popularization of Internet e-Korea Stage connection with all PCs

Any one Desire : PC Popularization, all individuals Cyber-Korea Stage possessing computers

Informatization technology development stages

Source: Ha Won-gyu, "u-Korea Building Strategies and Action Plans: Vision, Issues, Tasks, Systems," Telecommunications Review, Vol. 13 No. 1, 2003.

The main purpose of the u-KOREA plan was to respond to the rapid transition of the IT environment to a ubiquitous IT environment so as to further strengthen Korea's position as the world leader in ICT. The plan aimed to transform Korea into a highly advanced country in five areas (government, land, economy/industries, society, personal life) and to optimize four major engines (globalization, industry, social systems, technology) in order

48 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 to integrate IT into every part of society and serve as the driving force behind all the social innovations to be pursued by Korea.

ㅇ Friendly Government: Eliminate the supplier-centered mindset and deliver customized administrative services to meet the needs of the public

ㅇ Intelligent Land: “Intellectualize” the nation's infrastructure and improve efficiency nation-wide

ㅇ Regenerative Economy: Open new IT markets, enhance the competitiveness of traditional industries through informatization, and contribute to achieving a national income of US$ 30,000 per capita (GDP)

ㅇ Secure & Safe Social Environment: Establish an IT-based safety system/environment system that enables all citizens to enjoy peace of mind

ㅇ Tailored u-Life Services: Provide customized intelligent self-services and create a convenient and comfortable living environment

ㅇ Balanced Global Leadership: Secure international status that befits the country's position as a world leader in ICT and exercise global leadership

ㅇ Ecological Industrial Infrastructure: Abolish short-sighted cultivation policies and provide a business environment conducive to self-cultivation of industry

ㅇ Streamlining Social Infrastructure: Create an efficient and flexible social infrastructure conducive to the flowering of diverse ubiquitous services

ㅇ Transparent Technological Infrastructure: Create technology development conditions that are friendly to synergy creation through the convergence/ connection of diverse technologies including BT, NT, ST, CT, and ET as well as IT

Chapter 01_Iran's ICT Policies and ICT Industry 49 [Figure 1-16] u-Korea Vision

Source: u-Korea Basic Plans to Realize the World's First Ubiquitous Society, Ministry of Information and Communication, 2006.

Under the 'u-Korea' action plan, the Korean government divided the period into the establishment phase and the settlement phase and presented specific goals for each stage.

In conjunction with network upgrades and legislative improvements such as BcN and USN, the establishment phase (2006-2010) was aimed at establishing the basis for the ubiquitous society, providing the desired services anytime anywhere through mobile terminals connected to the wired/wireless broadband network, fostering new ubiquitous IT related industries, opening up new domestic and overseas markets, contributing to the achievement of national income (GDP) of US$ 22,000 per capita (with Korea ranking 15th in the world in terms of competitiveness), creating a pleasant IT environment, improving the quality of daily life in the areas of traffic, culture and housing, and realizing a safe society (Korea currently ranks 25th in the world in terms of quality of life).

The settlement phase (2011-2015) was aimed at realizing the intellectualization of the country's major buildings and facilities, universalizing the ubiquitous service for all social fields, revitalizing the domestic market, securing competitiveness in major overseas markets, and building a ubiquitous society capable of generating GDP of US$30,000 per capita (i.e. achieving a ranking of 10th in the world in terms of national competitiveness).

50 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 1-17] u-Korea promotion stages and detailed objectives

Source: u-Korea Basic Plans to Realize the World's First Ubiquitous Society, Ministry of Information and Communication, 2006.

3.3.2 Identifying key tasks for u-Korea

From the five area advancement goals and four major engine optimization goals, the Korean government selected key tasks that met the following criteria: tasks that could create added value by reflecting the characteristics of u-IT and applying new technologies; tasks which, in close conjunction with other related tasks, could lay solid foundations for growth in the relevant sectors; tasks with serious ripple effects both nationally and socially; and tasks that needed to be promoted from the mid- to long-term perspective.

Chapter 01_Iran's ICT Policies and ICT Industry 51 [Figure 1-18] u-Korea key tasks

Source: u-Korea Basic Plans to Realize the World's First Ubiquitous Society, Ministry of Information and Communication, 2006

[Table 1-11] Details of key tasks

Main/subsidiary Supporting Description Key Tasks Major Contents organizations agencies  Connecting the working systems of To build a different regions and organizations government-wide  Securing communication channels Ministry of Ministry network to create between different departments Government of an organic including teleconference and Administration and Info.and administrative administration-exclusive text Home Affairs Comm. environment messaging services  Building ubiquitous government infra  Building integrated Local governments transport/logistics/facility / Ministry of Five major To build management centers for each Construction and Ministry advancement integrated local municipality Transportation, of Info. areas centers to realize  Real-time connection with Ministry of and u-City neighboring local governments, Government Comm. metropolitan municipalities and Administration and central government agencies Home Affairs To enhance  Promoting the incorporation of u-IT competitiveness Ministry of Ministry into the textile industry as a top by incorporating Commerce, of Info. priority ICT into Industry and and  Developing new materials for textiles traditional Energy Comm. including smartware industries

52 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 1-11] Continued

Main/subsidiary Supporting Description Key Tasks Major Contents organizations agencies  Building wired/wireless communication channels that are always accessible including in the To build an event of disasters/accidents National intelligent  Providing interworking service for Emergency Ministry of emergency wireless communication networks for Management / Info. and communication inter-agency and multi-party National Police Comm. network to deal telephone calls Agency with disasters  Building an intelligent communication network capable of autonomous path design and self- restoration Local governments Ministry of  Issuing a card that will serve as an Government authentication card that can be used Administration and To distribute u-ID in various u-services Ministry of Home Affairs / cards as the basis - Only a minimum of information is Info. and Ministry of Welfare for u-life services entered for authentication, with the Comm. Ministry of Culture rest managed in a DB and checked & Tourism, through a network. Ministry of Education  Significantly improving the performance of current wired, wireless and satellite networks To build the  Capable of supporting max. 1Gbps ETRI world's most wired/wireless communication. NCA advanced  Realizing a seamless network Telecom carriers u-network environment by linking wired/wireless and satellite networks via BcN and USN  Fostering the convergence terminal To foster five key industry ETRI u-strategic  Fostering the bio electronics industry KISA industries to  Fostering the nano electronics NCA create new industry Related industries Four major growth engines  Fostering the RFID industry engine areas  Fostering the software industry To upgrade the  Upgrading the basic law for a new legislation for the u-IT-based society to streamline the KISDI systematic implementation system and legislate NCA promotion of performance management u-Korea  Attracting international organizations that will lead international To attract informatization and u-IT to Korea international - Attracting major international KADO organizations to organizations such as ITU to Korea KISDI take the lead in to raise international awareness of u-IT u-KOREA and strengthen the international IT cooperation system.

Source: u-Korea Basic Plans to Realize the World's First Ubiquitous Society, Ministry of Information and Communication, 2006.

Chapter 01_Iran's ICT Policies and ICT Industry 53 The expected economic effects of the u-Korea project included laying the foundations for new growth engines and expanding the u-IT market. The production inducement effect through job creation was estimated to surpass KRW 240 trillion by 2010, with average annual growth of KRW 40.5 trillion, including KRW 10.42 trillion from living services, KRW 81.21 trillion from industry, and KRW 10.84 billion from public administration. Apart from the quantitative effects, ubiquitous technologies were expected to bring about a revolution in human safety and convenience by striking a harmonious balance between preservation and development. u-Korea aimed to innovate the industrial structure through the formation of a new economic sector somewhere between the secondary sector and the tertiary sector, including new information appliances and smart ware resulting from the incorporation of u-IT into traditional industries. The project also sought to secure diverse channels for citizens’ engagement, with the aim of enhancing the capability to respond to citizens' needs, raising public satisfaction with public services, and increasing the proportion of immediate administrative services. In summary, u-Korea was expected to bring about remarkable improvements in the efficiency, fairness and transparency of Korea’s administrative services.

3.4. K-ICT (2015-2020)

3.4.1. Background

Korea's ICT industry has taken the lead in overcoming national crises, including the IMF crisis of 1997 and the global financial crisis of 2008, recording high growth rates in both production and exports. However, as the 2010s dawned, major global economies such as the US, China, and Japan boosted their efforts to secure market leadership in technological and industrial convergence, while the Korean ICT industry was reeling from low productivity and a fall in investment. Korea badly needed to find new growth engines to break the low-growth pattern of its ICT industry, a situation which compelled the Korean government to confront the weaknesses of the Korean ICT industry and come up with the 'K-ICT Strategies' with the aim of turning risks into opportunities.

54 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 1-19] K-ICT Strategies

Source: K-ICT Strategies for Realizing the Creative Economy, Ministry of Science, ICT and Future Planning, 2015.

3.4.2 Major Contents

Under its 'Realization of a Creative Korea' vision, the Korean government aimed to stimulate an annual average growth rate of 8% (KRW 240 trillion in ICT production, US$210 billion in exports by 2020) in the ICT industry by investing a total of KRW 9 trillion over a period of five years, largely in the areas of R&D, human resources and the venture eco-system of the ICT industry, as well as various convergence areas. Its main focus was on creating demand through massive investments, promoting deregulation, and providing concentrated support for strategic industries. The four main strategies of K-ICT were aimed at (1) improving the fundamental structure of the ICT industry, (2) creating new demand through massive investment aimed at expanding ICT convergence services, (3) opening new markets including China and developing countries through package-type

Chapter 01_Iran's ICT Policies and ICT Industry 55 export diversification, and (4) cultivating nine major strategic industries including software and new industries.

ㅇ Structural improvement of the ICT industry

As the pace of ICT technology innovation accelerates, Korea will shift the focus of its R&D projects and the structure of its state-funded research institutes in three specific directions, Basic Original, Public Convergence, and Enterprise Support, while the government will become more involved in leading R&D projects. Korea will enhance industry-university-research cooperation for the establishment of R&D innovation clusters, among others, while striving to improve the efficiency of R&D support by introducing fast-track and open evaluation systems10). Korea will also increase the designation of software-leading schools in preparation for mandatory software education at elementary, middle and high schools (2018). For tertiary education, Korea will focus on boosting universities’ R&D capabilities including the expansion of Grand ICT R&D Centers (three universities by 2017) and Software-centered Universities (10 universities by 2017). In order to nurture high-caliber talents, Korea will expand overseas education and training programs in partnership with overseas educational institutions (5 programs in 2019) and support the recruitment of overseas Korean talents by SMEs (12 projects in 2015). The government will seek promising ventures through business integration and branding among other initiatives, and support their overseas expansion by providing them with on-site business consulting.

10) Targeted technology commercialization rate: 18.2% (2015) → 30% (2017) → 35% (2019)

56 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 1-20] Key K-ICT Promotion Strategies

Source: "Realization of ICT-leading Creative Korea," 'Presentation of K-ICT Strategies,' Ministry of Science, ICT and Future Planning, March 2015.

ㅇ Expansion of ICT convergence investments

Korea will expand ICT convergence to its major industries and raise the level of ICT convergence from 60% in 2015 to more than 80% by 2019, primarily by carrying out massive ICT convergence projects for six major areas including transport, energy, tourism, cities, education, and medicine.

 (Transport) Improvements in traffic circulation and congestion through the development and construction of intelligent transportation systems for major roads

 (Energy) Expansion of smart meters and intelligent power management devices (ESS) for large buildings and apartments

 (Education) Establishment of the 1G-class wired/wireless communication environment in all schools, and support for the N-screen learning service

 (Medicine) Launch of a demonstration project for a customized medical service provided through wearable equipment, and operation of health parks

 (Tourism) Realization of smart tours that provide IoT-based customized tourism information in real time

Chapter 01_Iran's ICT Policies and ICT Industry 57  (Cities) Construction of ten smart cities equipped with specialized services across the country

To that end, Korea will invest a total of KRW 2.1 trillion by 2019 to create a global convergence cluster as a test bed without any restrictions on frequency utilization, and attract major overseas convergence companies to the location.

[Table 1-12] Amount of ICT convergence investment (2015-19)

(Unit: KRW 100M)

Description 2015 2016 2017 2018 2019 Total

Budget 270 6,398 6,048 6,248 1,448 20,412

Source: "Realization of ICT-leading Creative Korea," 'Presentation of K-ICT Strategies,' Ministry of Science, ICT and Future Planning, March 2015.

ㅇ Enhancement of global cooperation

Korea will strive to increase its ICT exports (from US$173.9 billion in 2014 to US$208.5 billion in 2019) by implementing overseas expansion strategies customized to its partner countries. It will develop packaged strategic products based on the results of its informatization projects, open up new markets in developing countries, promote export diversification, and dispatch the 'World Friends Techno Peace Corps' to developing countries to provide technical assistance ranging from policy consulting to expert training as a way of achieving win-win cooperation with the developed world. Korea will also seek to enhance its influence in the international community by successfully hosting the Olympic Winter Games PyeongChang 2018 with the most advanced ICT, actively participating in global organizations (ITU, APT, etc.), and expanding its contributions to the OECD’s Official Development Assistance (ODA) program.

ㅇ Cultivation of 9 strategic industries

In order to maximize the effects of K-ICT, Korea selected nine strategic industries after carefully analyzing various candidate industries from the perspectives of growth potential and market competiveness, and came up with specific goals to promote for each of them during the project period.

58 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 1-21] Diagnosis of current status of major strategic ICT products

Source: K-ICT Strategies to Realize Creative Economy, Ministry of Science, ICT and Future Planning, 2015.

➀ Software - Increase software exports (US$5.3 billion in 2014 → US$8 billion in 2017 → US$10 billion in 2019) - Enhance the fundamental competitiveness of the SW industry by establishing 8 major basic SW research hubs, implementing the SW Grand Challenge project, and creating SW convergence clusters - Provide R&D support for start-ups, expand M&A fund support for small and medium-sized venture companies, increase support for SMEs' advance into the global market

② IoT - Encourage cooperation with global companies and big businesses through the Global Private-Public Council: fostering of small- to medium-sized IoT venture firms as specialized global companies (from 34 in 2014 to 200 in 2019) - Create a massive-scale IoT demonstration complex of healthcare and the smart city in collaboration with municipalities (Center for Creative Economy and Innovation, etc.) and promote demonstration projects for seven strategic business sectors (household appliances, manufacturing, automobiles, energy, healthcare, sports, and tourism)

Chapter 01_Iran's ICT Policies and ICT Industry 59 ③ Cloud - Increase the use of public and private cloud services through the transition of public services to private cloud (40 by 2019) and apply cloud to industrial complexes (50 by 2019) - Foster specialized global companies (10 by 2019) by providing one-stop support to increase their cloud investments, promote company-specific R&D based on the technology map, and improve the procurement policies

④ Information security - Nurture security experts (7,000 professionals by 2019) through cyber safety diagnosis and create new security markets including IoT security - Designate universities that specialize in information protection (7 in 2017), expand 'employment-contract-type' master's courses (8 → 11), and promote global security technology initiatives including top-10 security technologies

⑤ 5G mobile communications (5G) - Verify the technical feasibility of 5G at the 2018 PyeongChang Olympic Games (investment of KRW 600 billion won by 2020) - Promote cooperation on 5G standardization with major countries such as China and the EU - Promote competition in the mobile communication market, encourage new investments, and pursue the world's first commercialization of 5G (2020)

⑥ UHD - World's first terrestrial UHD (2015, UHD frequency distribution and experimental broadcasting) - Provide support for the production of broadcasting contents (50% of the budget to be spent on UHD contents production) - Increase the number of Creative ICT Smart Media Centers in order to foster media ventures (northern Gyeonggi-do, Daegu and Gyeongsangbuk-do regions) - Induce continuous investment in five basic smart media technologies (KRW 141.8 billion from 2015-20) - Apply the negative/minimum regulations principle (autonomy and ex-post regulation) to revitalize innovative services

60 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 ⑦ Smart devices - Pursue the technological development of ten major devices (wearable, healthcare, etc.) and ten core parts (wireless charging, human body communication, etc.) - Provide support for commercialization in cooperation with regional bases (Creative ICT Device Lab, Mobile Convergence Center, Creative Economy Innovation Center, etc.) - Expand the Creative ICT Device Lab (Daegu), establish domestic certification labs for overseas telecom operators (Alcatel, China Mobile, etc.), and support the overseas expansion of domestic businesses

⑧ Digital contents - Promote cooperation between global companies and domestic SMEs, and create the Digital Contents Fund (KRW 400 billion by 2017) - Provide intensive support for promising contents and original technologies (CG/ animation, 5D cinema, virtual reality games and education programs, digital performance/exhibition) - Establish the Creative ICT Contents Biz Center (Sangam, Seoul) and integrate the support functions, and establish nationwide networks including Busan (film) and Jeju (CG/animation) - Promote the Peng You Project with China and the intensive cultivation of global entertainment stars

⑨ Big data - Launch a pioneering government-private joint data project (KRW 35 billion for three years): promising business areas such as manufacturing, healthcare, weather forecasts, sports, disaster prevention, distribution and finance - Revitalize the big data industry and amend the related legislation including the Personal Information Protection Act

Under these circumstances, the Korean government has divided the roles of the government and the private sector, and plans to continuously revise and supplement its tasks according to changes in the market situation. To check the progress, the relevant government agency has established a monitoring organization headed by a director-general who will report the bureau's quarterly monitoring results to the ICT Strategy Council, which is headed by the prime minister, twice a year.

Chapter 01_Iran's ICT Policies and ICT Industry 61 - (Government) To identify government-wide tasks and coordinate actions through the ICT Strategy Council and meetings between relevant ministers, as and when necessary

- (Private) To establish an Industry-Academia-Research Council for each of the nine ICT sectors, collect opinions, and encourage stakeholders' participation

[Table 1-13] Annual Budget for the K-ICT Plan (2015-19)

(Unit: KRW 100M) Description 2015 2016 2017 2018 2019 Total

Annual budget 9,341 20,503 22,070 21,463 17,398 90,775

Source: "Realization of ICT-leading Creative Korea," 'Presentation of K-ICT Strategies,' Ministry of Science, ICT and Future Planning, March 2015.

[Figure 1-22] The K-ICT Strategy Promotion System

Source: A pre-briefing related to the Comprehensive Measures to Enhance ICT Competitiveness, Ministry of Science, ICT and Future Planning, Rep. of Korea, 2015.

62 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 4. Implications and Recommendations

In keeping with the recent evolution toward the digital economy, diverse countries around the world are actively searching for the driving force of their economic development by promoting science and technology in general and the ICT industry in particular, examples of which abound around the world. Iran accounts for 1.57% of global science and technology production (as of 2013) and has an annual growth rate of science and technology that is higher than the global average. Ranked 17th in the world in terms of the number of science and technology academic papers it produces, Iran leads the Middle East in the sphere of science and technology. As shown by the core science and technology indices, Iran is registering continuous growth in the number of papers published in science and technology journals, researchers, R&D exports, and high-technology exports (See Table 1-14).

The desirable ICT policies and strategies of any given country should be based not only on assessments of its existing ICT strategies but also of its political, economic, cultural, and social characteristics. More importantly, it must be deeply aware of the fact that the ICT sector is the key to any developing country's national development. In this context, the Iranian government needs to remind itself of the fact that it is a major consumer of ICT products and technologies, a designer of various systems, a legislator and enforcer of laws, and a key facilitator of ICT innovation and technological development. In light of the diverse tasks with which it is faced, the Iranian government might as well pay keen attention to the experiences of other countries including those of Korea.

[Table 1-14] Key indicators of Iran's science and technology

Indicator 2004 2006 2010-2014

Public education expenditure 4.87 5.06 3.7 (2014) (as a % of GDP)

Thesis publication in S&T journals 2116 3423 8176 (2011)

Ratio of R&D researchers - 716 1483 (2014) (per 1M people)

R&D exports 0.59 0.67 0.7 (2014) (as a % of GDP)

Patent applications 2426 5970 8242 (2011)

Chapter 01_Iran's ICT Policies and ICT Industry 63 [Table 1-14] Continued

Indicator 2004 2006 2010-2014 High-tech exports 71 403 652.6 (2014) (US$1M) High-tech exports 1.86 6.31 4.46 (2011) (as a % of total exports) Internet users 7.49 8.76 21 (2011) (per 100 people)

Source: Song Jong-guk et al., An official overseas trip/training report, Science and Technology Policy Institute, 2016

Upon establishing and implementing its ICT policies, Iran might be advised to consider the experiences of Korea, which are summed up below as follows:

First, it is necessary to demonstrate strong leadership based on concrete action plans. In order to achieve the goals of developing science and technology as specified in the national development plans, it is crucial to establish and implement action plans that are highly practicable and productive.

Second, government policies tend all too often to become 'diluted' due to conflicts of interest between the ministries involved. Therefore, the ICT authorities must stand ready to implement ICT policies consistently with conviction and continue to upgrade the relevant legislation and institutional arrangements on time.

Third, it is important to establish a national technological innovation system that nurtures continuous innovation across the board in recognition of the fact that 'technological innovation' is the only sustainable way of achieving national development.

Fourth, policymakers must place the highest value on the perspective of major technology users when establishing policies.

Fifth, the ICT Ministry must continue to enhance cooperation and coordination with the relevant agencies and organizations to ensure that its policies will bring about the intended effects in a timely manner. It is particularly important that the national leadership thus established should guarantee that the benefits of the country's advances in ICT are shared by everyone including the inhabitants of remote and isolated communities.

64 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Reference

[Books] Im In-taek, 'Iranian Culture and Business,' Neulpum Plus, 2015. Thirty-Five Years of ETRI History, ETRI, 2012.

[Reports] '2011 National Informatization White Paper,' Ministry of Public Administration and Security, 2011. '2015 Overseas ICT R&D Policy Trends,' Institute for Information & Communications Technology Promotion, 2016. 'Current Status of Nations' ICT and Media,' National IT Industry Promotion Agency, 2015. 'A Survey/Analysis Report on National Research Development Projects,' Ministry of Science, ICT and Future Planning and Korea Institute of S&T Evaluation and Planning, 2016. 'The 3rd Basic Plans for National Informatization for the Cultivation of Global Leaders and the Construction of e-Korea,' Ministry of Information and Communication, 2002. 'The Lifting of Economic Sanctions on Iran and the Expected Effects,' KDB Bank, 2016. 'Trends in S&T Policies and R&D in Germany,' KIST Europe, National Research Foundation of Korea, 2013. 'The Latest Trends and Outlook of the US Sanctions on Iran,' Yulchon, March 2013. 'Basic Plans for u-Korea to Realize the Worlds' First Ubiquitous Society,' Ministry of Information and Communication, 2006. 'Practical Guide for Investments in Iran,' KOTRA and Jipyong, 2016. 'Guide on Winning Project Bids in Iran,' KOTRA, 2016. '2016 Annual Report on the Promotion of the ICT Industry,' Ministry of Science, ICT and Future Planning, 2016. 'K-ICT Strategies to Realize the Creative Economy,' Ministry of Science, ICT and Future Planning, 2015. "Analysis of the Past Trends of the Korean ICT Industry and Its Outlook,' Korea Information Society Development Institute, 2015. 'A Report on the Trends of the Korean ICT Manufacturing Industry and an International Comparison,' Korea Information Society Development Institute, 2015.

Chapter 01_Iran's ICT Policies and ICT Industry 65 Iran Telecommunications Report, BMI Research, Q3 2015. Iran: The $1 Trillion Growth Opportunity? McKinsey Global Institute, 2016. Snapshot of the Iranian ICT Market, Frost & Sullivan, 2015. The Islamic Republic of Iran, IMF Country Report No. 15/346, IMF, 2015. Political Structure and Economic Policy in Iran, KIEP, 2013. u-Korea Master Plan, MIC, 2006.

[Theses] Yoo Dal-seung, "A Study on Iran's Democracy - Focusing on the Combination of Islam and Western Democracy," Journal of Middle Eastern Affairs, Vol. 11, No. 2, 2009. Yoo Dal-seung, "The Roles of Religion in Social Changes in Iran," KAMES (Korean Association of Middle Eastern Studies) Collection of Theses, Vol. 36, No. 3, Feb. 2016. Yoo Seong-hoon, "An Environmental Analysis of Iranian ICT Markets," ICT & Media Policy, KISDI, Vol. 28, No. 4, 2016. Ha Won-gyu, "u-Korea Building Strategies and Action Plans: Vision, Issues, Tasks, Systems," Telecommunications Review, Vol. 13 No. 1, 2003. Kwon Hyung Lee et al., “The Political Structure and Economic Policy of Iran”, World Economy Update, Vol. 3, No. 55, KIEP, Dec. 2013.

[Websites] "Sanctions on Iran" (https://ko.wikipedia.org). “The Lifting of the US Sanctions on Iran," Yonhap News, Jan. 2016.

[Others] Seminar on Strategies for Entering the Iranian Market, KITA and BKL, Apr. 2016 The Enforcement Decree for the 6th 5-year Development Plan of Iran (Mar. 2016 - Mar. 2021), Iranian Embassy to the Republic of Korea, April 2016 "Realization of a Creative Korea Led by ICT," at the Presentation of K-ICT Strategies by the Ministry of Science, ICT and Future Planning in March 2015. Korea’s Experiences of Strategic ICT Policy Development, a report made to the UN, May 2015.

66 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Chapter 2

Suggestions for the Development of Iran's ICT Research Institutes

1. National Vision and Science and Technology Development Strategies of Iran 2. Korea's National R&D Strategies 3. A Case Study on the Activities of Korea's ICT Research Institute (ETRI) 4. Implications and Suggestions  Chapter 2

Suggestions for the Development of Iran's ICT Research Institutes

Myung S. Kim / Chang S. Park (ETRI)

1. National Vision and Science and Technology Development Strategies of Iran

1.1. An Overview of Iran's Science and Technology Policies

Iran's science and technology policies can be observed in three stages. During the first stage in the 1990s, Iran's science and technology policies were focused on promoting science and technology education through the country's higher education institutions. Throughout that decade, the Iranian government strove to expand its higher education institutions11) and to support their international research exchanges and publication of academic papers.

Iran's second generation of science and technology policies was implemented at the dawn of the new millennium. During this stage, Iran accorded priority to the establishment of an adequate science and technology infrastructure so that researchers could devote themselves to the research and development of new technologies by supporting various universities, research labs, techno parks and startup incubators. It was during the second stage that Iran also started to put science and technology at the forefront of its national development scheme. Thus, Iran included and implemented the government-led science and technology policies during the country's third 5-year

11) Currently, Iran runs 154 universities under the Ministry of Science, Research and Technology (MSRT), 567 campuses under the Islamic Azad University, the country's largest national university, 58 medical schools under the Ministry of Health and Me Medical Welfare, and 354 nonprofit private universities.

68 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Development Plan (2001-2005). Iran also established the Vice Presidency for Science and Technology (VPST) and the Supreme Council for Science, Research and Technology (SCSRT) as departments dedicated to promoting science and technology as well as establishing and implementing the country's science and technology policies. Iran increased the number of techno parks by expanding into areas near university campuses in particular. Meanwhile, the Iranian government provided institutional support to protect intellectual property rights and establish the Technology Transfer Center (TTC/TTO) to support the commercialization of the research results of universities and research institutes. Under the National Vision 2025, the Iranian government presented the following specific national goals for 2025:

- Iran aims to become a model for the Islamic world by 2025 by becoming the most advanced country in Western Asia, all the while maintaining the tradition of the Islamic Revolution of 1979.

- Iran aims to become the world's twelfth largest economy by transforming itself into a high-level science and technology powerhouse that will produce advanced science and technology and knowledge, primarily by fostering excellent science and technology personnel. To that end, the Iranian government will invest a total of US$3.7 trillion12) in the promotion of science and technology, with one third of that amount (US$1.3 trillion) to be raised from foreign capital.

[Figure 2-1] Evolutionary stages of Iran's S&T policies

Source: Esmaeil Ghaderifar, presentation materials distributed at a KSP visiting fellows training workshop, April 20, 2017.

12) Since 2011 a substantial portion of the investment has been generated as the Innovation and Prosperity Fund (IPF) and been committed to supporting knowledge-based companies.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 69 Upon entering the third generation stage, Iran specified its Vision 2025 as part of its fifth 5-year Economic Development Plan (2010-2015) and Comprehensive Science Plan. In 2006, Iran was already suffering as a result of the recently imposed UN sanctions, which drove the Iranian government to make the transition from a traditional resource-dependent national economy to a knowledge-based economy. Specifically, Iran was forced to endure severe economic hardships, high inflation, restrictions on oil exports, and the freezing of its foreign trade. The subsequent shortage of resources and materials compelled the Iranian government to forge a strong commitment to developing its R&D capability and achieving economic self-sufficiency. Ultimately, the national hardship became a direct cause of the dramatic shift in Iran’s national science and technology policies and, consequently, the Iranian government interpreted Article 44 of the Constitution more flexibly to place the national focus on achieving prosperity through the development of science and technology.13)

[Table 2-1] Summary of Iran’s major science and technology policies

Major Policies and Laws Year Major Contents

Presentation of a national vision for 2025 Emergence as a first-rate country in Western Asia Vision 2025 2005 Achievement of the world's 12th largest economy (20-year plan) Investment of US$3.7 trillion by 2025 (with US$1.3 trillion to be raised from foreign capital)

Reaffirmation of Vision 2025 National Master Plan for Enhancement of universities’ research capability Science and Education to 2009 Enhancement of industry-academia collaboration 2025 Promotion of commercialization of R&D results

5th 5-year Economic Enhancement of R&D capability of higher education institutions Development Plan and Enhancement of industry-academia collaboration 2010 KBF Promotion Act (KBFs Promotion of commercialization of R&D results and IPF) Increase of the KBF’s R&D investments

13) According to Article 44 of the Constitution of the Islamic Republic of Iran, which was established in 1979 immediately after the Islamic Revolution led by the Ayatollah Khomeini, an Islamic country consists of three spheres: the national sector, corporate sector, and individual sector, with all of the nation's key industries related to transport, communications and other infrastructures and utilities belonging to the Iranian state. However, due to the inefficiency of the public sector, widespread corruption, and increasing pressure to privatize, the Iranian government reinterpreted Article 44 to allow partial recognition of privatization in 1997 (Source: 2014 KIEP Visiting Fellows Program, KIEP, 2015.) In 2010, as part of its efforts to promote the fifth 5-year Economic Development Plan, Iran announced the "General Policies of Article 44 of the Constitution," which permitted the privatization of key properties on a large scale.

70 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 2-1] Continued

Major Policies and Laws Year Major Contents

Comprehensive Plan of Specific goals and support policies for the realization of Vision 2025 Increase of the ratio of R&D investment to 4% of GDP Science 2011 Increase of the ratio of education investment to 7% of GDP (basic plan for S&T Creation of 3,000 researchers per million residents development) Presentation of major indicators Announcement of the Supreme Leader's S&T policy directions in relation to the establishment of the 6th 5-year Economic Development Plan S&T Policy Directions 2014 Anti-corruption campaigns Elimination of inefficiencies Establishment of an Islamic Economic Community through the expansion of privatization

Improvement of national efficiency Improvements in business environment and competitiveness Expansion of R&D at public institutions and private companies (mandatory allocation of 3% of the previous year's profits to the 6th 5-year Economic next R&D budget) 2016 Development Plan Expansion of the National Development Fund (allocation of 30% of the nation's oil revenues) Promotion of fire-optic projects and establishment of information infrastructure Revitalization of e-commerce, etc.

During the third generation of Iran’s S&T policies, Iran focused its resources on the designation of knowledge-based companies, the creation of the IPF (Innovation and Prosperity Fund), the elimination of obstacles to efforts to improve productivity, reform of the relevant legislation (Article 43), and the acceleration of innovation. Having recognized that structural innovation and institutional reform in the economy as a whole were critical to Iran’s development into an advanced country equipped with a strong S&T sector, the Iranian government led by President Rouhani advanced the following as the country's two main tasks under the 6th five-year Economic Development Plan (2016-2021):

1) Improvement of national efficiency In order to achieve economic growth of 8% during the period, the Iranian government aimed to achieve an average annual growth rate of 2.5%, which it recognized could only be reached by making significant improvements in efficiency across the country's entire socioeconomic spectrum. As such, all of the country's public institutions, including the National Efficiency Organization, judiciary, military and state-owned companies,14) began to make all-out efforts to raise efficiency across the board.

14) The Iranian government has sought to build a national consensus among its population based on the fact that the achieving an 8% economic growth during the five year period would be practically impossible without eliminating the widespread corruption, impropriety and inefficiency plaguing Iranian society.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 71 2) Improvements in business environment and competitiveness

As continuous improvements in the business environment and competitiveness are urgently required, Iran has carried out campaigns to revise its tax laws, enhance the roles of the Fair Competition Commission, improve the transparency of transactions between the government and big businesses, prevent monopolies from forming, and eliminate corruption by 2018.

The country's efforts to achieve 'the transition to a knowledge-based society' can clearly be viewed not only as one of the government's policies but also as one of the nation's visions. Iran's basic strategy for "making the leap to becoming a technological powerhouse" was clearly laid out by the Supreme Leader Khamenei in his comments on the 'Resistance Economy15)' in February 2014. Through a series of science and technology policies, including Vision 2025, Iran is not only pursuing economic prosperity as a top-tier county in the Middle East but is also establishing a solid national ideology that will contribute to the prosperity of the entire Islamic community through the realization of the Resistance Economy.

The Law on the Sixth Development Plan comprises 31 articles under the three mandates of reducing public costs, improving revenue management, and reducing oil dependence, with the S&T and ICT sector related clauses (Articles 2, 14 and 17) stating the following (Table 2-2).

[Table 2-2] S&T and ICT Policies in the Law of the 6th Development Plan

(Article 2) 2. From the third year of the development plan, 30% of the proceeds from oil and gas exports shall be allocated to the National Development Fund (NDF), after which they shall increase by increments of 2% each year. The Central Bank shall remit the relevant amount by the end of each year.

(Article 14) 3. In addition to the research budget included in the annual budget bill, all operating agencies shall allocate at least 2% of the credit costs and at least 2% of the credit asset acquisition expenditures to the research and technology development sector.

15) Extract from a speech by the Supreme Leader Khamenei: "Iran is striving to establish a resistance economy in order to not only overcome the various socioeconomic problems with which it is faced, but also to circumvent the influences of adversaries that are pressing Iran with economic sanctions among other factors. In order to eliminate the many risks, uncertainty, corruption and inefficiency and thereby strengthen the national economy, Iran will have to acquire new dynamic technologies at home and abroad and make the best use of them on the basis of egalitarianism. Iran will complete its 30-year S&T development plan based on the Islamic Constitution with the aim of building a sustainable Islamic Economic System."

72 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 2-2] Continued

4. All operating agencies shall list their research projects, technologies and papers on the SAMAT website. 5. All operating agencies shall establish an action plan in accordance with the elite cultivation strategic plan within one year and implement it from the second year of the Sixth Development Plan. 6. All public and private enterprises shall allocate at least 3% of their previous year's profits to research and technology development. 7. The government can provide financial support for joint demand-driven studies of universities and seminaries. 8. All operating agencies shall help the economically active population to develop their economic knowledge.

(Article 17) 1. The Ministry of Information and Communications Technology (MICT) shall organize and invest in projects related to optical cable projects and infrastructure construction projects. 2. The government may refuse to allow monopoly facilities for public goods. 3. The communication channel held by each organization shall be used only within the extent of its organization. Any other uses must be approved by the MICT in advance. 4. The operating agencies should, if possible, proceed with the entire process online. 5. The operating agencies, the military and the police shall open online websites to provide information and statistical data to the public in order to create a comprehensive registration system and a national statistical network at the Statistical Center of Iran, which should be completed by the third year of the development plan. 6. Each operating agency shall open a free online Q&A system that facilitates exchanges with other organizations for Q&A. The MICT shall provide the infrastructure necessary for information sharing among institutions through NIX. 7. All online documentation procedures shall be valid and sufficient. 8. By the end of the second year of the development plan, all surveys shall be conducted in accordance with the e-government roadmap. 9. All operating agencies shall reduce the number of offline purchasers by more than 50% by activating online services in cooperation with the MICT and reduce the volume of offline transactions for products and services by more than 30%.

Recently, the Iranian government reaffirmed its strong commitment to modernizing the financial sector in order to advance the country's business environment; abolishing non-institutional financing beyond the central bank's control, including financial institutions run by religious groups in order to nurture the capital market; revitalizing investment at home and abroad and preventing corruption; and expanding loans to SMEs. In order to attract foreign direct investment (FDI), Iran has set up an annual FDI target amount of US$12 billion, undertaken various institutional improvements, and made it mandatory to allocate 30% of the country's oil revenues to the NDF so that private enterprises can acquire foreign currency loans.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 73 1.2. Science and Technology Governance of Iran

In Iran, the Supreme Leader oversees Iran's legislative, judicial and executive branches for all the country's major decisions, while the president and the executive branch assist him with determining the country's fundamental policy directions. In the field of science and technology, the top policy decision-making bodies are the Supreme Council of the Cultural Revolution and the Supreme Council for Science, Research and Technology. These councils are responsible for establishing science and technology policies, legislating the relevant laws and prioritizing the budgets. The two councils also run subcommittees composed of experts from government agencies, universities and industry.

1) Supreme Council of the Cultural Revolution (SCCR)

Founded in 1984, the SCCR oversees the national science and technology policies and higher education institutions (universities), with the President serving as its chair. The heads of the judiciary and legislature, the Vice-president for Science and Technology, and the Minister of Science, Research and Technology work together as its members. Apart from the SCCR, the Expedition Discernment Council of the System (EDCS) assists and advises the Supreme Leader in the establishment of key policy frameworks such as Vision 2025, the Comprehensive Science Plan, and the Resistance Economy.

2) Supreme Council for Science, Research & Technology (SCSRT)

The SCSRT was founded by the Iranian Parliament in 2004 when the Ministry of Science, Research and Technology was established. The council is responsible for coordinating the roles of government agencies and setting specific goals for each agency in relation to the establishment and implementation of the country's S&T policy. The President serves as the chair, and its other members include the Minister of Science, Research and Technology, the Vice-president of Science and Technology, other S&T related ministers, university presidents, heads of scientific and technological organizations, and industry representatives (two persons).

The Ministry of Science, Research and Technology (MSRT) traditionally focused on 'science and technology research and education,' which suffered as a result of its weak links with industry and business. Thus the Iranian government set up the Vice Presidency for Science & Technology (VPST) in 2007 with the aim of placing greater emphasis on 'innovation' in science and technology policies and 'connection' between research and industry as part of the country's efforts to develop a national innovation system. In order to secure consistency in the country's science and technology policies and to ensure the

74 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 effective implementation of the policies, the head of the VPST directly reports matters related to science and technology to the President in his capacity as vice president and coordinates the interests of the various organizations participating in the innovation system, thereby linking the policy-making organizations with the policy-implementing agencies. The council has been planning and operating major innovation programs that directly affect the country's industry and business communities, including the designation of knowledge-based firms and the establishment and operation of the Pardis Technology Park (PTP) as its representative commitments.

[Figure 2-2] Iran's S&T governance

Source: Science, Technology & Innovation Policy Review - Islamic Republic of Iran, UNCTAD, 2016.

Under the MSRT there are currently about 150 national universities and 1,000 technical and vocational universities. Of these, the University of Teheran (UoT), the Sharif University of Technology (SUT), and the Isfahan University of Technology (IUT) are world-class universities. The Islamic Azad University has almost 500 campuses across the country. Iran

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 75 also has more than 350 private non-profit universities. The MSRT is responsible for planning, coordinating and evaluating research projects carried out by its affiliated research institutes (26) and university research labs (356). It recently realigned the emphasis of its policy with industry-academia collaboration that links the research results of research institutes and universities to various industries in order to secure intellectual property rights, promote innovation, and support start-up companies. The IROST (Iranian Research Organization for Science and Technology), as the flagship policy research institute under the MSRT, is dedicated to research on science and technology policies, including new technology planning and commercialization strategies designed to promote science and technology. The Iran National Science Foundation (INSF), an independent government agency, is in charge of the management of S&T research projects and the provision of support for doctoral programs, overseas patent applications and innovation research centers.

The Ministry of Post Telegraph and Telephone (MPTT), originally established in December 2003, has been restructured and renamed as the Ministry of Information and Communications Technology (MICT) and put in charge of ICT infrastructure and aerospace programs. Its main functions now include ICT policy development, law enforcement, service provider licensing, frequency allocation, market and rate regulation, telecommunications services, infrastructure management, and the supervision of equipment manufacturing companies.

1.3. Iran's R&D Investments

The lion’s share of Iran's R&D investments are funded by the government budget, with R&D investment by the private sector currently standing at around 20% of the total R&D expenditure. Although government-led R&D investments are quite common in the developed world, Iran's dependence on government investment accelerated during the period when overseas economic sanctions were hurting the country. The Planning and Budget Organization (PBO) is in charge of planning and allocating R&D budgets as it is responsible for budgeting the general accounts. The sources of Iran's public/private R&D funds are categorized as follows:

- Private investment (venture capital or start-up investment) - Funds established by law: National Development Fund (NDF), Innovation and Prosperity Fund (IPF) - Non-governmental investment (various R&D funds) - Special funds of government agencies (MSRT, MICT, techno parks, start-up support, etc.)

76 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 - Equity investment and direct financing by banks

Iran's total investment amount in the public and private sectors increased from 32 trillion IRR in 2011 to 43 trillion IRR16) in 2013. The amount of government investment in total R&D investment increased from 10 trillion IRR in 2007 to 30 trillion IRR in 2013, i.e. threefold over seven years, with a particularly marked rise in 2011. As a result, the share of public R&D investment as a proportion of GDP rose from 0.35% in 2007 to 0.42% in 2013 (Table 2-4).

[Table 2-3] Iran's investments in science and technology (2011-2013)

Iran's Investments in R&D and Technological Innovations (Unit: 1M IRR) Classification 2011 2012 2013 R&D Investment 32,472,716 39,557,142 43,917,687 Investment in Technological Development and Innovation 3,055,413 3,626,565 4,057,026 Programs Total 35,528,129 43,183,707 47,974,713

Source: A Brief Presentation on Technological Achievements, Iranian Government, August 2014.

[Table 2-4] Amounts of R&D investment with government budgets (2007-2013)

Year R&D Budget R&D Budget as a Percentage of GDP (%) 2007 10,163,992 0.35 2008 14,284,068 0.42 2009 19,874,777 0.56 2010 18,833,435 0.44 2011 22,814,102 0.44 2012 30,401,531 0.49 2013 30,986,305 0.42

Source: A Brief Representation of Technological Achievements, Iranian Government, August 2014,

16) Equivalent to US$1.3 billion according to the exchange rate in March 2017 (1 USD = 32,420 IRR).

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 77 [Table 2-5] Iranian government's ICT budgets

SHARE OF IN ICT BUDGE ICT BUDGET YEAR % CHANCE IRAN'S TOTAL (BILLION IRR) (USD) BUDGET 1391 (2011/12) 13,230 408,807,000 50% 0.81% 1392 (2012/13) 15,335 473,851,500 16% 0.8% 1393(2013/14) 35,779 1,105,571,100 133% 1.52% 1394(2014/15) 56,706 1,752,215,400 58% 2.11% 1395(2015/16) 120,659 3,728,363,100 113% 3.6% 1396(2016/17) 118,485 3,661,186,500 -2% 3.2%

Source: “Iranian Internet Infrastructure and Policy Report”, Filterwatch, December 2016.-

Iran established the Innovation and Prosperity Fund (IPF) in 2012 with the aim of providing intensive support to KBFs in line with the enactment of the Act on Support for the Establishment of KBFs. The Fund invested US$280 million in a total of 1,380 projects between 2012 and 2016, with funding provided to 260 projects in 2015. About 25% of the total amount was invested in ICT KBFs (Table 2-6).

[Table 2-6] IPF investments in knowledge-based firms (2012-2016)

Number Share of IPF of funding for each Industrial and technological field approved activity in total IPF projects funding (per cent) Biotechnology 203 22.2 Electronics 222 12.7 ICT and computer software 201 12.5 Advanced equipment manufacturing, production and 186 10.0 laboratory Advanced medicine and medical engineering 96 8.6 Advanced materials 77 4.0 Aerospace 52 2.1 Nanotechnology 43 1.9 Optics and photonics 30 1.0 Renewable energy 28 0.9 Commercialization services 23 0.1 High-tech products in other fields 218 23.2 Total 1 379 100

Source: Science, Technology & Innovation Policy Review, UNCTAD, 2016.

78 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Private venture funds are still in their infancy in Iran, with only eighteen in operation at the moment. The Technology Development Fund (TDF) legislated during the 3rd Development Plan takes the lead in supporting the Iran Venture Capital Association (IVCA). Those member companies of the association funded by the TDF are mainly engaged in the life science, medicine and pharmacology, and bioengineering sectors where Iran has a comparative advantage.

1.4. Techno Park and Company Support System

As noted above, Iran's national innovation policy based on science and technology began to be implemented in full-swing during the second generation of Iran's S&T policies, especially from 2005 onward when the VPST was launched. Since 2011, Iran has provided direct support to knowledge-based firms (KBFs) through the IPF, in addition to designating science and technology towns (techno parks) and science and technology special zones, and providing venture capital financing.

1.4.1. Techno Parks and Incubation

In a bid to award direct incentives to the tenants of designated complexes and to promote the commercialization of the outcomes of research projects undertaken by universities, the Iranian government has designated and operated Science & Technology Parks (techno parks) since 2002 under the leadership of the VPST and the MSRT17). The techno parks increased in number from just one in 2002 to 38 in 2015, and are now occupied by a total of 3,650 enterprises employing almost 30,000 workers18). According to the Iran Entrepreneurship Association, 99 unlicensed private techno parks are also in operation in Iran, with more than 20 in Tehran, 8 in Fars Province, and 7 in Razavi Khorasan (Table 2-7).

17) Iran to establish Energy Technology Park, downloaded March 13, 2017 (http://en.mehrnews.com/news/103374/Iran-to-establish-Energy-Technology-Park) 18) UNCTAD, Science, Technology & Innovation Policy Review, 2016.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 79 [Figure 2-3] Status of Iran's techno parks (2002-2016)

Source: Science, Technology & Innovation Policy Review, UNCTAD, 2016.

[Figure 2-4] No. of companies based in Iran's techno parks (2012-2016)

Source: Science, Technology & Innovation Policy Review, UNCTAD, 2016.

[Table 2-7] Iran's major techno parks

Name Industrial Fields Location Guilan Science and Technology Agro-Food, Biotechnology, Chemistry, Guilan Park Electronics, Environment, ICT, Tourism. Advanced Engineering (mechanics and 25km Pardis Technology Park automation), Biotechnology, Chemistry, North-East Electronics, ICT, Nano-technology. of Tehran Tehran Sohware and Info ICT Tehran rmation Technology Tehran University and Science Tehran Technology Park Khorasan Science and Advanced Engineering, Agro-Food, Chemistry, Kho rasan Technology Park Electronics, ICT, Services.

80 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 2-7] Continued

Name Industrial Fields Location Materials and Metallurgy, Information and Communications Technology, Design & Sheikh Bahai Technology Park lsfahan Manufacturing, Automation, Biotechnology, Services Semnan Province Technology Semnan Park East Azerbaijan Province East Technology Park Azerbaijan Yazd Province Technology Park Yazd Markazi Province Technology Arak Park Kahkeshan (Galaxy) Technology Aerospace Tehran Park Pars Aero Technology Park Aerospace & Aviation Tehran Energy Technology Park Energy (planned)

Source: https://en.wikipedia.org/wiki/Science_and_technology_in_Iran#cite_note-unctad.org-42

ㅇ Pardis Techno Park (PTP)

The Pardis Techno Park (PTP) was the first techno park to be established in 2002 as part of the VPST's Technology Innovation Cooperation Center Project. It is Iran's flagship techno park in terms of its size and contents. Located just 20km from Tehran, it has excellent geographical advantages. In addition, it offers unlimited access to water and electricity, and is equipped with advanced sewage facilities. The initial investment of US$25 million was spent on building the infrastructure, the Operation & Management Center Building, and the Central Complex. Thereafter, an additional amount of US$300 million was invested in land acquisition, the construction of the R&D Center and Research Labs, and the recruitment of researchers. Currently, some 140 SMEs and startup incubators in the fields of ICT, nanotechnology, biotechnology, electronics, and machinery are based in the Pardis Techno Park.

The Iranian government has continued to establish business incubation centers for the purpose of supporting young researchers' pursuit of creative innovations and helping the regional economy to grow through their technological development. As of the end of 2016, Iran had established more than 170 business incubation centers across the country.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 81 [Figure 2-5] Status of Iran's incubation centers

Source: Science, Technology & Innovation Policy Review, UNCTAD, 2016. A Brief Presentation on Iran's Technological Achievements (2014).

[Figure 2-6] Nationwide distribution of Iran's incubation centers (2014)

Source: A Brief Representation of Technological Achievements, Iranian Government, August 2014. Iran has also set up numerous laboratories devoted to R&D. The number leapt from 3,500 in 2013 to 8,800 in 2015 (Fig. 2-7) and to 12,594 in 201619).

19) Source: Science, Technology & Innovation Policy Review, UNCTAD, 2016.

82 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 2-7] Status of labs designated by Iran's Ministry of Science, Research and Technology

Source: Science, Technology & Innovation Policy Review, UNCTAD, 2016.

1.4.2. The Support System for Knowledge-Based Firms (KBF)

The Iranian government enacted the Knowledge-Based Firm Support Act20) in 2010 to support the pursuit of creative innovation by young researchers working at the techno parks and to promote the growth of local economies through their technological development. According to the Act, the government designates R&D-intensive companies based in techno parks as knowledge-based firms (KBFs), thus entitling them to the following benefits21) (including tax benefits, financial support, and import bans on the relevant KBF products or other similar products):

- Export tax and various tax exemptions (15 years) - Short- and long-term loans at low interest rates for production, supply and innovation costs - Priority of space allocation in techno parks, startup incubation centers and science and technology special zones - Use of government procurement materials and equipment - Purchasing rights to public research institutes slated for privatization - Insurance benefits to reduce risks associated with the development, supply and use of innovative products - Permission to build plants in urban areas

KBFs are entitled to a total of 51 extra benefits, of which 21 are designed to support

20) The Knowledge-Based Firm Support Act also includes the Innovation and Prosperity Fund (IPF), which was set up in 2012 to promote KBFs' R&D investment and the commercialization of developed technologies. The IPF raised 4,000,060,000,000 IRR (approx. US$1,000,071,000,000) by 2014, and aimed to raise a total of 8 trillion IRR by 2015. It is legally required to allocate 0.5% of the government budget to the IPF each year after its basic funding is completed. 21) How sanctions helped Iranian techindustry, http://www.al-monitor.com/pulse/originals/2016/02/iran-tech-it-sector-post-sanctions-relief-development.html

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 83 their exports in a direct way. By the end of 2016 Iran had a total of 2,732 designated KBFs with more than 70,000 employees, and the country now aims to increase the number to 3,000 by the end of March 2017. The KBF project lies at the core of the various knowledge-based firm support programs aimed at incorporating the outcome of R&D efforts into business performance as part of a drive to increase synergistic effects by assisting Iranian businesses' efforts to develop high value added products and services.

[Figure 2-8] Status of KBF designation in Iran (2014-2016)

Source: Science, Technology & Innovation Policy Review, UNCTAD, 2016.

In order to be designated as a KBF, a company must possess at least one of fourteen core technologies including biotechnology, nanotechnology, materials, software, pharmacology, renewable energy, crude oil and gas equipment, cognitive science, medical equipment, climate change related technologies, water resources, and soil erosion control technology. The major export items of KBFs based in techno parks and startup incubation centers include aerospace products, computers, pharmaceuticals, scientific equipment and facilities and electrical machinery. The export volume has significantly increased since 2014.

[Figure 2-9] Exports by KBFs based in techno parks and startup incubation centers

Source: Science, Technology & Innovation Policy Review, UNCTAD, 2016,.

84 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 The efforts to support techno parks figure among the concrete policy measures implemented by the Iranian government to reduce the volume of petroleum exports and to boost exports of non-petroleum sectors, with the ultimate goal of developing the country into the leading manufacturing powerhouse in the Middle East, as set forth in the national vision22). When it comes to exports by the non-petroleum sector, they still account for only 1% of the country's total exports. However, the fact that the export of products with a medium level of technology intensity stands at 30.7% is indicative of the high potential of Iranian industry to advance into technology-intensive manufacturing.

For the past ten years, Iran has made great strides in strengthening its science and technology capabilities with the aim of making the transition to a knowledge-based economy. To accelerate the development of the country's civilian economy by linking outstanding R&D achievements with industrial performance, the Iranian government provides industries with various forms of direct support including free plant sites and financial assistance.

1.5. Iran's ICT-devoted Research Institute (ITRC)

As an organization under the Ministry of Information and Communication (MICT), the Iran Telecommunication Research Center (ITRC) in Tehran is Iran’s oldest and best national research institute in the field of information and communication. It was launched in 1970 as an affiliate laboratory of the University of Tehran to conduct joint research between the Iranian and Japanese governments on wireless communication technology. In 1973, the ITRC became a research lab of the Ministry of Trade, Industry and Energy as it was entrusted with ICT research and policy consulting for the Iranian government. The ITRC was restructured as a research institute in 1997, while in 2005 (SH 1384) it became the ICT Research Association comprising three research institutes. In 2012 (SH 1391), it was upgraded as a research center.

The ITRC has offered undergraduate courses since 1997 in its capacity as an accredited university starting in 2005. As of 2017, the ITRC employs about 800 professors and researchers. Its administration is handled by Deputy 1 (external research cooperation, commercialization, PR, etc.) and Deputy 2 (purchase, finance, personnel management, etc.). Its research, technology development and ICT policy research are carried out by the CT Lab, IT Lab, ICTS Lab, PSS Lab, which also offer specialized education and training in their respective fields (Fig. 2-10).

22) In fact, revenues from the non-petroleum sector increased to 56% of Iran's total revenues in 2012-2014 compared to 20% and 31% in Saudi Arabia and the UAE, respectively, which is a clear indication that Iran is laying robust foundations for the manufacturing sector.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 85 The mission statement of the ITRC sums up its tasks as assisting the MICT and other government agencies in policy development and consulting in the ICT sector; conducting R&D in the field of ICT; collaborating with universities, research centers, standards organizations, and ICT firms at home and abroad; and upgrading the calibration facilities and competences of laboratories. In short, the ITRC serves as a policy adviser and a think tank for the MICT by carrying out ICT consulting and research tasks at the same time.23) Its R&D efforts are focused on the development of technologies as specified in the country's 5-year development plans in the ICT sector. The ITRC's major missions and roles are as follows:

- To establish, develop and improve research topics in the field of ICT in order to achieve the relevant goals in the country's 20-year vision plan; - To expand ICT knowledge base promotion of and ICT studies through in-house or commissioned research; - To collaborate with techno parks, national academic institutes and universities. - To provide support for research conducted by industries and private research institutes; - To collaborate with international research institutes and academic institutions.

23) ITRC website (https://www.itrc.ac.ir)

86 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 2-10] ITRC organizational chart

Source: ITRC website (https://en.itrc.ac.ir)

The Iranian government's core ICT policies as specified in the 6th Development Plan include a wide series of measures aimed at increasing the nation’s data transmission volume, realizing e-Government, and developing local information networks by improving their data transmission capacity and expanding the transmission bandwidth in cyber space. The ITRC is currently concentrating on building the NIN (Iran National Information Network).

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 87 [Figure 2-11] Conceptual map of the NIN

Source: Iranian delegates' presentation materials at the visiting fellows training workshop, April 20, 2017

The Iranian government is fully responsible for the construction and management of the NIN, whose principal objectives include building a network capable of supplying a variety of contents and services from all around the world to the entire country with high-quality mobility; equipping the network with encryption technology and the digital signature function to enable citizens to use the service safely; and realizing a stable high-speed communication between public data centers and major government agencies. By securing the successful operation of the NIN, the Iranian government aims to achieve the following tangible results:

- Full control of cyber space by the nation; - Increased positive socioeconomic effects of the ICT industry ; - Greater benefits for the general public via the provision of superior contents and services; - Security against external threats and cybercrime; - Creation of a reliable Internet environment that guarantees convenience for the public; - Efficient management of national information resources; - Protection of the national ICT infrastructure against cyber threats; - Cyber law enforcement, personal security, and intellectual property protection; - Promotion of domestic and overseas commercialization of ICT knowledge and technology.

88 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 2-12] NIN service map

Source: Iranian delegates' presentation materials at the visiting fellows training workshop, April 20, 2017.

During the 6th Development Plan, the ICT sector is striving to enhance the network functions of telecom carriers by improving the IP network functions, increase the transmission capacity of data centers, and expand the number of access networks. To that end, the ITRC conducts intensive research both on its own and in partnership with universities, among other entities. The current main research tasks and goals set by the ITRC are as follows:

- High-capacity Transmission Radio -Product Base - 4G/LTE Access-Product Base - 5G -Research BASE - IoT -Research & Product BASE - Optical & IP Networks -Product BASE - FAB -Research & Product BASE - BIG DATA-Research & Product BASE - Cloud-Research & Product BASE - Search Engine-Research & Product BASE

The ITRC focuses its ICT research management and organizational operations on productive R&D with the goal not only of achieving technological advances but also that of securing independence and self-sufficiency in R&D. The ITRC consists of four categories of laboratories: communication technology (CT), information technology (IT), ICT security

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 89 (ICTS), and policies & strategic studies (PSS). The ITRC is both Iran's ICT research and development hub and a major adviser to the government on ICT policies. The four categories of labs are now engaged in the following research tasks:

(1) CT Labs: high-speed transmission technology (millimeter wave, microwave, etc.), 4G mobile communication and LTE technology (micro cell, small cell, eNodeB, modem technology), 5G technology (test bed, C-RAN, etc.), IoT technology (M2M, sensor, platform, etc.), optical network/IP network (SDN/NFV, DWDM, xPON, etc.); (2) IT Labs: big data, cloud computing, search engines; (3) ICTS Labs: semiconductor FAB technology (chipset, IoT sensor, 5G parts, etc.); (4) PSS Labs: ICT policies and digital economy.

1.5.1. CT Labs

The CT labs are primarily dedicated to the development of communication systems and research on new technologies, but also advise the MICT and its affiliates on wired/wireless communication network technology and communication policies. They now place particular focus on acquiring new technologies for the latest mobile communication networks, such as IoT, SDN and 4G/5G, and conduct research on equipment development and services for the monitoring and calibration of mobile communication and satellite systems in addition to equipment test certification.

[Figure 2-13] CT Lab organizational chart

Source: Iranian delegates' presentation materials at the visiting fellows training workshop, April 20, 2017.

90 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 1.5.2. IT Labs

The IT labs conduct research on information technology—such as information storage, data management and information transmission, and information service technology, and construct the relevant platforms. They are now carrying out research on the latest information management technologies such as text mining, which will be applied to database management by the MICT and its affiliated organizations. They are also conducting research on IT-based application technologies such as big data, search engines, and cloud computing. The labs are also engaged in the research on cutting-edge technologies such as image/sound/ video processing and retrieval technologies, cloud computing services, e-services, multimedia, and HCI.

1.5.3. ICTS Labs

The ICTS labs conduct research on information security technologies to counter all types of cyber threats, and provide technical support and advice on information security to the MICT and its affiliates. They also carry out research on basic information security technologies, applications and policies. They are also charged with the development of applicable tools in the security technology field, as well as being responsible for the operation and management of the Security Information & Event Management (SIEM) for website test certification and monitoring.

[Figure 2-14] ICTS Lab organizational chart

Source: Iranian delegates' presentation materials at the visiting fellows training workshop, April 20, 2017.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 91 1.5.4. PSS Labs

The PSS labs conduct research on ICT policies, technology forecasting, legislation, entrepreneurship and the digital economy. They also carry out research on ICT strategies, regulatory systems, and the digital economy on behalf of the MICT and its affiliates, and research on Internet business models, etc. in Iran's cyberspace, too. To promote technology transfer and commercialization, they have set up policies aimed at attracting investments from home and abroad, and designate and manage the country's techno parks in the ICT sector.

[Figure 2-15] Major research areas of the ITRC

Source: Iranian delegates' presentation materials at the visiting fellows training workshop, April 20, 2017.

92 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 2. Korea's National R&D Strategies

2.1. Korea's National R&D Policies and Implementation Systems

The Korean government enacted the 'Framework Act on Science and Technology' in 2001 to contribute to the national economic development, and to further elevate the quality of life and develop human society by establishing the basis for the development of science and technology, innovating science and technology, and strengthening national competitiveness. The National Science and Technology Commission (NSTC) decided to select and nurture 77 core technologies24) out of 361 technologies from six categories of promising new technologies by means of strategic prioritization.

The six categories included IT (information technology), BT (biotechnology), NT (nanotechnology), ST (space technology), ET (environment and energy technology) and CT (cultural technology) [See Table 2-8].

[Table 2-8] Promising new future technologies (6T)

Category Core technologies by category  Key components (terabit-class optical communication parts technology, integrated circuit technology, etc.),  Next-generation network bases (4th-generation mobile communication, IT large-capacity optical transmission system technology, etc.)  Information processing systems and software (multimedia terminals and operating system technology, information security and password technology, etc.)

 Basic technologies (genome-based technology, protein research, etc.), healthcare-related applications (biomedical drug development technology, BT intractable disease treatment technology, etc.)  Applications (genetically-modified organism technology, preservation and utilization technology of agricultural and marine living resources, etc.)

 Nano devices and systems (nanoelectronic device technology, nano information storage technology, etc.), nanomaterials (nanomaterials technology, etc.), nanobio healthcare (nanobio material synthesis and analysis NT technology, pharmaceutical drug delivery systems, etc.), nano-based processes (atomic and molecular level material handling technology, nano measurement technology, etc.)

24) There are 12 technologies in IT, 17 in BT, 14 in NT, 9 in ST, 18 in ET and 7 in CT.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 93 [Table 2-8] Continued

Category Core technologies by category  Satellite technology (satellite design and development technology, satellite control technology, etc.),  Launch vehicle technology (rocket propulsion engine technology, small satellite ST launch vehicle development technology, etc.),  Aircraft technology (aircraft system synthesis and flight performance based technology, intelligent autonomous flight unmanned airplane system, etc.)  Basic environmental technologies (air pollutant abatement and elimination technology, natural environment/contaminated soil/groundwater purification and restoration technologies, etc.), energy (energy material technology, untapped energy utilization technology, etc.) ET  Clean production (public clean source technology, environmentally-friendly material (Eco-material) development technology, etc.)  Marine environment (ocean environment-related technology, coastal ecosystem restoration technology, etc.)  Cultural contents (virtual reality and artificial intelligence application technology, digital image/sound/design technology), life culture (cyber CT communication technology, interactive media technology, etc.)  Other technologies not included in the above 6T categories

Source: 2015 Performance Analysis of National R&D Programs, Ministry of Science, ICT and Future Planning/KISTEP, 2017.

Korea's national R&D is characterized by a greater focus on the economic development sector than other advanced countries. However, government policies focused on industrial production technologies are likely to raise the issue of redundancy between the government and the private sector. In the 2000s, the Korean government began to pay close attention to the proper allocation of R&D resources between the public and private sectors. The Korean government concluded that the traditional catch-up R&D strategy was very effective for Korea's technology development but that it was no longer effective with regard to the recent Korean science and technology situation, including rapid advances made in the ICT field. Thus Korea shifted to a creative type of R&D system in the 2010s.25) Through the 'Comprehensive Action Plan for Future New Growth & Industrial Engines of 2015,' the Korean government shifted its focus from quantitative expansion to strategic expansion of its R&D investments and divided the roles of the public and private sectors for the redundant investments made by them.

25) Of the government's total R&D investment in 2014, 48.9% (KRW 6,0899 trillion) was invested in development research, followed by 30.9% (KRW 3,8535 trillion) in basic research, and 20.2% (KRW 2.5214 trillion) in application research. The proportion of basic research rose considerably between 2009 (25.3%) and 2014 (30.9%), indicating that the government placed considerable emphasis on creative R&D in the 2010s.

94 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Korea's national R&D system has developed consistently over the past thirty to forty years thanks to the government's strong commitment to fostering science and technology as a driving force of the national economy. As of 2017, Korea's national R&D project promotion system is composed of four tiers: policy coordination and budget allocation, government R&D strategy planning, government R&D commissioning, and research execution. Korea's national R&D project budget is implemented on a delegation- and-distributed-control basis with the various ministries concerned taking the lead in planning and managing their own R&D budgets. Most of the R&D budget planning at the ministerial level is done by each ministry's flagship research management institution (e.g. STEPI, NST, KISTEP, etc.), which is responsible for not only R&D task management and budget implementation but also for R&D budgeting with the assistance of each ministry's Expert Council. As such, Korea's R&D programs are actually planned and promoted through collaboration between a number of organizations including the government, the NST (National Research Council of Science and Technology), and the departments in charge of R&D at the ministerial level, as well as research institutes, universities and businesses that are directly involved in R&D (See Fig. 2-16).

[Figure 2-16] Organizational chart for the promotion of national R&D projects

Source: STEPI, Suggestions for Improvements in the Government's R&D Strategies and R&D Promotion System (Policy Research, Vol. 2016-03), Dec. 2016.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 95 1) Tier 1 consists of coordinating the tasks and policies of the relevant departments under the Government Organization Act, which are carried out by the Presidential Advisory Council on Science and Technology (launched in 2016) and the National Science & Technology Council.

2) Tier 2 consists of governmental R&D strategy planning and supervision of research councils, which is carried out by each ministry within the scope provided under the Government Organization Act. R&D strategy planning is implemented by committees composed of members of the National Research Council of Science & Technology (NST) and the research management organizations of the relevant ministries.

3) Tier 3 consists of the NST, which is the main pillar in the implementation of national R&D projects, and the research management organizations responsible for executing government R&D projects commissioned by ministries.

4) Tier 4 consists of research institutes, universities and companies that directly conduct research. The government ensures that national R&D projects are carried out properly according to the original intentions and purposes, R&D budgets are executed appropriately, and innovative R&D is conducted autonomously by groups of highly talented experts.

[Figure 2-17] National R&D project planning process

Source: ETRI, 2014.

96 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 2.2. Development process of national R&D programs

2.2.1. Government ministry-led R&D

Until 1982, Korea did not have any R&D programs that were directly funded and managed by the government (hereinafter referred to as 'national R&D programs26)) with state-funded research institutes (hereinafter referred to as 'state-funded research institutes') conducting the actual R&D in the areas required by the nation’s industries. Starting with the Specific R&D Programs27) promoted by the government in 1982, Korea launched the current national R&D support program on the basis of competition among industry, academia, and research organizations for research programs with the highest priority by referring to the S&T promotion policy models of various developed countries.

In the 1980s, Korea's Ministry of Science and Technology served as the driving force behind the development of the country's high-tech industries— including semiconductors, IT, and automobiles—by leading R&D investments in those areas with the aim of fostering those industries. In the 1990s, Korea’s government R&D support schemes underwent a structural change as the government launched the government-wide national 'Leading Technology Development Program' based on a selection and concentration strategy, while various government agencies such as the Ministry of Information and Communication, the Ministry of Commerce, Industry and Energy (MOCIE), the Ministry of Environment, the Ministry of Education, and the Small and Medium Business Administration were active in promoting their own R&D projects. Most notably, the MOCIE not only supported technology development programs but also consolidated the base for industry-academia technological collaboration while implementing technology base construction projects. Towards the end of the 1990s, Korea was reeling from the aftermath of the so-called IMF economic crisis. In response, the government launched venture business promotion

26) National R&D Programs are goal-oriented R&D projects strategically pursued by the government. Overseas, government-sponsored R&D projects are generally referred to as government R&D programs in that they are carried out by government agencies in relation to their respective administrative duties. Korea's national R&D programs reflect its national development strategies most prominently among the country's government R&D programs. They are performance-oriented R&D programs executed through strategic integration of the country's total R&D capabilities (Lee Jong-shik and Lee Dong-gyu, 1995, p. 50). 27) Specific R&D programs were initiated in 1982 by the Ministry of Education, Science and Technology based on the 'Technology Development Promotion Act' in order to foster Korea's national science and technology abilities and to advance the country's core industrial technologies. It was Korea's first full-fledged national R&D program. The programs were launched as Korea needed to optimize the utilization of its national R&D resources at a time when the developed world was resorting to technology protectionism amid a severe economic recession. In order to increase individual and collective R&D investments by private companies and government-funded research institutes and to promote collaborative research among industry, academia and research institutes, the government launched 'specific R&D programs' with some of the R&D budget it provided to them individually. (Source: google.co.kr, National Archives of the Ministry of the Interior)

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 97 policies, while the Small and Medium Business Administration emerged as a main R&D promotion agency. It was at this time that various ministries such as the Ministry of Environment, the Ministry of Construction and Transportation, the Ministry of Education and the Ministry of Commerce, Industry and Energy began to rapidly increase their R&D budgets.

[Figure 2-18] National R&D operating system

Source: Young B. Choi, 2016/2017 KSP Interim Reporting Seminar, April. 20, 2017.

2.2.2. Development of the NST system

In 1999 the Korean government established what is now called the NST28) with the remit of supporting, fostering and managing the state-funded research institutes under its ministries and driving forward the development of national research projects and the knowledge industry. The organization was launched in a bid to put an end to the severe interference with the flexible and creative research activities of research institutes caused by the ministries' direct management of research institutes. In 1999, the Prime Minister's Office founded five national research councils (i.e. the National Research Council of Economics and Social Sciences, National Research Council of Humanities and Social Sciences, Korea Research Council of Fundamental Science and Technology, Korea Research Council of Public Science and Technology, and Korea Research Council for

28) The NST system was introduced for the purpose of guaranteeing the managerial autonomy and research flexibility of state-funded research institutes, supporting their creative research activities, and boosting excellence in research (www.nst.re.kr).

98 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Industrial Science & Technology), with forty-two state-funded research institutes placed directly under them. In 2004, the three research councils related to science and technology (fundamental, public, and industrial technology research councils) were transferred from the Prime Minister's Office to the Ministry of Science and Technology. In 2005, the National Research Council of Economics and Social Sciences, and the National Research Council of Humanities and Social Sciences under the Prime Minister's Office were integrated into the National Research Council for Economics, Humanities and Social Sciences. In 2008, the Korea Research Council of Public Science and Technology was dissolved. The Korea Research Council of Fundamental Science and Technology was transferred to the Ministry of Education and Science Technology, and the Research Council for Industrial Science & Technology was transferred to the Ministry of Knowledge Economy. In 2014, the Korea Research Council of Fundamental Science and Technology and the Korea Research Council for Industrial Science & Technology under the Ministry of Science, ICT and Future Planning were integrated into the NST. Thus the National Research Council for Economics, Humanities and Social Sciences (with 26 state-funded research institutes) is now under the control of the Prime Minister's Office while the NST is under the control of the Ministry of Science, ICT and Future Planning (See Table 2-9).

[Figure 2-19] Current Status of the NST

Source: Young B. Choi, “2016/2017 KSP with Iran”, 2016/2017 KSP Interim Reporting Seminar, April. 20, 2017.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 99 [Table 2-9] Roles of the NST's affiliated research institutes

Research Institute Principal Role To conduct R&D on creative source technology to lead Korea Institute of Science and national science and technology and to disseminate the Technology (KIST) results. To support collaboration and cooperation between countries Green Technology Center (GTC) in relation to green technology R&D and policy establishment and green technologies. Korea Basic Science Institute To conduct R&D and provide support for research facilities (KBSI) and equipment and analytical science and technology. National Fusion Research Institute To support new quest and conduct R&D in the field of (NFRI) nuclear fusion energy and disseminate the results thereof To promote academic research and technology development Korea Astronomy and Space in the fields of astronomy and space science and Science Institute (KASI) disseminate the results thereof. Korea Research Institute of To construct and operate R&D and public infrastructure Bioscience and Biotechnology in the field of life science and technology. (KRIBB) Korea Institute of Science and To serve as a specialized research institute in the field of Technology Information (KISTI) national scientific and technical information. Korea Institute of Oriental To conduct R&D on oriental medicine theories, skills and Medicine (KIOM) practice and disseminate the results thereof. To develop and commercialize original technologies in the Korea Institute for Industrial field of production, provide technical support to SMEs, and Technology (KITECH) disseminate the results. Electronics and To develop original technologies in the fields of ICT, Telecommunications Research electronics and broadcasting and promote their industrial Institute (ETRI) convergence, and disseminate the results. National Security Research To develop 21st-century-type national information security Institute (NSRI) technologies including cybersecurity technologies. Korea Institute of Civil Engineering To develop original technologies in the fields of construction and Building Technology (KICT) and land management and disseminate the results thereof To conduct R&D in the fields of public transportation, Korea Railroad Research Institute including railway and logistics, and disseminate the results (KRI) thereof. Korea Research Institute of To establish national standards and conduct the related Standards and Science (KRISS) R&D, and disseminate the results. Korea Food Research institute To conduct R&D and provide technical support in the food (KFRI) sector, and disseminate the results. To conduct R&D in the field of kimchi and disseminate the World Institute of Kimchi (WIKIM) results. To conduct domestic and overseas onshore and seabed Korea Institute of Geoscience and geological surveys; explore, develop and utilize natural Mineral Resources (KIGAM) resources; conduct R&D on geological disasters and globa environment changes and disseminate the results thereof. Korea Institute of Machinery and To conduct R&D and support reliability evaluation in the Materials (KIMM) machinery sector and disseminate the results thereof.

100 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 2-9] Continued

Research Institute Principal Role To develop original technologies and disseminate the results Korea Institute of Materials thereof, and provide test evaluation support in the materials Science (KIMS) field To support new quest, technology leadership, and Korea Aerospace Research technology development in the field of aerospace science, Institute (KARI) and disseminate the results thereof. Korea Institute of Energy Research To conduct R&D in the energy technology field and (KIER) disseminate the results thereof. To develop original technologies, disseminate the results, Korea Electro-technology and provide a test/certification service in the fields of power Research Institute (KERI) and electricity. To conduct R&D and provide public infrastructure support Korea Research Institute of in the fields of chemistry and the related convergence Chemical Technology (KRICT) sectors. To conduct a safety assessment study and develop the Korea Institute of Toxicology related technology for various substances such as chemicals (KITOX) and biomaterial. Korea Atomic Energy Research To conduct R&D in the nuclear technology field and Institute (KAERI) disseminate the results thereof.

As public institutions that are responsible for setting Korea's ICT R&D policies and providing R&D related support, Korea has founded the following institutions: National IT Industry Promotion Agency (NIPA), Korea Communications Agency (KCA), Korea Internet Security Agency (KISA), National Information Society Agency (NIA), and Korea Data Agency (Kdata). NIPA supports policy research and establishment for the ICT industry and lays the foundations for continuous industrial development through the cultivation of ICT experts, among its various roles. Its affiliated institution, the Institute for Information and Communications Technology Promotion (IITP), provides ICT R&D support for the development of new technologies and growth of the industry, assigns ICT R&D policy researchers the roles of establishing technological development strategies and managing R&D tasks, cultivates ICT experts, and carries out the administration of the Fund for the Promotion of Information and Communications, which amounted to about KRW 760.9 billion as of 2015. The KCA is responsible for promoting the broadcasting and telecom convergence industry and managing radio resources and the Broadcasting Communications Development Fund. KISA responds to cyber-attacks, builds the national information protection infrastructure and supports the Internet information security industry. The NIA sets ICT convergence policies, including those related to intelligent information technologies, studies the relevant laws and systems, identifies new ICT-based

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 101 public services, and builds and operates public data platforms. Kdata enhances the country's data utilization capabilities and contributes to the development of the DB industry in a variety of ways.

The Korean government also provides indirect support to various associations such the Korea Radio Promotion Association (RAPA), the Korea Institute of Advancement of Technology (KIAT), the Korea Telecommunications Technology Association (TTA), and the Korea Telecommunications Operators Association (KTOA), as well as expert groups and societies such as the Open Standards and Internet Association, the Institute of Electronics and Information Engineers, the Korea Institute of Electronic Communication Science, the Korean Institute of Electromagnetic Engineering and Science, and the Korean institute of Information Scientists and Engineers.

2.3. Current Status of R&D Investments

The total amount of Korea's total R&D investments (including public and private investments) as a proportion of GDP rose from 2.83% (KRW 27.35 trillion) in 2006 to 4.23% (KRW 65.956 trillion) in 2015, posting an average annual growth rate of 10.3%. As such, Korea's GERD/GDP ratio is the highest in the world, exceeding the 2.74% recorded by the United States (2013), 3.59% for Japan (2014) and 2.90% for Germany (2014). Thus, Korea currently ranks 6th in the world in terms of the total investment amount (See Fig. 2-20).

[Figure 2-20] Status of Korea's R&D Investments

Source: White Paper on S&T Statistics 2016, Ministry of Science, ICT and Future Planning and KISTEP, 2017.

102 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 In terms of R&D investments in new growth engines (6T) in 2013-2015, Korea invested KRW 63.51 trillion (33.6%) in IT, followed by KRW 24.84 trillion (13.1%) in NT and KRW 18.82 trillion (10%) in ET, indicating that Korea placed particular emphasis on IT investments during that period.

[Table 2-10] R&D investment in Korea's promising new future technologies

(Unit: KRW 100 million) Year IT BT NT ST ET CT Others Total 2013 202,612 45,043 78,193 7,312 60,359 4,346 195,145 593,010 2014 219,391 48,097 83,587 7,088 65,577 4,917 208,683 637,340 2015 213,099 59,946 86,609 13,049 62,271 7,027 217,593 659,594 Total 635,102 153,086 248,389 27,449 188,207 16,290 621,421 1,889,944 Ratio 33.6% 8.1% 13.1% 1.5% 10.0% 0.9% 32.9% 100%

Source: White Paper on S&T Statistics 2016, Ministry of Science, ICT and Future Planning and KISTEP, 2017.

In 2015, Korea spent KRW 18.85 trillion, or 28.6% of its total national R&D investment, on the development of new technologies with the aim of enhancing national competitiveness and developing the national economy. The Korean government invested about KRW 8.7814 trillion, or 46.5%, of its budget, in support for the development of new technologies and in R&D projects carried out by national/public research institutes. Therefore, the basic S&T policy of the Korean government can be summed up as the provision of intensive support for national and public research institutes and the promotion of their research results to Korea’s industries.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 103 3. A Case Study on the Activities of Korea's ICT Research Institute (ETRI)

The success of Korea's ICT industry is attributable to the intensive input of resources and the development of excellent human resources based on role-sharing and cooperation between the public and private sectors. For the past thirty to forty years the Korean government has never shrunk from its exceptionally strong commitment to fostering its ICT industry as the backbone of national development through the selection and concentration of strategic areas, cooperation between the government and industry/academia/research institutes, and continuous investment in HR development. The core of the Korean government's ICT industry support has focused on the establishment of state-funded research institutes combined with the appropriate policy development and implementation concerning their operations. This section will observe closely the exceptionally successful case of ETRI (Electronics and Telecommunications Research Institute), a government-funded ICT-devoted research institute.

3.1. Establishment of Government-funded Research Institute (ETRI)

ETRI was established with the aim of contributing to the country's economic and social development by seeking new knowledge and creating new technologies in the fields of ICT, electronics, and broadcasting and their conversion technologies, disseminating the research results, and cultivating experts in the ICT industry. Upon its inception, ETRI set itself the clear target of becoming 'the world's top ICT research institute,’ and it now Korea's flagship government-funded research institute and one of the best IT research institutes in the world. ETRI's main tasks include research and development in the areas of ICT, electronics and broadcasting and the related conversion technologies; research on information security and standardization; the training of experts in science and technology; the provision of technical guidance to industries; and cooperation with domestic and foreign research institutes. Founded in December 1976, ETRI has now been in operation for more than forty years, and has around 2,400 employees (1,800 researchers, of whom 50% hold doctoral degrees) as of 2017. ETRI's budget for 2016 amounted to about KRW 600 billion, including government-funded research projects (KRW 91.2 billion), government-funded and government-commissioned projects (KRW 467.7 billion), private sector research projects (KRW 26.9 billion), and other research projects (KRW 13.9 billion).

104 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 3.1.1. Background to Organizational Changes

As it continued to implement its five-year economic development plans in the 1970s, Korea found itself faced with the need to set up specialized research institutes to meet the demand for diverse new technologies. Fully aware that only independent technology development could fuel sustainable national economic growth, Korea enacted the Specific Research Institutes Support Act, established government-funded research institutes in nine areas, and invested massively in the development of science and technology.

The Korea Telecommunications Research Institute (KTRI), ETRI’s predecessor, was established as an affiliate of KIST in December 1976 to take charge of the introduction and development of electronic telephone exchangers. In January 1978 it became an independent research institute equipped with a full-scale R&D system. Meanwhile, the Korea Institute of Electronics Technology (KIET), which was launched in 1976 with the aim of fostering electronics fields such as semiconductors and computers, entered the domain of research and development, testing and inspections in 1978. Shortly thereafter, research institutes around the world were required to integrate their research in the areas of telecommunications and electronics according to the rapid development of the IT industry as well as to the need to improve their organizational efficiency. Thus, KTRI and KIET were merged into ETRI in 1985. (Fig. 2-21)

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 105 [Figure 2-21] ETRI timeline

Source: 35 Years’ History of ETRI, ETRI, 2012.

3.1.2. Creation of Research Facilities

Research facilities are an important factor in the successful execution of research and development projects along with manpower and budgets, and thus serve as a yardstick of the development level of research institutes. At the time of its establishment in the mid-1970s, ETRI did not have its own research building, and its researchers worked in numerous leased buildings. In 1983, however, ETRI moved into Daedeok Innopolis and its research facilities continued to expand through the 1990s. With just one research building in 1983, ETRI now has twelve research buildings in Daedeok Innopolis and numerous regional research centers in the country's major cities (as of 2017).29) Each research

29) ETRI's regional research centers include the Honam Research Center based in Gwangju Metropolitan City, which was established in 2004 as a hub for fostering regional strategic industries through R&D on IT convergence technology, and the Daegu-Gyeongbuk Research Center, which was founded in 2011 to enhance

106 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 building in Daedeok Innopolis has its own open laboratory and communication space for the free exchange of creative ideas among researchers. As one its employee welfare facilities, ETRI has built a high-quality outdoor broadcasting system for a walkway that runs around the entire ETRI complex so that researchers can enjoy quality music and relaxation during their lunchbreaks.

3.2. Organizational Operation

ETRI was born from the national goal of achieving economic growth based on the development of information and communication technology. Behind the incredible growth of ETRI from a small research institute in a country with virtually no science and technology base into a world-class research institute was the government's long-term vision and specific goals to be achieved over a number of decades. The following constitute a summary of ETRI's organizational operations and achievements in a variety of fields for the past forty years.

3.2.1. Vision and Management Philosophy

As explained above, what is now ETRI was born in 1985 as a comprehensive research institute in the fields of electronics and telecommunications by merging two research institutes. That same year, ETRI set itself the goal of 'developing into the world's top research institute by 1996' and adopted the 'spirit of excellence'' as its ideology to achieve that objective. Although that goal seemed somewhat unrealistic and far-fetched back in 1985, the management's commitment was clear: ETRI was to expand its horizon to the entire world and compete with global powerhouses in the realm of science and technology. From the late 1980s to the early 1990s, ETRI focused on developing the country's own basic technologies via the implementation of large-scale national projects such as TDX and ultra-high-density semiconductors (DRAM). As a quantitative comparison with overseas top-tier research institutes, ETRI came up with the 3P (paper, patent and product) evaluation criteria and aimed to produce 1,000 papers (including 300 international papers), apply for 700 patents (including 100 overseas patents) and complete 20 technology transfer programs by 1996.

the added-value of the key industries based in Daegu and Gyeongbuk and provide them with new growth engines.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 107 [Figure 2-22] Management philosophy from the 1980s to the beginning of the 1990s – [IMPH]

Source: 35 Years’ History of ETRI, ETRI, 2012.

During the period of economic difficulties caused by the foreign exchange crisis in the late 1990s, ETRI implemented 'Innovative Management' to actively respond to changing business environments by pushing ahead with organizational restructuring, internal reforms, start-up support, and the recruitment of top talents. With this initiative ETRI sought to achieve the 2M’s (Minimization of Costs, Maximization of Royalties) based on the 3C’s (Challenge, Creativity, and Customer). In the R&D sector, ETRI selected prominent research tasks in terms of sophistication, superiority, economic feasibility and marketability. It boosted its operational efficiency by continually improving its regulations and procedures based on the quantification, transparency, and predictability of all its research activities and administrative practices.

[Figure 2-23] Management philosophy at the end of the 1990s - [Innovative Management]

Source: 35 Years’ History of ETRI, ETRI, 2012.

108 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 However, the 'Innovative Management' initiative was accompanied by certain notable side effects. In particular, researchers were faced with serious internal conflicts in the process of restructuring, in addition to the tougher R&D environment occasioned by budget cuts. In 2001, ETRI launched the 'New Management' initiative with the purpose of resolving the conflicts that had emerged while trying to overcome the IMF crisis and helping its employees make great strides in developing their personal competency.

[Figure 2-24] Management philosophy at the beginning of the 2000s - [Refreshed Management]

Source: 35 Years’ History of ETRI, ETRI, 2012.

To implement its 'New Management’ scheme, ETRI set the vision of becoming 'the World's Top ICT Research Institute of the 21st Century' based on the following three management visions refreshed management, quality management, and knowledge management. ETRI further specified its corporate vision as “a research institute that possesses numerous world-class intellectual property rights, that employs numerous world-class prominent researchers, and that has the world's highest royalty revenue per researcher.”

ETRI also set itself the following mid- to long-term quantifiable management goals: promote the development of original technologies, expand the share of large-scale tasks,

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 109 and accelerate the transfer of developed technologies. In accordance with the abovementioned management philosophies and goals, ETRI executed large-scale national R&D projects with huge technological and economic ripple effects, such as the 4G mobile communication technology, next-generation Internet server technology, next-generation active network information security system, high-speed optical access network technology, and intelligent integrated information broadcasting technology (Smar TV).

[Figure 2-25] [Creative Management] at the end of the 2000s

Source: 35 Years’ History of ETRI, ETRI, 2012.

At the end of the 2010s, ETRI set its vision as a 'Smart & Green Technology Innovator,' which basically meant that ETRI would strive to realize 'Smart IT' in order boost the intelligence, sophistication and convergence of information technologies and reflect the latest cultural trends - characterized by such traits as engagement, sharing and opening - in order to empower users to enjoy a user-oriented pleasant, comfortable and affluent lifestyle. It also meant that ETRI would strive to realize 'Green IT' to help the country realize green economic growth through 'green IT development' and 'green IT convergence.' To achieve this vision, ETRI set itself the following three major management goals: to develop innovation-type national strategic technologies; to secure value creation-type knowledge properties; and to commercialize industrial growth acceleration-type technologies. To accomplish these goals, ETRI set the following five strategies: construction of a creativity/convergence planning system; construction of a global open R&BD platform;

110 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 promotion of new business strategies for intellectual assets; construction of a new eco-system for technology commercialization; and cultivation of creative talent. ETRI set creativity and productivity as its basic management principles. As the ideal ETRI member, ETRI presented 'the future creator equipped with spirit, creativity and communicative ability' as the ideal ETRI member. As such, ETRI sought to foster all its employees into talents characterized by 'challenges and passion’ (spirit), ‘originality and innovation’ (creativity), and 'connection and consideration’ (communication).

3.2.2. Talent Management

Over the past four decades, ETRI's 'talents' have enabled the research institute to successfully execute a number of remarkable R&D projects related to TDX, DRAM, CDMA, DMB, WiBro, 4G mobile communication, and LTE-Advanced among others. From the outset, ETRI has continued to hire highly qualified talents, a critical factor in enabling the organization to equip itself with prominent R&D capabilities. In the 1970s, ETRI had just 158 employees, including 86 at the Korea Telecommunications Research Institute and 72 at the Korea Institute of Electronics Technology. The number surpassed the 1,000 mark in 1985 as a result of the institute's concerted efforts to secure top-tier research talents in Korea and to attract prominent scientists from abroad. Since then, ETRI has paid as much attention to the sophistication of its researchers' capabilities as to the recruitment of exceptionally outstanding talents. In 1991, 15% and 64% of its researchers held doctoral and master's degrees, respectively, as ETRI put the HR Department under the direct control of the Director and strove to upgrade its employees' academic credentials and employ increasingly highly educated personnel. Unfortunately, Korea was forced to rely on IMF bailout loans during the Asian financial crisis of 1997-1998. Like other public institutions in Korea, ETRI was compelled to downsize its organization and had to let go around 20% of its most highly qualified researchers at the end of 1997. These employee layoffs had a negative effect on ETRI's R&D performance for quite some time, but by the early 2000s, ETRI had resumed its recruitment of first-rate talents in a drive to match its status as the country's leading, world-class ICT research institute. ETRI also began actively outsourcing for more efficient human resources management (HRM), thereby enhancing its competitiveness further still.

In terms of its HRM, ETRI avoided placing too much emphasis on seniority, unlike many Korean companies at that time. Rather, ETRI reflected objective performance indicators such as papers and patents in its evaluations of employees' performance; and focused on employees' capabilities and achievements in its HRM. As recharging opportunities, ETRI offered annual leave and sabbaticals to its researchers, while making

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 111 the best of external specialists through special arrangements with invited lecturers, postdoctoral researchers and commissioned researchers. ETRI also enhanced autonomy in the research field by increasing the responsibilities and authority of the heads of research departments. ETRI held on-campus job fairs and continued to recruit talented personnel while running diverse job training programs internally and revitalizing the in-house priority hiring system for vacancies in an effort to increase its HRM flexibility. Recently, ETRI introduced the wage peak system to allow greater efficiency and flexibility in its HRM, the dual career ladder system to enable researchers and position holders to develop their career and enhance their research capabilities, and the smart work system to promote a healthy work-life balance among its employees.

3.2.3. Organizational Composition

As outlined above, ETRI has evolved considerably over the past forty years in order to meet the needs of the rapidly developing Korean ICT industry. In particular, it has continued to enhance its R&D capacity so as to meet the government's ever-changing R&D needs and strategies. As of 2017, ETRI is composed of five research laboratories and one strategy research laboratory (See Fig. 2-26).

[Figure 2-26] ETRI R&D organizational chart (2017)

Source: ETRI, 2016.

112 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 (1) The Hyper-connected Communication Research Laboratory (HCRL) is responsible for R&D related to communication networks. To realize the Open Digital Connectome (ODC), a new concept hyper-connected intelligence platform, the HCRL carries out various leading research projects including the development of 1) a reliable networking technology that ensures end-to-end security and privacy; 2) a smart data creation and context-based control technology based on information collection, analysis, reasoning and learning from things or user devices; 3) an autonomous networking technology that facilitates application-specific configuration for the potentially diverse requirements of future applications, and supports optimized information delivery capability; 4) a distributed computing technology that intelligently identifies and processes vast amounts of IoT information at the network access point; and 5) a platform technology armed with a self-learning and adaptive autonomous intelligence capable of processing the massive volumes of information generated by hyper-connected things in physical space and cyber space.

(2) The SW & Content Research Laboratory develops the software and contents-related core technologies required by the nation and its industries. Its primary purpose is to perform research on hyper-intelligent software and contents that human society needs to push ahead with the Fourth Industrial Revolution and enter the new era of AI society. Specifically, the laboratory is responsible for conducting research not only on base technologies comprising high-performance computing, cloud, language/voice/visual intelligence and big data, but also on next-generation realistic/emotional contents and application technologies comprising autonomous cars, intelligent robots, and ICT-bio convergence.

The laboratory also performs research on original technologies such as many-core OS, next-generation intelligent information, and human-augmented reality with the aim of improving the country's mid- to long-term competitiveness in SW technologies. The major R&D results in this area include the clustered file system, Exo-brain, and Genie Talk. Recently the laboratory has promoted the operation of open source SW and open platforms in order to disseminate its research results more extensively.

(3) The ICT Materials & Components Research Laboratory develops semiconductor devices and component sensors required by the ICT industry. To realize the Fourth Industrial Revolution, the laboratory conducts R&D for core ICT components such as intelligent semiconductor devices, AR/VR devices, hologram panels, composite sensors, 3D printing materials and components, power semiconductor devices, and energy transforming/harvesting devices. It places particular emphasis on the development of high-value-added components that are linked to various systems and services, such as military components, broadcasting-

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 113 telecom convergence components, optical communication devices and components, and quantum communication devices and components.

(4) The Broadcasting & Media Research Laboratory conducts research on the world-top-tier technologies required to secure the next-generation, core, original broadcasting and media technologies and international standards technologies. It is also involved in the development of technologies required to create ultra-realistic global broadcasting and media services through the development and diffusion of terra media technology; research designed to upgrade RF resource applications based on the Tera-herz technology; and the development of a satellite disaster communication system and a meteorological satellite ground station.

(5) The 5G Giga Service Research Laboratory is engaged in the development of 5G mobile communication technologies. More specifically, the laboratory aims to develop technologies with the potential to lead mobile communication infrastructure construction and technologies that will enable access to broadband Internet services anywhere anytime.

The laboratory's research projects include the development of 5G mobile communication technologies and the technologies required to foster local SMEs. Its research areas include original core technologies of mmWave-based wideband mobile communication and application systems, which are necessary to secure the initiative with the 5G technologies that are slated for commercialization in 2020, pioneering core technologies of 5G mobile communication, market-oriented research focusing on corporate demand for 5G technology commercialization, and C-P-D-N30)-interconnected technologies to realize tangible 5G services.

3.2.4. Intellectual Property Management

ETRI has striven to improve its performance in the field of intellectual property rights (IPR) management by increasing its royalty income through IPR utilization and helping IT SMEs to enhance their patent competitiveness through the domestic transfer of mobile communication patents.

In order to create high-quality patents, ETRI has not only worked to create superior patents through prior patent information surveys, but has also identified key patents based on standard strategy patent development and due diligence regarding the patent assets in its possession. ETRI has made efforts to increase its patent royalties through

30) C-P-D-N: Contents-Platform-Device-Network

114 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 patent packaging, build a portfolio of promising technology areas, and connect to invention capital. Since 2013, it has enhanced its patent management organization by training 'patent coordinators' equipped with both technical expertise and patent knowledge and recruiting patent attorneys.

As indicated by the status of its patent applications over the past twenty years, ETRI has consistently maintained an 'active' patent rights strategy (Figure 2-27). As of the end of 2016, ETRI had 13,165 patents, which amounts to about 32% of the total patents (40,941) possessed by state-funded research institutes in Korea. Based on these various ICT patent portfolios, ETRI has generated revenues of KRW 162.7 billion, including KRW 44 billion in overseas royalties from patent licensing and technology transfer over the past five years. ETRI's royalty income is reinvested into its R&D budget. Most notably, ETRI has focused on international standard patent pool activities for the patent licensing of international standard technologies such as MPED, WCDMA and LTE in order to expand its royalty income. ETRI has ranked first in the world for three consecutive years (2013-2016) in the comprehensive (quantitative and qualitative) evaluation of 288 government agencies, research institutes, and universities worldwide that have registered patents with the United States (See Fig. 2-28).

[Figure 2-27] Status of ETRI patent application

Source: 35 Years’ History of ETRI, ETRI, 2012.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 115 [Figure 2-28] The IPIQ scorecard ranks ETRI #1

3.2.5. Technology Transfer and SME Support

ETRI ultimately aims to contribute to the national economy not only by accumulating its own technology development capability but also by transferring the results of its technology development to diverse industries and assisting them with their commercialization. In 1979, ETRI began offering corporate technical guidance activities through the consulting service provided to GoldStar Electric and Kwangjin Electronics. Technical support for industries consequently emerged as one its main duties, ultimately developing into technology transfer, technical guidance, and new technology introduction and application. External support projects were conducted in two forms, i.e. joint technology development for early technology commercialization, and the transfer of developed technologies to generate royalties. For large-scale national projects such as TDX, ultra-high-density semiconductors and main computer systems, private companies participated in the technology development process from the outset. For other projects, ETRI developed technologies and transferred them to private companies. By adopting such an approach, ETRI has been able to actively create demand for new technologies and thereby improve the technological competitiveness of the country's small and medium-sized venture companies, as well as increasing the utilization of its R&D results. Each year, ETRI holds technology transfer orientation meetings with businesses to actively support the commercialization of its core technologies. Most notably, ETRI helps SMEs to commercialize ETRI's new technologies with a minimum royalty burden, while providing them with intensive technological support in areas that are critical to their own technology development process so that they can boost their technological self-reliance and strengthen their corporate competitiveness. ETRI has also focused on overseas technology transfer by building the infrastructures required to extend its overseas

116 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 technology transfer network to China (Beijing and Shanghai), Vietnam and Algeria. In 2004, ETRI established the Technology Commercialization Division and tasked it with discovering candidate technologies at an early stage, assessing the value of technologies, promoting technology transfer, and enhancing support for SMEs, with the ultimate aim of sharing its R&D results more widely and broadening its technology development base.

[Figure 2-29] ETRI’s virtuous R&D cycle

Source: Young B. Choi, “2016/2017 KSP with Iran”, 2016/2017 KSP Interim Reporting Seminar, April. 20, 2017.

[Figure 2-30] Status of ETRI’s T/T and royalty income

(Unit: Case, KRW 1M)

Source: Source: 35 Years’ History of ETRI, ETRI, 2012.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 117 3.2.6. Support for Venture Startups

In the wake of the so-called IMF foreign exchange crisis that hit Korea in the late 1990s, the Korean government decided to support venture businesses as a means of overcoming the national crisis. The government's commitment to fostering venture startups generated a 'venture startup fever' among state-funded research institutes based in the Daedeok Science Town; and, due to the relative ease of launching a startup in the ICT field, ETRI created more startups than any other state-funded research institute.31) Towards the end of 1998, ETRI launched the Incubation Support Center, a venture incubator equipped with incubation facilities and other associated facilities. The center set up programs through which it provided startups with business spaces, office equipment, and technical and management guidance, and linked them to the relevant product markets and specialized industrial complexes. As a result, a number of researchers launched ETRI-based startups, which numbered 44 in 1998 and peaked at 72 in 2000. Meanwhile, ETRI established the ETRI Venture Business Association (EVA) in 1996 for the purpose of building a network of ETRI-supported startups to share information among other objectives. The members not only helped one another but also took part in joint technology development with ETRI, received startup revitalization assistance from ETRI, shared information on the latest technologies and market trends, acquired human and physical assistance through technology exchange meetings among others, and built up a human network to help them grow into global IT businesses.32)

3.2.7. Establishment of Research Spin-off Companies

ETRI Holdings was established in 2010 to promote the commercialization of ETRI's technologies, and was notable for being the first technology holding company of any state-funded research institute. ETRI Holdings establishes and fosters subsidiaries in the forms of technology venture consulting companies or government-investment companies, contributes technologies and cash in the form of new resource creation for technology commercialization with the aim of facilitating technology business incubation, and reinvests the proceeds from such undertakings in technology commercialization. Previously, state-funded research institutes commercialized their outstanding research results by transferring their newly developed technologies transfer to private companies

31) The emergence of dozens of venture startups in ETRI was fueled by ETRI's 'Startup Support Regulations' set up in 1990 to evaluate the feasibility and suitability of ETRI startups, provide appropriate support, and promote commercialization of research results. 32) Of the just over 190 EVA member companies currently in operation, 13 are listed on the KOSDAQ, and these are driving the growth of the IT industry, posting average annual sales of around KRW 700 billion at home and abroad.

118 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 or by allowing the researchers concerned to establish start-ups. In 2006, Korea introduced various systems for research spin-off companies as part of its Daedeok Innopolis project, and research institutes to promote the commercialization of their research achievements directly. Research spin-off companies are a typical public-private cooperation model that combines the excellent research results of state-funded research institutes based in Innopolis with private capital and management know-how. The revenues of such spin-off companies continued to rise—from KRW 1.2 billion in 2006 to KRW 5.7 billion in 2007 and to 14.9 billion in 200833). ETRI’s research spin-off companies are expected not only to promote the commercialization of its excellent research results but also to serve as a success model for venture companies everywhere.

[Figure 2-31] ETRI’s research-based spin-off companies

3.3. Representative Research Achievements

Over the past forty years, ETRI has completed countless research projects. This paper intends to examine various aspects of its representative research projects that have driven the outstanding national economic and social achievements of recent decades in an attempt to present the implications for national R&D models.

33) ETRI research-based spin-off companies number 12, including Autus in the field of telematics, DMBRO in the field of terrestrial DMB, and MACRO Graph in the field of motion graphics.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 119 [Figure 2-32] Major achievements of ETRI R&D

Source: “ETRI Introduction---IT Future Creator”, Global Cooperation Team, ETRI, 2016.

3.3.1. TDX Technology Development

In the 1960s, when Korea’s national economy was growing rapidly, the telephone began to be recognized as an indispensable daily necessity and as a foundation for national economic and industrial development. As the number of telephone subscribers rose from 120,000 in 1961 to 500,000 in 1970 and to 1 million in 1975, a phone installation backlog emerged as a serious problem for the country. The backlog jumped from about 13,000 in 1972 to 600,000 in 1978, leading to a wait of around one year for many citizens. Supply failed to keep pace with the sudden increase in telecommunications demand generated by the nation’s rapid economic growth. As the backlog worsened, the exchange facilities had to be expanded. However, such a huge expansion of facilities inevitably entailed a massive fiscal investment. On top of that, the mechanical exchanges widely used in the 1970s suffered from crosstalk as well as excessive maintenance costs when their capacities were expanded. In the meantime, the prevailing international trend was a shift from mechanical to electronic exchanges. Therefore, it was argued that adding mechanical switchboards would only be a temporary fix, and thus was not an ideal choice from the long-term economic perspective. In February 1976, the government decided to develop the Time Division Exchange (TDX) in Korea.

120 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 2-33] Overview of TDX development

Development Skyrocketing demand for telephone services due to high economic growth in the Background 1970s; ever increasing phone installation backlog; and need to secure sufficient number of phone lines and telecommunication networks as infrastructure.

Research To development electronic telephone exchanges with a unique system structure to Goals resolve the chronic phone installation backlog; provide a telephone line to each household, install automatic electronic telephone exchanges nationwide; protect the enormous domestic market; and achieve national self-reliance in communication network operating technologies. Research 1978-1993 (15 years) Period, KRW 107.6 billion Budget 3,146 M/Y and HR Input Host and Host: ETRI Participants Participants: GoldStar Semiconductor, Orient Electronics, Daewoo Telecom, Samsung Semiconductor

Royalty Around KRW 6.8 billion (1994-2004) Income Technology implementers: LG Information & Communications, Samsung Electronics, Donga Elecomm, Daewoo Telecom

Economic KRW 20.5292 Ripple (as of 2011) Effects

Source: 35 Years’ History of ETRI, ETRI, 2012.

[Figure 2-34] Comparison of telephone subscribers before/after the launch of the TDX system

Source: 35 Years’ History of ETRI, ETRI, 2012.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 121 The TDX development plan submitted by KETRI to the government called for the input of 1,300 people and an investment of KRW 24 billion over five years starting in 1982. At that time, Korea rarely had a research project worth more than KRW 100 million, so investing such a large sum in a single research project was considered an extremely risky undertaking. In October 1981, the Korean government decided to carry on with the TDX development plan as a central government initiative in the context of not only the development of the electronics industry but also the pursuit of a long-term national development strategy. In accordance with the central government's decision to promote the development of TDX as a national project using all the technologies and resources it could muster at home and abroad, ETRI took charge of the technology development aspect with private companies set to engage in production, with the technology to be transferred to them by ETRI. As such, it was a public-private partnership (PPP). ETRI, however, had its fair share of difficulties in the development process as it lacked experience in conducting a large-scale project. Nevertheless, it successfully worked out the development system and methodology, acquired the necessary operation techniques, and applied new technologies to production and commercialization in close cooperation with the participating companies. This type of partnership involving industry-academia-government-research institutes, which was applied for the very first to the TDX development project, ultimately became a model for large-scale national R&D projects including the development of CDMA, DRAM, and mainframe computers.

3.3.2. Mobile Communication and CDMA Technology Development

Korea's mobile telecommunication industry launched its first-generation mobile communication service in 1984 when Korea Mobile Communications Services Co., the predecessor of SK Telecom, launched its first car phone service. All the systems and terminals were imported from abroad, although some imports bore the logos of domestic brands. However, Korea succeeded in making some remarkable innovations in its mobile communication technologies over the following ten years, as demonstrated by the commercialization of CDMA in 1996, the development of WiBro in 2006 and the LTE system in 2008, and the development of LTE-Advanced, a 4G mobile broadband technology, all of which have led the evolution of the world's mobile communication technologies while transforming Korea into a global powerhouse in mobile telecommunications.

122 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 2-11] Evolution of mobile communication technologies

Description 1G 2G 3G 4G

Standard Analog WCDMA, Wibro, LE-Advance GSM, CDMA Technology communication cdma2000 WiBro-Advance

Transmission 10Kbps ~64Kbps ~14.5Mbps 600Mbps+ speed

1-CD full 6 minutes and movie N/A 24 hours 9.3 seconds 30 seconds download Voice, text, broadband Major Voice, text, Voice Voice, Text Internet, services broadband Internet large-volume multimedia

Throughout the 1990s the size of the global mobile telecommunications market kept getting bigger, with advanced countries competing fiercely for dominance in the market. The United States, which had standardized TDMA, and Europe, which was attempting to commercialize the Group Special Mobile (GSM) method, were locked in a contest for global standards. As the developed world was rapidly moving towards digital technologies to overcome the technical limitations of analog systems, Korea found itself faced with the task of developing digital mobile communication on its own. Thus ETRI set the development of TDMA technology as its primary research objective. However, given the increasing number of subscribers, the selection of the TDMA scheme looked problemati c.34) Then, ETRI got to know about an experimental CDMA mobile phone system developed by Qualcomm, a small US venture company back then. This posed the huge risk for ETRI, a national research institute, of choosing a new technology yet to be verified, as well as presenting it with the huge challenge of persuading the government, academia and industry. In the end, ETRI managed to convince them that if Korea chose the CDMA system, it would have an opportunity to develop and commercialize the newest most up-to-date digital mobile communication system in the world, and joined forces with

34) TDMA’s capacity was anticipated to be insufficient upon the completion of its development in 1996. In addition, Europe had already developed the time-division-based GSM method and was about to launch the commercial service. Meanwhile, the development of the North American time division method was nearing completion. Therefore, if Korea had continued along that path, it would have failed to secure the core technology and ended up permanently dependent on the advanced countries.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 123 Qualcomm to develop the CDMA technology. The CDMA subscriber capacity was ten times that of the analog system and more than three times that of the TDMA system. The new technology was also superior to the TDMA system in terms of its propagation efficiency and base station allocation. Furthermore, Korea decided that since CDMA was a new technology, if the country succeeded in developing a SDMA-based system, it could avoid the pitfall of technological dependence on advanced countries and advance into the world market without any restraints.

[Figure 2-35] Overview of CDMA development

Development Skyrocketing demand for mobile communication available in a Background mobile environment anytime anywhere; need for self-reliance and advance of mobile communication technology.

Research Development of a digital mobile communication system based on Goals Korea's own method, with superior technological competitiveness to America's TDMA method, Europe's GSM method and Japan's PDC method.

Research Jan. 1989 - Dec. 1996 Period, KRW 99. 6 billion Research 1,042 M/Y Budget, Manpower Input Host & Host: ETRI Participants Participants: LG Information & Communications, Samsung Electronics, Hyundai Electronics, Macson Electronics

Royalty KRW 318.3 billion from overseas sources from 1997 to 2008, and Income about KRW 25 billion from Korean corporations (Samsung Electronics, Hyundai Electronics, Macson Electronics, LG Information & Communications) since 1997.

Economic KRW 54.39 trillion Ripple (as of 2011) Effects

Source: 35 Years’ History of ETRI, ETRI, 2012.

Commercialization of the world's first CDMA technology presented Korea with a decisive opportunity to emerge as a powerhouse in the mobile communications industry. Although Korea had entered the mobile communication industry later than developed countries, with the commercialization of CDMA the number of subscribers increased astronomically, and the domestic mobile communication industry grew at an unprecedented rate. Fueled by the expansion of its mobile communication industry, Korean mobile phone manufacturers such as Samsung Electronics and LG Electronics grew

124 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 very rapidly, while the country's dependence on overseas mobile communication devices and handsets dropped significantly.

[Table 2-12] Development process of mobile communication technologies

1989. Start of the Digital Mobile Communication System Development Project 05. 1991. Signing of a contract with Qualcomm of the USA for the joint development of CDMA technology. 04. 1996. Commercialization of the world's first CDMA technology. . 05. 2001. Global number of subscribers to CDMA mobile communication exceeds 100 million. 12. 2002. Launch of the IMT-2000 service by operators in ten countries. 11. 2005. Demonstration of the WiBro service at the APEC Summit held in Busan, South Korea. 06. 2006. Commercialization of the world's first WiBro service and full-fledged development of the 4G mobile communication system . 01. 2008. Successful development of LTE, a 4G mobile network technology and the world's first pilot service demonstration 01. 2011. Successful development of LTE-Advanced technology for 4G mobile communication and the world's first demonstration service.

Source: 35 Years’ History of ETRI, ETRI, 2012.

3.3.3. Development of DRAM Technology

Those advanced countries that predicted back in the 1970s and 1980s that the semiconductor industry would become the core industry of the future set out to actively develop semiconductor technology while striving to block other countries from joining their ranks35). It was as early as the mid-1970s, however, that Korea began to pay attention to the semiconductor industry. As the Korean government was looking into the possibility of fostering the electronics industry, it talked about specific ways of developing the industry in Korea with the delegation of the United Nations International Reconstruction and Development Bank (IBRD) that visited Korea in November 1974. Indeed, the concept of the semiconductor was a hot topic at the meeting. In 1975, the US consulting firm ADL singled out the semiconductor as a core technology that would lead the industry in the future in the results of its survey on 'The Long-term Prospects of the Electronics Industry.' In response to this series of events, the Korean government selected the semiconductor as the key electronics R&D area in its 4th 5-year Economic Development Plan in 1977, thus marking the starting point for Korea’s rise as a

35) Advanced countries checked the usage of semiconductors thoroughly before agreeing to semiconductor sales, and also limited the sales volume out of fear of a potential technology leakage.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 125 semiconductor powerhouse. In order to accelerate the development of semiconductors, the Korean government established a plan for 'the joint development of ultra-high-density semiconductor technology' in 1986 as part of the country's 'Specific Research and Development Projects,' and set the goal of developing a 4M DRAM with a line width of 0.8㎛ by 1989. For the 4M DRAM joint development project, ETRI took charge of the R&D while private companies such as Samsung Semiconductor & Telecommunications, GoldStar Semiconductor and Hyundai Electronics were tasked with design and production. Even prior to the completion of the 4M DRAM development project, the joint development team began to examine the feasibility of developing 16M DRAM and 64M DRAM,36) which were already being developed in the advanced countries. The joint development project progressed according to plan, and Korea succeeded in developing 16M DRAM in 1991 and 256M DRAM in 1994, thereby laying the foundations for Korea’s emergence as the world leader in semiconductor production.

[Figure 2-36] Overview of DAM development

Development Increasing external dependence on foreign semiconductors, etc., Background emergence of the need to improve product design technologies.

Research Goal Securing leadership in the global semiconductor market and narrowing the technology gap with developed countries.

Research Oct. 1986 - Mar. 1993 Period, KRW 277.9 billion Research 2,172 M/Y Budget, Manpower Input Host & Host: ETRI Participants Participants: GoldStar Semiconductor, Samsung Electronics, Hyundai Electronics

Royalty KRW 77.3 billion (1993-2002) Income Technology licensees: Samsung Electronics, Hyundai Electronics, LG Semiconductor

Economic KRW 18.89 trillion Ripple (as of 2011) Effects

Source: 35 Years’ History of ETRI, ETRI, 2012.

36) As in the case of 4M DRAM, ETRI assumed overall control of the joint development project, while six companies, including the three companies that had participated in the 4M DRAM development, Kumho Petrochemical, two state-funded research institutes and 19 universities including Seoul National University.

126 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 2-13] DRAM technology development process

1985. Establishment of the Comprehensive Plan for the Development of the Semiconductor Industry 08. 1986. Approval of 'the plan for joint development of ultra-high-density semiconductor technology' written jointly by the Ministry of Science and Technology, Ministry of Communication, and Ministry of Commerce and Industry; designation of the joint 4M DRAM development project as a government policy 09. 1988. Joint Development Team starts the 'Basic research for the joint development of next-generation semiconductor technologies and the establishment of a basic plan' 02. 1989. Development of 4M DRAM. 03. 1991. Development of 16M DRAM. 11. 1992. Development of the world’s first 64M DRAM. 08. 1994. Development of the world’s first 256M DRAM.

Source: 35 Years’ History of ETRI, ETRI, 2012.

3.3.4. Development of Supercomputer Technology

Korea's computer industry began with the distribution of educational computers that were essentially imitations of the computers of Apple of the United States. Korea announced the Plan for the National Basic Information System in 1985, when the country was trying to develop 32-bit microcomputers. Under these circumstances, the plan to localize super-mini-class computers for use in the national basic information system seemed somewhat imprudent. The fact remains that the Korean semiconductor industry was growing rapidly and the TDX development project was progressing smoothly, and ETRI’s researchers were confident that they could develop superminicomputers. In terms of technologies, they were also able to mobilize all the necessary technologies (including those for microprocessor chips and operating systems that are the critical to computer hardware design) required to develop mid- to large-sized computers domestically37).

Korea promoted the development of the mainframe computer for the national administration network as a joint development project for four years starting in 1987,38)

37) Intel began to manufacture and sell microprocessor chips, which correspond to the brain of a computer, in 1974. AT&T of the United States distributed UNIX, an operating system that it developed for research purposes, to universities and research institutes free of charge. Korea was in a position to develop the mainframe computer quite economically if it chose to adopt UNIX as the O/S. 38) The national administration network project became embroiled in continuous controversies and disputes as it was a huge national project involving numerous government agencies. For instance, opinions were divided as to how to secure the mainframe computer to be used for the national basic information system (NABIS). Dacom Co., Ltd. insisted that Korea develop the host computer independently since NABIS was aimed at

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 127 with Samsung Semiconductors, Goldstar, Daewoo Telecommunications and Hyundai Electronics Industries selected as the participating businesses. The projected mainframe computer, TiCOM (short for 'Tightly Coupled Multiprocessor), was a large-scale joint development project involving 714 workers and KRW 21.5 billion of research funds. ETRI completed the basic system design by getting directly involved in the design and production of not only TiCOM’s structure but also the final system, including the board level, telecommunications, database and software. As a result, ETRI secured the design, implementation and testing technologies required to produce medium-sized computers, and Korea joined the ranks of mid- to large-sized computer-producing countries.

[Table 2-14] Supercomputer development process

12. 1985. Establishment of a plan to build the basic information network for 5 areas including administration, medicine, education, transportation and finance; determination to develop the host computer locally. 06. 1987. ETRI started to develop the host computer (TiCOM) with Korea's four major computer manufacturers, namely, Samsung Semiconductor, GoldStar, Daewoo Telecom and Hyundai Electronics Industries.. 02. 1988. Production of host machine I (70% localization rate) via the introduction of a fault-tolerant computer system. 02. 1989. Production of host machine I (localization rate 100% realization) via the introduction of a fault-tolerant computer system. 07. 1991. Development of the main computer II (TiCOM) and start of the joint development of main computer III (high-speed medium-sized computer). 01. 1994. Development of host computer III. 01. 1998. Development of host computer IV (high-speed parallel computer).

Source: 35 Years’ History of ETRI, ETRI, 2012.

With the development of the main computer (TiCOM), Korea entered the stage where it could design, develop, and test medium-size computers independently, advancing beyond the level of computer assembly and OEM production-centered computer technology. The successful development of the computer also stimulated the development of the local computer peripherals and parts manufacturing industry, as well as creating the demand for information communication in Korea, and bringing about revolutionary changes

fostering the domestic information industry. Computer experts asked to use the existing foreign machine, arguing that it was more important to use the existing centralized computer system and stabilize NABIS. The Korean government opted for the computer on its own and NABIS managed to develop the host computer locally.

128 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 throughout the domestic information and communications industry.

[Table 2-15] The TICOM series developed by ETRI

Promotion Classification Contents Strategies ETRI led the import and localization of original technologies for the ETRI-Businesses first two years, while businesses were responsible for upgrading Host computer I joint them over the next 2 years. (Tolerant) development ETRI: KRW 7.5 billion (136 persons) Businesses: KRW 3.2 billion (82 persons)

ETRI led the development for 14 years with manpower (budgets) Host computer II supplied by businesses, with commercialization undertaken by ETRI-led (TICOM) businesses. ETRI: KRW 22.8 billion (714 persons)

Joint development by ETRI and businesses under the latter’s Host computer III initiative, with commercialization undertaken by businesses. (high-speed ETRI: KRW 11 billion (370 persons), system hardware design, Business-led mid-range system SW development. computer) Businesses: KRW 19 billion (300 persons), hardware development, application SW development

Joint development by ETRI and businesses under a joint initiative, Host computer with commercialization undertaken by businesses. IV (high-speed ETRI-business ETRI: KRW 28.5 billion (270 persons), core technology parallel joint leadership development. computer) Businesses: KRW 28.5 billion (3,000 persons), application SW development.

Source: 35 Years’ History of ETRI, ETRI, 2012.

3.4. Economic Impact

As shown above, the direct economic effects of Korea's representative research projects, such as TDX, DRAM, and CDMA, and the ripple effects of their related business amounted to KRW 170 trillion (as of 2011, based on sales amounts) [See Fig. 2-37]. These projects not only enabled Korea to enhance its technological capability through the implementation of the R&D tasks, but also made significant contributions to the development of the national economy through the commercialization of the relevant technologies. In addition, the many high-caliber researchers that ETRI has produced in the past forty years have played a leading role in the development of Korea's information and communication industry in various fields including universities and corporations.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 129 [Figure 2-37] Economic ripple effects of ETRI R&D

(Unit: KRW 100M)

Source: 35 Years’ History of ETRI, ETRI, 2012.

It is estimated that ETRI's eight major technologies39) have generated KRW 70.2831 trillion in direct economic effect and KRW 39.6128 trillion in indirect production inducement effects. Of the eight technologies, CDMA technology accounts for the largest proportion at KRW 54.3923 trillion,40) followed by TDX, DRAM and LTE, which together have generated economic effects worth around KRW 10 trillion. As for voice recognition and OLED technologies, whose markets have yet to expand, they are estimated to have generated KRW 943.3 trillion in economic effects to date.

39) ETRI's 8 major technologies: TDX, DRAM, CDMA, DMB, Wibro, LTE, voice recognition, OLED 40) CDMA's direct economic effect: KRW 33.9933 trillion / indirect economic effect (production inducement effect): KRW 20.399 trillion

130 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 2-38] ICT R&D achievements

Source: Mid- to Long-term ICT R&D Strategies, Management Information Research Center, 2016.

To sum up, Korea's national R&D projects were launched with the ambitious goal of achieving national economic growth by raising the nation's technological competence. These projects were carried out by state-funded research institutes - organic organizations - whose research outcomes were utilized by businesses at home and abroad, creating huge amounts of economic, social and technological benefits and value. Korea's national R&D projects, therefore, can serve as a good example of measuring the effectiveness of the national innovation system, in which the technological outcomes of R&D have been absorbed and utilized by enterprises and industries, the value-added of the national economy has been increased, and national science and technology competence has been significantly enhanced.

[Figure 2-39] Virtuous cycle of the government's R&D investments

Source: “ETRI Introduction---IT Future Creator”, Global Cooperation Team, ETRI, 2016.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 131 4. Implications and Suggestions

4.1. Korea's Innovative Growth Model

In the twenty-first century, both developed and developing countries are faced with the most serious challenge of our time, namely, that of growing the national economy by developing and applying science and technology. Many countries are making diverse efforts to increase their national wealth and improve the quality of life of their people through the promotion of science and technology. According to the Global Innovation Index (GII) 2016, Korea ranks 11th among the 128 countries surveyed. In terms of innovation input and innovation output, Korea also ranks high in the following areas:

1) In the category of innovation input, Korea ranks third in the world in the category of 'Human Capital and Research' among a total of five sub-indices. Most notably, Korea ranks 10th or higher in all of the Research & Development sub-indices (number of researchers, proportion of total R&D expenditure to GDP, average ranking of outstanding R&D enterprises, average ranking of outstanding universities) and the ICT sub-indices (ICT accessibility, ICT use, government online services, e-participation), all of which clearly shows from where Korea's competitiveness originates. To sum up, the keys to Korea' competiveness includes the development of and investment in its excellent R&D personnel, open informatization based on innovative ICT, and the consequent efficiency of its business and administrative services.

2) In the category of innovation output, Korea ranked 5th in 'knowledge and technology outputs' in the world by ranking 2nd in the area of 'intangible assets' and 3rd in 'knowledge creation' in particular. This can be interpreted as a natural consequence of Korea's high level of input in 'Human Capital and Research' in the field of innovation input.

[Table 2-16] Current status of Korea's GII by area

Score Ranking Score Ranking Category Indicator Item 2015 2016 2015 2016 Change 2015 2016 2015 2016 Change Political environment 70.9 69.6 38 39 ↓1

Institution 76.1 75.4 33 31 ↑2 Regulatory environment 67.4 66.7 66 66 -

Business environment 90.2 89.7 4 6 ↓2 Education 53.9 55.6 35 38 ↓3 Innovation Human capital and 64.8 66.9 2 3 ↓1 Tertiary education 54.8 55.5 10 12 ↓2 Input Research & research 85.7 89.5 2 1 ↑1 development ICTs 92.4 92.9 1 1 - Infrastruc- 62.4 63.3 8 9 ↓1 General infrastructure 55.5 57.4 12 9 ↑3 ture Ecological sustainability 39.4 39.6 61 80 ↓19

132 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 2-16] Continued

Score Ranking Score Ranking Category Indicator Item 2015 2016 2015 2016 Change 2015 2016 2015 2016 Change Credit Market 54.5 59.6 17 15 ↑2 sophistica- 63.3 62 16 14 ↑2 Investment 59.9 54.4 9 17 ↓8 tion Trade & competition 75.5 72 76 29 ↑47 Knowledge workers Business 59.9 65.5 22 8 ↑14 sophistica- 45.2 50.1 30 13 ↑17 Innovation linkages 40.1 41.8 44 27 ↑17 tion Knowledge absorption 35.6 43.1 61 18 ↑43 Knowledge Knowledge creation 78.6 77.6 1 3 ↓2 and 56.7 54.1 5 5 - Knowledge impact 42.4 41.2 47 43 ↑4 technology outputs Knowledge diffusion 49.1 43.5 19 18 ↑1 Innovation Output Intangible assets 56.8 68.7 19 2 ↑17 Creative Creative goods and 43.6 47.4 28 21 ↑7 26 26.1 49 50 ↓1 outputs services Online creativity 34.7 26.1 41 35 ↑6 Source: Analysis of Global Innovation Index 2016, KISTEP Statistics Brief, Vol. 2016-21, 2016 (Recited from “The Global Innovation Index 2016”, Cornell University, INSEAD, WIPO, 2016)

In sum, the Korean growth model is based on the world's highest input in the area of Human Capital and Research and the consequent high return in Knowledge and Technology Outputs. Most notably, Korea ranks 1st in Research & Development in the area of Innovation Input, 2nd in Tertiary Education (i.e. the ratio of tertiary education enrollment to population), and 1st in the Number of Patent Applications in the area of Innovation Output, which clearly indicates that Korea's national innovation model is based on its strategy of creating knowledge resources by cultivating the competencies of the country's human capital.

On the other hand, an analysis of Iran's GII rankings shows that Iran ranks remarkably high in the category of Human Capital and Research - a model similar to Korea. Specifically, Iran ranked 4th in the world in the category of Tertiary Education, largely by ranking 2nd in the world in the number of graduates in science and engineering majors (Korea: 7th) and 31st in tertiary education enrollment (Korea: 2nd), which indicates that Iran, like Korea, has relative strength in Human Capital and Research. However, Iran ranks quite low in the categories of Institutions, Market Sophistication and Business Sophistication, indicating that the country still has a number of challenges to meet in terms of its national institutions and overall infrastructure. (See Table 2-18)

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 133 [Table 2-17] Strength and weakness analysis of Korea's GII

Weakness Indicators Category Indicator Strength Indicators (10th or higher) (70th or lower) Cost of redundancy dismissal Institutions Ease of resolving insolvency (4th) (107th) Gross expenditure on R&D, % GDP (1st) Tertiary enrollment, % gross (2nd)

Human capital PISA scales in reading, math & science (4th) Tertiary inbound mobility and research Researchers, FTE (4th) (72nd) Global R&D firms, avg. exp. top 3 (5th) Graduates in science & engineering (7th) Innova- QS university ranking (9th) tion E-participation (1st) Input Environmental policies (73rd) Government's online service (3rd) Infrastructure Energy consumption, % GDP ICT use (4th) (90th) ICT access (9th) Market Total value of stocks traded (7th) Applied tariff rate (100th) sophistication Ease of protecting minority investors (8th) GERD performed by business (2nd) GERD financed by abroad Business Patent families filed in 2+ countries, % GDP (2nd) (92nd) sophistication Research talent (2nd) FDI net inflows (109th) GERD financed by business (3rd) ICT services imports (112nd) Patents by Koreans (1st) PCT patent applications (1st) Knowledge and ICT services exports, % total technology Utility models by Koreans (5th) Innova- trade (100th) outputs High- & medium-high-tech tion manufacture, % (5th) Output High-tech exports less re-exports (5th)

Printing & publishing Creative outputs Industrial designs (1st) manufactures, % (92nd)

Source: Analysis of Global Innovation Index 2016, KISTEP Statistics Brief, Vol. 2016-21, 2016. (Recited from “The Global Innovation Index 2016”, Cornell University, INSEAD, WIPO, 2016)

[Table 2-18] Iran's GII rankings by area

Indicator 2014 2015 2016 Institutions 131 126 112 Human capital and research 46 46 48 Infrastructure 81 68 91 Market sophistication 139 139 102 Business sophistication 136 130 111 Knowledge and technology outputs 113 90 65 Creative outputs 128 116 75

Source: Science, Technology & Innovation Policy Review ― Islamic Republic of Iran, UNCTAD, 2016.

134 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 In terms of R&D investments, global GERD (Gross Domestic Expenditure on Research and Development) increased from US$1.13 trillion in 2007 to US$1.479 trillion in 2013, indicating that most countries around the world increased their R&D investments in science and technology in that period and even during the global financial crisis. The growth rate of GERD investments far surpassed the world's average GDP growth rate during the period - a testament to these countries' strong commitment to achieving economic growth through the development of science and technology.

[Table 2-19] Status of R&D investments

(Unit: US$ billion, PPP-based) GERD (in PPP $ billions) GERD / GDP (%) 2007 2009 2011 2013 2007 2009 2011 2013 Global average 1132.3 1225.5 1340.2 1477.7 1.6 1.7 1.7 1.7 Canada 23.3 23.0 22.7 21.5 1.9 1.9 1.8 1.6 China 116.0 169.4b 220.6 290.1 1.4 1.70b 1.8 2.1 France 40.6 43.2 44.6b 45.7 2.0 2.2 2.19b 2.2 Germany 69.5 73.8 81.7 83.7 2.5 2.7 2.8 2.9 India 31.1 36.2 42.8 - 0.8 0.8 0.8 0.0 Israel 8.6 8.4 9.1 10.0 4.5 4.2 4.1 4.2 Iran 7.1+1 3.1b 3.2-1 - 0.75+1 0.31b 0.31-1 - Japan 139.9 126.9b 133.2 141.4 3.5 3.36b 3.4 3.5 Malaysia 2.7+1 4.8b 5.7 6.4-1 0.61+1 1.01b 1.1 1.13-1 Korea 38.8 44.1 55.4 64.7 3.0 3.3 3.7 4.2 Turkey 6.3 7.1 8.5 10.0 0.7 0.9 0.9 1.0 UK 37.2 36.7 36.8 36.2 1.7 1.8 1.7 1.6 USA 359.4 373.5 382.1 396.7-1 2.6 2.8 2.8 2.81-1 -n/+n = data are for n years before or after reference year B: break in series with previous year for which data are shown Source: UNESCO Science Report, Towards 2030, UNESCO, 2015.

In Iran, GERD shrank considerably between 2007 and 2011, declining from US$7.1 billion in 2007 to US$3.1 billion in 2009 and to US$3.2 billion in 2011, although the statistics are not completely reliable. The GERD/GDP ratio decreased from 0.75% to 0.31% during the same period.41) (See Table 2-19) The ratio is lower than that of Turkey or India, Iran's major benchmarks in Western Asia. However, the Iranian government has repeatedly emphasized since 2013 that it will increase its R&D investments to the level of 1% of GDP. According to the Iranian government's budget plan for the fiscal year 2016/2017, Iran plans to invest an additional 0.37% of its GDP in R&D. If implemented as planned, Iran's GERD/GDP ratio will consequently jump to around 0.86% in 2016.42)

41) According to an UNCTAD data, Iran's GERD/GDP ratio slightly rose between 2011 and 2012 from 0.52% to 0.55%, dropped to 0.42% in 2012, and then increased again to 0.47% in 2015. 42) Science, Technology & Innovation Policy Review―Islamic Republic of Iran, UNCTAD, 2016, pp.13.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 135 In terms of the GERD/GDP) ratio, Israel (4.21%) ranked 1st in the world in 2013, followed by Korea (4.15%), Japan (3.47%), the USA (2.81%) and China (2.08%). In 2014, however, Korea ranked 1st at 4.29%. This fact shows that compared to the size of its national economy, Korea is extremely active in terms of R&D investment, making it a country with a very high degree of intensity in R&D investment.43) Korea also ranks 1st in the world in terms of government R&D investments (the GERD/GDP ratio) (Fig. 2-40).

[Figure 2-40] Major countries' total R&D expenditure and GERD ratio

* The world ranking was based on the latest data of its member and major non-member countries. compiled and released by the OECD(Main Science and Technology Indicators 2015-1) * Source : OECD, Main Science and Technology Indicators 2015-1

Korea ranks 1st in the world in terms of its GERD/GDP ratio, far surpassing the USA, Germany, the UK and France in terms of its ratio of government R&D investment to GDP. It is a fact that Korea runs an R&D-intensive national economy. Most notably, Korea is the world's number one in terms of government-led R&D. Korea is also the world's number one in the proportion of its ICT industry to the country's total private R&D investments. The Korean government has led the country’s R&D investments and industrial development for the past forty years, the effects of which have now spread to the entire national economy. The ICT industry in particular has played a central role in increasing Korea's industrial production and exports. Such a Korean national development model has

43) One noteworthy phenomenon is that China's GERD jumped from US$116 billion in 2007 to US$290.1 billion in 2013, showing a 250% increase in just six years. China's share of total global GERD investment jumped from 10.2% to 19.6% during the same period, thereby surpassing Japan (12.4%) and emerging as the world's second biggest R&D investor country after the US (28.1%) in 2013. (UNESCO Science Report, Towards 2030, UNESCO, 2015, pp. 10)

136 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 strengths in human capital, knowledge & technology outputs, market sophistication and infrastructure - a pattern similar to that of Germany, a traditional science and technology powerhouse. This type of economic growth model places particular emphasis on human capital and research.

[Figure 2-41] Korea's R&D investment index

(a) GERD/GDP ratio industry to private (b) The ratio of the ICT R&D Investment

(c) Government R&D investment to GDP (d) Comparison of innovation indices of Korea ratio and Germany

Source: Hee J. Kang, 'Statistical Changes in Major Countries' R&D Investments,' Science & Technology Policy, Vol. 24, No. 5-6, STEPI, 2015. Analysis of Global Innovation Index 2016, KISTEP Statistics Brief, Vol. 2016-21, 2016

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 137 In short, Korea's successful national R&D innovation system is attributable to the combination of the following:

1) The Korean government's establishment and implementation of a firm goal-oriented policy; 2) The Korean government's active investment in national R&D programs and its establishment and support of state-funded research institutes; 3) The Korean people's outstanding diligence and learning ability; 4) The concerted efforts of the government, private sector and households to nurture excellent science and engineering talents.

Korea has maintained the 'fast follower' strategy in its ICT policies as well as its economic development plans for the past forty years. The main reasons for the success of Korea’s ICT policies include the government's selection of and concentration on the ICT sector; joint funding and collaboration between government agencies, research institutes, businesses and schools; continuous investment in HR development; and, above all, the government's strong commitment to achieving national development through the success of the ICT industry. The government's commitment was embodied in the various national policies customized for the country's different stages of ICT technology development, in addition to the government's steady R&D budget input over a period of four decades regardless of any political changes that the country endured. It is also clear that the government's commitment and budget input alone could not have guaranteed the worldwide success of the country's industry. The Korean government has joined forces with the private sector to focus all their combined resources on improving the country's research capacity and on training and fostering high-caliber talent through the establishment and operation of ICT-devoted research institutes in particular. Korea has continued to support state-funded research institutes and assist their efforts to engage in long-term research commitments with their own high-caliber researchers, while creating a virtuous cycle between national R&D projects, technology commercialization, the improvement of corporate competitiveness, and the creation of economic value-added. The Korean government has made all-out efforts to streamline all of the relevant institutional arrangements, build the necessary infrastructure (venture business support and commercialization eco-system creation), and provide full support to national R&D projects and the relevant technology commercialization.

138 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 4.2. Suggestions for Iran's ICT Development

Iran has a large domestic market, a territory 7.5 times the size of the Korean Peninsula, a population of over 80 million, and a national economy amounting to US $400 billion. It is the only country with a well-developed manufacturing sector among the countries situated on the Persian Gulf44). A recent census showed that some 60% of Iran's population is under the age of 30, with 66% of that demographic being college graduates. Every year, Iran turns out around 70,000 university graduates in the field of ICT. The Iranian government plans to continue to actively support young people's ICT education until the total number of the country's employees in the ICT field reaches 300,000.45)

[Figure 2-42] Iran's demographic composition by age

Source: 「A Brief Representation of Iran’s Technological Achievements」, Iranian Government, August 2014.

Since the beginning of the 2000s, the Iranian government has accorded the fundamental role of science and technology in driving the national development even more importance, and has set the national goal of making the transition from a natural resource-dependent (oil, gas, etc.) economy to a knowledge-based economy. For almost two decades, the Iranian government has pursued the necessary organizational reforms and restructuring while implementing various government development/support programs designed to accelerate the country's technological innovations. Such

44) In most industries, manufacturing still remains largely centered on simple assembly work. Compared to other Middle Eastern countries, however, Iran has great potential to develop into a manufacturing-based industrial country. 45) A Brief Representation of Technological Achievements, Iranian Government, Aug. 2014, pp. 90.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 139 government efforts have led to notable tangible outcomes. Notably, Iran jumped from 34th to 16th in terms of its production of science and technology papers between 2005 and 2015. In fact, Iran is now equipped with world-class competitiveness in the fields of nanotechnology, life sciences, aerospace, nuclear power, stem cells, and renewable energy. This recent increase in its production of academic papers is simply astonishing.46) Iran's rate of co-authorship with researchers from G20 nations has reached 24.6%, indicating that Iranian scholars are actively engaged in joint research and intellectual exchanges with science and technology scholars in the advanced countries. Moreover, a large number of young Iranian scientists and engineers study and work in North America and Europe, adding to the country's huge growth potential in science and engineering.

[Figure 2-43] The number of Iran's ISI articles (posted on Web of Science)

Source: UNESCO Science Report, Towards 2030, UNESCO, 2015. (partially edited)

46) According to the "Science and Engineering Indicators 2012" published by the NSF in the USA, the number of Iran's scientific and technical papers increased by an annual average of 25.2% for the ten years between 2000 and 2009, the highest rate of any country in the world. According to the "Knowledge, Networks and Nations" report jointly published by the Royal Society of the UK and Elsevier of the Netherlands in 2011, Iran's science and technology output grew eighteen times between 1996 and 2008. Indeed, Iran is growing faster than any other country in the world when it comes to science and technology.

140 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 2-44] The number of Iran's ISI articles by area (posted on Web of Science)

Source: UNESCO Science Report, Towards 2030, UNESCO, 2015.

Based on this great growth potential in science and technology, the authors would like to define the challenges faced by the Iranian government and propose some policy directions it could take in terms of technology development and industrialization in the country's ICT sector, as follows:

4.2.1. Government’s Consistent Funding and Active R&D Investment

When it comes to science and technology, Iran has numerous favorable conditions such as the Iranian people’s exceptionally strong academic passion and the high ratio of scientists and engineers among its young demographic. Iran's most notable weakness lies in the low proportion of R&D investment in its national economy. In addition to lackluster R&D investment in the public sector, Iran's private sector is not as active in R&D investment as it should be, either. To overcome this weakness, the Iranian government needs to make bold changes in its policy directions and continue increasing the proportion of direct R&D investment funded by the government budgets. An increase in government investment in the ICT industry in particular would attract the country's outstanding science and engineering talents at home and abroad to promising industries while mitigating the relatively high unemployment rate among young adults.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 141 4.2.2. Building-up of ICT Specialists

The Iranian government's economic policy-making agencies need to adopt a longer-term perspective and make an innovative policy shift towards reducing the Iranian economy’s dependence on oil and natural resources. They should be aware that the country’s existing petroleum resources could be replaced by new energy at any time in the future, at which point Iran may well lose its fundamental economic competitiveness overnight. They should also start looking at things differently based on the fact that "oil can no longer be a leading source of Iran's national wealth." In recognition of the fact that boosting its industrial competitiveness based on high-tech and R&D is the only way-out, Iran should develop a manpower development strategy to overcome the current low-wage economy and foster a skilled workforce that can generate high value-added for the national economy. To that end, the Iranian government should actively develop supportive measures that will enable specialized research institutions such as the ITRC and university affiliated research centers to grow into organizations capable of accumulating world-class advanced new technologies.

4.2.3. Enhancement of Industry-Academia Collaboration

The Iranian government began to promote science and technology in the early 2000s with the creation of techno parks, the designation of knowledge-based firms (KBFs), and the financing of R&D through the Innovation and Prosperity Fund (IPF). Recently, these efforts have begun to generate tangible effects. For instance, the number of both KBFs and their employees has increased at an incredible pace. Among the numerous factors likely to brighten Iran's science and technology prospects are the high percentage of the young population, the large number of engineering and science majors as well as college graduates, their prominent research papers and the incredibly fast rate of increase in the production of such papers. Compared to its large number of potential talents, the gap between the level of technical education offered by Iran’s educational institutions and the level of technological fluency required by businesses is still very large47). Apart from the support for techno parks and the construction of infrastructure, the Iranian government needs to make an all-out effort to build a nationwide innovation ecosystem where universities and industrial sites can join forces to create synergistic effects in their pursuit of innovation.

47) The major reasons include the fact that most of the universities in Iran are national universities, and the reality that Iran has yet to build a collaborative system between universities and businesses to create synergistic effects in their respective research activities.

142 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 4.2.4. Research Planning Capability and Intellectual Property Rights

The Iranian government also needs to strive to secure more intellectual property rights, an area in which Iran's performance is far less impressive than that of the production of academic papers. Given that Iran has yet to produce a great deal of intellectual property rights, including patent applications, the Iranian government needs to upgrade the relevant legislation and institutional arrangements in preparation for the looming knowledge-intensive society. The government also needs to keep pace with the international level in the protection of intellectual property rights by adopting international standards and benchmarking excellent intellectual property rights protection systems. In addition, it needs to enhance the country's research planning ability to conduct market research and technology demand surveys, among other things. Finally, the Iranian government needs to conduct an overall review of its R&D support policies with the aim of building a national research management system whereby it can plan and implement the development of necessary technologies and transfer the outcomes to industry in a timely manner.

[Table 2-20] Strength and weakness analysis of Iran's GII

Strengths/Opportunities Weaknesses/Threats

• Increase of college graduates • It is necessary to develop overall college 178,000 (2004) -> 719,000 persons education & training so that companies Human (2012) can make the best of graduates capital • Ratio of science/engineering immediately and the country can lower manpower: #2 in the world (2016) youth unemployment. • Female ratio in tertiary education (47%)

• In possession of relatively well • Insufficient links between techno developed infra including techno Innova- park-based companies and industries. Infrastruct parks and incubation centers: techno tion • It is necessary to increase the number of ure parks (1 in 2001 > 39 in 2016 and Input techno park-based firms and incubation labs designated by the MSRT (3,500 cases and enhance support for them. in 2013 > 12,600 in 2016).

• A low proportion of R&D to the national economy. R&D • Financial support for KBFs: IPF funds • A low ratio of R&D by the private sector Investment (US$2.8 million) (20% of GERD in 2010). & Support • Insufficient STI finance for venture capital firms and venture startups.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 143 [Table 2-20] Continued

Strengths/Opportunities Weaknesses/Threats

Science • Increasing science papers: world • A low level of international cooperation papers (1.5%), region (28.6%). on science papers (19.8%).

• A low ratio of international patent registration. • Gradual increase in domestic patent Patens • A large number of patent applications application and registration. Innova- by individuals but a small number by tion corporations. Outputs • An increase in startups and KBFs: • Industrial production and export ratio: Knowledge KBFs (52 in 2014 > 2,732 in 2016) High technology (1%), intermediate -based Techno park-based companies: 2,518 technology (30.7%). outputs in 2012 > 3,650 in 2015 • A low ratio of KBF employment to the national economy.

Source: Science, Technology & Innovation Policy Review ― Islamic Republic of Iran, UNCTAD, 2016.

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[Reports] 'An Analysis Report on the Achievements of National Research Development Projects 2015,' the Ministry of Science, ICT and Future Planning and KISTEP, 2017. 'A White Paper on S&T Statistics 2016,' Korea Institute of S&T Evaluation and Planning, 2017. 'Analysis of Global Innovation Index 2016,' KISTEP Statistics Brief, Vol. 2016-21, 2016. 'Directions for Government R&D Investments and Main Characteristics 2017,' 2016. 'An Analysis of ETRI R&D Achievements for 35 Years,' STEPI, 2010. 'National S&T Achievements: 50 Years in the Past and 50 Years into the Future,' Korea Institute of S&T Evaluation and Planning, 2015. 'A Survey/Analysis Report on National Research Development Projects,' the Ministry of Science, ICT and Future Planning and Korea Institute of S&T Evaluation and Planning, 2016. 'The Comprehensive Plan for the Implementation of Future Growth Engines,' the Ministry of Science, ICT and Future Planning, 2015. 'An Analytical Study on the Roles of the Government and the Private Sector in R&D Investments,' STEPI 2016. '2016 Annual Report on the Promotion of the ICT Industry,' the Ministry of Science, ICT and Future Planning, 2016. 'Suggestions for Improvements in the Government's R&D Strategies and its R&D Promotion System,' Policy Research, 2016-03, STEPI, 2016. State-funded Research Institutes - Universality and Korean Characteristics,' KISTEP, 2006. Islamic Republic of Iran, IMF, 2015. Science, Technology & Innovation Policy Review ― Islamic Republic of Iran, UNCTAD, 2016. The Global Innovation Index 2016, Cornell University, INSEAD, WIPO, 2016. UNESCO Science Report — towards 2030, UNESCO, 2015.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 145 [Theses] Hui J. Kang 'Changes in R&D Investments in Major Countries,' S&T Policy, Vol. 24 No. 5/6, 2014. In S. Seo and Dong G. Lee, 'An Analysis of the Effect of R&D Investment Policies on the Increase of National Productivity: Simulation Analysis based on System Dynamics,' Government Studies, Vol. 16 #3, 2016. Gi J. Lee, 'Major Contents and Promotion Strategies for Comprehensive Plan of Science,' S&T Policy, 2002, pp. 10-27. Gi D. Jeong et al., 'A Study on Communication among S&T Organizations: Focusing on the Korean Federation of Science and Technology Societies,' Korea Science & Technology Innovation Society, June 2011, pp. 277-287. Jungwon Yoon, “The evolution of South Korea’s innovation system: moving towards the triple helix model”, Scientometrics, 2015. Luc Soete et al., “A world in search of an effective growth strategy”, UNESCO Science Report — towards 2030, UNESCO, 2015. M.H. Mozafari, “Iranian Economic Policy after the election (2013)”, KIEP Visiting Fellows Program, KIEP, 2015. Mohsen Mehrara, “Government Expenditure and Economic Growth in Iran”, International Letters of Social and Humanistic Sciences, Vol.11, 2013.09. pp 76-83.

[Websites] The website of National Research Council for Economics, Humanities and Social Sciences (www.nrc.re.kr) The website of National Research Council of Science & Technology (www.nst.re.kr) The website of ETRI (www.etri.re.kr) The website of ITRC (https://www.itrc.ac.ir) “Invest in Iran ― Iran at a glance” (http://www.investiniran.ir/en/home) “Invest in Iran ― why Iran / Human capabilities” (http://www.investiniran.ir) “Iran Document: Supreme Leader’s Plan for Resistance Economy” (http://eaworldview.com) “Iranian Internet Infrastructure and Policy Report”, Filterwatch, Dec. 2016. (https://smallmedia.org.uk) “Iran's ICT Budget 2017/2018” (https://smallmedia.org.uk) “Leader issues 6th Development Plan general policies” (http://en.mehrnews.com) “Vision-2025 Roadmap for Government” (http://old.iran-daily.com)

146 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 “Will new 5-year plan solve Iran's economic problems?”(http://www.al-monitor.com)

[Others] '2017 Plan: Leading Intelligence Information Society through S&T and ICT Innovations,' the Ministry of Science, ICT and Future Planning, 2017 'Comprehensive Plan of Science (2002-2006),' the National S&T Commission, 2002. Jin B. Shim et al., 'The 4th Industrial Revolution and ICT,' Insight Report 2016-13, ETRI, 2016.

Chapter 02_Suggestions for the Development of Iran's ICT Research Institutes 147

2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Chapter 3

Proposals for the Expansion of Technology Commercialization in Iran

1. ICT Technology Commercialization 2. Current Status of ETRI Technology Commercialization Support 3. Surveys on Current Status to Promote Korea-Iran ICT Technology Commercialization 4. Recommendations  Chapter 3

Proposals for the Expansion of Technology Commercialization in Iran

Seung Ku Hwang / Hyung G. Roh (ETRI)

1. ICT Technology Commercialization

1.1. The Concept of Technology Commercialization

The concept of technology commercialization can be interpreted in various ways depending on the agency or person seeking to promote commercialization. In general, it refers to a series of processes including technology transfer, and is defined as "all of the activities and processes that together create added value through the transfer, trade, dissemination and application of developed technologies" from the perspective of the life cycle of technological innovation.48)

The 5th Technology Transfer and Commercialization Promotion Plan (draft)49) defines technology commercialization as 'actions (consultation) that create economic profit by utilizing developed technologies in manufacturing activities directly, or actions that support activities associated with the promotion of the process.' The plan defines technology transfer as 'the transfer of technologies possessed by public research institutes to companies in order to use the technology resources as growth engines, or the transfer of technologies by way of joint technology development or M&As.’50) Technology transfer

48) Jong B. Park, 'Suggestions for Platform Construction to Promote State-funded Research Institutes' T/T and Commercialization,' KIET, Feb. 2008, p.13 49) NTSC, The 5th T/T and Technology Commercialization Promotion Plan (draft), April 2014, p.1 50) Joo H. Kim et al., 'An Analysis of the Characteristics of Technology Commercialization and Suggestions for Its Strategic Promotion,' KISTEP, 2014, p.14

150 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 is largely classified into technology trade and license granting, which is in turn divided into the granting of a normal license, exclusive license or sub-license. Technology trade is defined as 'the transfer of rights protected by laws - including patents, utility model rights, and design rights - to the technology purchaser at a price.' License granting is defined as 'cases in which a technology supplier retains ownership of a technology and grants a license for, or the right to use, the technology to others based on a contract.”51)

As shown in Fig. 3-1, the process of technology commercialization consists of four stages: 1) technology planning, 2) technology acquisition, 3) product development, and 4) mass production and sales. In the case of public R&D, the technology acquisition stage is subdivided into R&D and technology transfer. At the technology planning stage, in which ideas with the potential for commercialization are visualized, businesses analyze the relevant technology and markets for commercialization and explore customer needs with a view to developing new markets. At the technology acquisition stage, in which the technologies required to transform an idea into a product or service are acquired, companies research the technology and use the results thereof to produce prototypes and test and inspect them, and then complement the technology according to market demand. At this stage, companies may entrust the R&D to external research institutes, conduct joint research, or introduce technology through technology transfer in order to obtain a new technology efficiently. At the product development stage, in which the acquired technologies are transformed into products or services that can be marketed, companies explore the technical possibilities through prototyping, check the feasibility of the cost structure, and consider the possibility of disputes over patent infringement among other things. Finally, at the mass-production and sales stage, in which products and services are launched in markets, companies mobilize differentiated competitive strategies by monitoring the consumer response and the movements of their competitors because at this point marketing issues are more important than technical details. Even in cases where technologies or products prove to be excellent, companies may fail to secure customers or generate profits when the market acceptability of their products is low.52)

51) Chang H. Hyun et al., 'A Quick Overview of the Commercialization of ICT R&D Technologies,' ETRI, Aug. 2015, p.137. 52) Chang H. Hyun et al., p. 39.

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 151 [Figure 3-1] Technology commercialization process

Source: Chang H. Hyun et al., 'A Quick Overview of the Commercialization of ICT R&D Technologies,' ETRI, Aug. 2015, p. 39.

The government's support activities designed to facilitate the country's technology commercialization include both direct support for technology development and indirect support for commercialization. Park Woong et al. (2014) have pointed out that, in order to ensure efficient support for technology commercialization, the government divides its support activities for technology commercialization into four areas: (1) establishment of infrastructure (laws, systems, policies), (2) strengthening of the competence of professional organizations and fostering of human resources, (3) operation and management of R&D projects and technical commercialization outcomes, and (4) construction of a base for technology trade (technical information database, technology trade, technology evaluation, technology finance).53) [Table 2-1] shows the government's indirect technical commercialization support activities as required by the technology commercialization process, including the four types of support activities presented by Park Woong et al. (2014)54) and the ten types of support ranging, from R&BD project support to technology trade support, presented by Joo H. Kim et al. (2014).

53) Park Woong et al., p. 805 54) Joo H. Kim et al., p. 22

152 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 3-1] Types of government support activities for technology commercialization

Type of Support Detailed Contents of Support Activities Activity Categorization Support for product development based on technical R&BD planning support completeness and market demand; establishment and development of a technology commercialization model. Technology consulting Professional support for the assessment of technical support values. 1. Establishment of Support for building, infrastructure managing and Comprehensive construction and provision of technical for technology providing a technical information that can be targeted for commercialization. commercializati information DB on Marketing & sales Support for marketing & PR, domestic market consulting support development, and global market entry. Technical certification Support for performance/system certification and and standardization domestic and international technical standards. support 2. Strengthening Support to strengthen - Support for commercialization manpower training: of competence the competence of fostering of technology evaluators and TLO experts. of professional organizations devoted - Support for commercialization organizations: TLO, organizations to technology technology holding company establishment, and fostering commercialization management, etc. of human On-site support by On-site matching, dispatch of R&D experts. resources technical experts 3. Operation and Elimination of obstacles to technology development and management market entry in technology commercialization promotion of R&D Legal and institutional processes; operation/management of research outcomes projects and improvements for the promotion of commercialization technical commercializati on outcomes Support for businesses faced with severe financing Financial support and difficulties; and activities for the diversification of fund creation investments and loans and fund creation and expansion. 4. Construction of a base for tech - Technology transfer: Transfer of know-how to other trade users and provision of necessary support so that Tech trade support developed technologies can be used efficiently. - Technology trade: Activities that enable technologies to be traded through technology trading organizations.

Source: Joo H. Kim et al., 'An Analysis of the Characteristics of Technology Commercialization and Suggestions for Its Strategic Promotion,' KISTEP, 2014, p. 22, and the Classification of Technology Commercialization Support Activities by Park Woong et al. (2014) - The two classification methods are integrated into the above table.

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 153 1.2. Trends of Technology Commercialization Policies

The Korean government enacted the 'Technology Transfer Promotion Act', and has implemented the 'Technology Transfer and Commercialization Promotion Plan' five times since January 2000 to enable public research institutes to transfer their new technologies to the private sector and promote their commercialization and to allow technologies developed in the private sector to be traded efficiently. The 'Technology Transfer and Commercialization Promotion Plan' includes a variety of intensive support measures in the following areas: (1) planning, (2) base expansion, (3) accelerated promotion, (4) financial support, (5) establishment of evaluation system, and (6) technology trust.

Table 3-2 below shows the representative accomplishments of the Technology Transfer and Commercialization Promotion Plan, which has been implemented five times so far, according to the Technology Transfer Promotion Act. The policy directions for the five promotion plans include the following: (1) the establishment of the Korea Technology Exchange in the first plan, (2) the introduction of R&BD in the second plan, (3) enterprise-centered technology commercialization in the third plan, (4) the establishment of a market-oriented technology commercialization system in the fourth plan, and (5) the laying of solid foundations for tech trade markets.55) According to the '2016 Survey on Technology Transfer and Commercialization by Pubic Research Institutes,’56) the number of technology transfers in Korea stood at 11,614 in 2015, exceeding the 10,000 mark for the first time, while the royalty income surpassed KRW 200 billion during the same year, indicating that Korea's policy efforts to promote technology commercialization started to generate impressive results in 2015.

55) Park Woong et al., p.799 (partially edited) 56) The Korea Institute for the Advancement of Technology, 'The 2016 Survey on Technology Transfer and Technology Commercialization by Pubic Research Institutes,' Dec. 2016.

154 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 3-2] Comparison of policy directions and promotional strategies for the technology transfer and commercialization acceleration plans

Description Policy Directions Detailed Action Plans Achievements The Technology 1) Support designed to invigorate Transfer Promotion (2001~2005) Creation and technology trade markets and promote Act, establishment invigoration of institutional upgrades. of the Korea The 1st Plan technology trade 2) Laying the foundations for technology Technology (2001-2005) markets trade and commercialization Exchange, NTB, etc. 1) Promotion of public technology transfer R&BD 등 Expansion of the and commercialization The Technology (2006~2008) infrastructure for 2) Expansion of the technology evaluation Transfer and The 2nd Plan technology system / technology finance Commercialization (2006-2008) transfer and 3) Expansion of base / international Promotion Act, commercialization cooperation R&BD, etc.

1) Identification and management of technology resources New Growth (2009~2011) Cultivation of 2) Full-cycle commercialization support Engine Fund, The 3rd Plan technology-based system Invention Capital, (2009-2011) global enterprises 3) Provision of technical finance step by Technical Trust, step etc. 4) Support for entry to global markets

1) Enhancement of the link between Strengthening TLO technologies and markets Creation of an organizational 2) Enhancement of competence of ecosystem based expertise in public (2012~2014) organizations responsible for hosting on the virtuous research institutes The 4th Plan technology commercialization cycle of / (2012-2014) 3) Promotion of convergence and open technology and Invigoration of innovation market technology 4) Upgrading of infrastructure for market finance, etc. mechanism operation

1) Facilitating the operation of tech trade Creation of an markets eco-system for 2) Promotion of the technology marketing Laying the (2014~2016) technology capability of public research institutes foundations for The 5th Plan transfer and 3) Customized supply of technologies with tech trade (2014-2016) commercialization high potential for commercialization markets* to realize the 4) Creation of growth conditions for creative economy companies implementing commercialization at the early stage

Source: Park Woong et al., 'A Study on a Business Ecosystem Model for Technology Commercialization: Focusing on Its Application of Public Research and Development Outputs to Commercialization,' Korea Technology Innovation Society, Vol. 17, No. 4, Dec. 2014. Note: For the 5th Promotion Plan which ended in 2016, there is no formal evaluation of the results. However, the 6th Promotion Plan asserts that Korea laid the foundation for technology trade markets during the period through various support systems.

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 155 Korea's major policy enforcement agencies, including the Ministry of Trade, Industry and Energy, the Small and Medium Business Administration (SMBA) and the Korean Intellectual Property Office, have worked out their respective action plans according to the country's 5th Technology Transfer and Commercialization Promotion Plan. In January 2014, the Ministry of Science, ICT and Future Planning announced the ‘Technology Commercialization Promotion Plan for the Dissemination of R&D Outcomes' for the commercialization of ICT R&D. The plan comprises four major strategies, including (1) customer-oriented R&D innovation, (2) enhancement of technology commercialization capability, (3) improvement of the technology commercialization promotion system, and (4) network enhancement, along with ten detailed tasks to implement. The ministry has promoted various programs designed to enhance the qualitative expansion of the country's technology commercialization57)(See Table 3-3).

[Table 3-3] The MSIP's plan to promote technology commercialization for the diffusion of R&D achievements

Four Major Strategies Ten Detailed Tasks 1) Transition to the open R&D planning system Customer-oriented R&D 2) Improvement of the R&D evaluation and management innovation system 1) Promotion of research and business development (R&BD) Enhancement of technology 2) Diffusion of R&D outcomes commercialization capability 3) Construction of a platform for commercialization support 1) Establishment and nurturing of professional support Improvement of the organizations technology 2) Enhancement of the commercialization capability of TLOs commercialization in universities and state-funded research institutes promotion system 3) Creation of ICT tech clusters through the creation of special research and development zones 1) Construction of a cooperation and support system for Network enhancement technology commercialization 2) Support for the expansion of global R&D

Source: Park Woong et al. (2014)

57) Park Woong et al., p.800

156 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 1.3. Technology Commercialization Strategies

The government presented its 6th Technology Transfer and Commercialization Promotion Plan in March 2017. During the implementation of the first five promotion plans, Korea laid the foundations for various support mechanisms including technology trade markets and technology-innovation-type M&As. Thanks to the establishment of this infrastructure, Korea saw a sharp increase in both the number and the ratio of public technology transfers, accompanied by rapid growth in the volume of M&A transactions. Therefore, the 6th Promotion Plan presents diverse strategies aimed at creating an innovation ecosystem that will expand the demand base and link consumers, intermediaries and suppliers seamlessly by promoting the 'Buy R&D' strategy, which is based on the adoption of excellent externally-developed technologies rather than technologies developed in Korea, based on the enhancement of its internal innovation capability in accordance with the latest trend toward open innovation.

In the 6th Technology Transfer and Commercialization Promotion Plan, the government support will focus on the implementation of the following four promotional strategies and their respective promotion tasks: (1) Demand: “Buy R&D” to expand the demand base; (2) Supply: Supply the technologies desired by enterprises; (3) Infrastructure: Eliminate the gap between consumers and suppliers; (4) System: Establish a government-wide collaboration system (See Table 3-4).58)

[Table 3-4] Promotional strategies and detailed promotion tasks for the 6th T/T and technology commercialization

Promotional Strategy Detailed Promotion Tasks

1) Introduction of the 'Open Innovation-type B&D' system Buy R&D to 2) Identification of additional competent technology Demand expand the demand groups demand base 3) Improvement of the technology trade promotion system

1) Introduction of a corporation support model to Supply of technology commercialization technologies Supply 2) Enhancement of public R&D marketability desired by 3) Promotion of high value-added technology-based enterprises business start-ups

58) NTSC, The 6th Technology Commercialization Promotion Plan, Relevant Ministries, Mar. 2017.(partially edited).

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 157 [Table 3-4] Continued

Promotional Strategy Detailed Promotion Tasks

1) Establishment of an on/offline convergence-type technology market platform Elimination of gap 2) Improvement of the private-sector-centered tech trade between promotion system Infra consumers and 3) Support to enable technology-based enterprises to suppliers overcome the “valley of death” 4) Raising awareness of Buy R&D through education and publicity

Establishment of a 1) Enhancement of management of collaboration on government-wide technology commercialization System collaboration 2) Establishment of systems to identify obstacles to or system problems with technology commercialization

Source: NTSC, The 6th Technology Transfer and Commercialization Promotion Plan, a joint meeting of the relevant ministries, Mar. 2017. (partially edited).

1.4. Technology Commercialization Support Programs

The Korean government has determined and supported its policy priorities according to the maturity stage of its technology commercialization efforts. The government initially focused on laying solid foundations, including legislation and infrastructure, and then shifted its focus to enhancing the efficiency of its technology commercialization support policies as commercialization entered the maturity stage. The relevant government agencies including the Ministry of Trade, Industry and Energy, the MSIP, the SMBA, and the Korean Intellectual Property Office have joined forces to provide concerted support measures based on their differentiated functions related to technology commercialization, such as R&D, technology commercialization, SME support and patent management. As pointed out by Joo H. Kim et al. (2014),59) the government's technology commercialization support policies can be divided into support for R&D commercialization, technology transfer and transaction support, infrastructure establishment support for technology commercialization, and financial support for technology commercialization. The relevant government agencies participate in the support measures according to their respective responsibilities and capabilities (See Table 3-5).

59) Joo H. Kim et al., p. 45

158 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 3-5] Types of technology commercialization support policies

Policy Types Contents - Support for the development of additional technologies Support for additional for the commercialization of developed technologies. technology - Support for the launch of prototypes and the mass development and production of launched items through engineering and prototype production 1) production line construction. Commercializ - Additional technology development of technologies ation R&D transferred from universities or state-funded research support Follow-up R&D on institutes. T/T target - Follow-up R&D support for transferred technologies of technologies research-based spin-off companies and companies holding technologies developed by industry-academia collaboration.

- Technology packaging, IP strategies and consulting Technology support for technology identification and 2) Technology identification and commercialization planning. transfer and transaction support - Support for technology trust and tech trade through transaction technology DB building and market opening. support - Support for technology value assessment, technology Technology commercialization feasibility, comprehensive technology evaluation support evaluation, etc.

- Support for manpower development and organizational 3) Support for T/T manpower and enhancement to accelerate technology transfer; laying the organization support commercialization of technologies developed by foundation industry-academia-research institutes. including organizations - Support for technology commercialization via the and networks Network support construction of a network of experts in technology transfer and commercialization.

- Support for the priority/joint purchase of products 4) Legislation Demand creation developed through government R&D. and systems support - Purchase support for new technology products and certified products.

- Support of funds required for technology 5) Financial Financial support commercialization by creating government-initiated funds support and monetary investments or loans.

Source: Joo H. Kim et al. (2014).

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 159 1.5. Technology Commercialization Ecosystem

The business ecosystem related to technology transfer and commercialization is run by diverse economic entities in a wide range of fields based on organic cooperation and close ties between them. The success of the ecosystem depends on how efficiently the cooperation and links are made among the various entities. Gil W. Lee et al. (2014) divide the technology commercialization ecosystem into three major areas: technology supply and demand, government policies, and the infrastructure designed to back up supply and demand. Technology suppliers create and supply technologies that are the targets of commercialization, while technology users receive and commercialize those of the suppliers' technologies judged to have a high probability of success. The policy and infrastructure support organizations provide various policies and systems, technology evaluation, technology finance, and technology trade brokerage, all of which are important elements of the technology transfer and commercialization process.60)

Technology suppliers include universities, research institutes and companies. The organizations that are deemed eligible for technology commercialization among public research institutes, as defined by Article 2 of the Technology Transfer and Commercialization Promotion Act, include 152 universities such as the Korea Advanced Institute of Science and Technology (KAIST), Seoul National University and Yonsei University, and 148 research institutes such as KIST, ETRI and Korea Institute of Industrial Technology (KITECH). Diverse organizations support the technology commercialization infrastructure. The main institutions responsible for promoting and facilitating technology transfer and commercialization include the Korea Institute for the Advancement of Technology (under the MOTIE), the Institute for Information & Communications Technology Promotion and Innopolis Foundation (under the MSIP), and the Korea Technology and Information Promotion Agency for SMEs (under the Small and Medium Business Administration). South Korea’s main technology trade organizations include techno parks and Korea Techno-Venture Foundation, while its principal technology financial institutions include the Korea Technology Finance Corporation and the Korea Credit Guarantee Fund (See Fig. 3-2).

60) Gil W. Lee et al., 'A Study on Ways to Boost Technology Transfer and Commercialization in National R&D Projects,' KISTEP, 2014, p. 69

160 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 3-2] Business ecosystem related to T/T and technology commercialization

Source: Gil W. Lee et al., 'A Study on Ways to Boost Technology Transfer and Commercialization in National R&D Projects,' KISTEP, 2014, p. 70 ('Business Ecosystem related to Technology Transfer and Commercialization'), Chang H. Hyun et al., 'A Quick Overview of the Commercialization of ICT R&D Technologies,' ETRI, Aug. 2015, p.41 (partially edited).

The following are the major participants in the technology commercialization ecosystem (research institutes, dedicated agencies and support organizations) along with their main support projects. First, KIAT (Korea Institute for Advancement of Technology) is the agency responsible for technology transfer and commercialization under the MOTIE (Ministry of Trade, Industry and Energy). KIAT's representative technology commercialization support activities include the establishment and operation of the Network for Tech Biz (NTB) to build and strengthen the country's technology commercialization infrastructure. It also supports IP Pool establishment and IP commercialization business with the aim of promoting the utilization of intellectual properties (IP). In order to promote the commercialization of technical achievements, KIAT provides diverse types of financial support for each stage of commercialization through the New Growth Engine Fund. It is also responsible for managing the technology (MOT) HR development project to meet the demand of industrial worksites. Specifically, KIAT is implementing the following projects to promote technology commercialization: (1) the technology trade promotion network

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 161 project, (2) projects aimed at laying the foundations for the invigoration of technology holding companies, (3) business idea commercialization support projects, (4) the Industrial Technology Commercialization Fund project, and (5) research and business development (R&BD) projects.61)

The Institute for Information and Communications Technology Promotion (IITP) is in charge of technology commercialization under the MSIP (Ministry of Science, ICT and Future Planning), and has overall control of ICT R&D. The IITP provides the life cycle of integrated R&D support including policy setting à R&D planning à evaluation/management à technology commercialization. It runs major projects in five areas including technology development, technology commercialization, standardization, HR development, and laying the foundation. As SME support programs, the IITP runs technology commercialization programs such as support for promising ICT technology development, Global Creative SW, innovative technology development projects in Creative Economy Valleys, and support for the development of ICT application technologies. The IITP's major support activities also include consulting on technology demand through ICT-Bay, customer service through integrated customer service windows, the supply of technology databases, and the presentation of ICT information. In order to offer ideas on technology commercialization as part of its efforts to promote commercialization, the IITP implements technology forecasts, provides information on its commercialization target technologies and patent portfolio, and supplies market trend reports.62)

The Innopolis Foundation (under the MSIP) aims to establish and operate an industry-academia collaboration model that pursues 'public technology coordination à commercialization (product launch and business start-ups) à corporate growth' by supporting the dissemination of public R&D outcomes originating from special research and development zones and business start-ups and the commercialization thereof. To assist the growth of research-based spin-off companies, the Innopolis Foundation runs platforms to support the following: (1) commercialization of research outcomes from special research and development zones (technology discovery and coordination, technology transfer and commercialization), and (2) start-up and growth of research-based spin-off companies (promotion of technology-based business start-ups, intensive support for growth, global exchanges/cooperation). The Innopolis Foundation also provides technology finance through the Special Zone Fund, which was created to invigorate technology finance for the purposes of investing in SMEs including cutting-edge technology firms and helping technology-based venture businesses to

61) https://www.kiat.or.kr 62) https://www.iitp.kr

162 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 proceed with the commercialization of their technologies without collateral.63)

Korea Technology and Information Promotion Agency (TIPA) for SMEs, currently under the Small and Medium Business Association is charged with providing R&D and IT support for SMEs as its two major tasks. The organization's four strategies include the advanced management of SME R&D evaluations, improvement of SME R&D support outcomes, establishment of the SME technology innovation infrastructure, and establishment of a creative innovation-based business management infrastructure. To that end, TIPA carries out various projects related with the provision of R&D support, information support, management innovation support, and technical talent training. It also runs a portal devoted to SME technology protection counseling, consulting support, information support and manpower support.64)

Korea Institute of Science and Technology (KIST) under the MSIP operates a technology transfer and commercialization program that supports the industry's complementary development of the original technologies in its possession. Its support focuses on technologies that can be commercialized through additional research for a relatively short period of time. KIST's main activities include technical consulting, technology transfer, joint R&D (Bridge Program), start-up support, K-Club, and equipment/analysis support. The Bridge Program is aimed at promoting companies' technology commercialization and enhancing their corporate competence through the development and commercialization of technologies based on the institute's original technologies.65)

Korea Institute of Industrial Technology (KITECH) is mainly involved in the development of practical production technologies for the purpose of supporting SMEs. To assist SMEs with their technology transfer and commercialization efforts, KITECH not only provides them with technical consultation but also involves with technology transfer and follow-up technology development for technology commercialization. In addition, it offers 890 kinds of equipment through its 42 open-type labs. It also runs SME-devoted research facilities where SMEs can use both research space and research manpower, as well as a website devoted to assisting SMEs.66)

Korea Technology Finance Corporation (KIBO) is a quasi-governmental asset management firm under the auspices of the Financial Services Commission, and has been designated as a public technology trade body according to the Technology Transfer

63) https://www.innopolis.or.kr 64) http://www.tipa.or.kr 65) http://smesc.kist.re.kr 66) https://www.kitech.re.kr

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 163 Promotion Act. Its main tasks include the provision of technology finance and technology evaluation services to technologically innovative companies to enhance their technical competitiveness. As such its major activities include assurance support, technology finance and evaluation, start-up support/venture and InnoBiz certification, and Tech-Bridge. The organization's technology assurance service is accompanied by technology commercialization support for technology SMEs through debt guarantees. KIBO also invests directly in promising companies through direct financing or supports their corporate bond issuance. of medium-term corporate bonds. KIBO's Tech-Bridge links technology providers including research institutes and technology consumers like SMES in terms of supply and demand for technology. It also promotes technology commercialization by providing financial support as an exclusive platform for technology transfer and commercialization.67)

2. Current Status of ETRI Technology Commercialization Support

2.1. The Establishment and Operation of ETRI's Technology Commercialization System

Founded in December 1976, ETRI is Korea's largest national ICT research institute, employing 2,025 personnel as of 2016. Over the past forty years, ETRI has helped Korea to become a high-tech powerhouse through the development of such core technologies as DRAM, CDMA, and WiBro, whose economic ripple effects amount to KRW 169 trillion to date. In the area of intellectual property, ETRI filed 20,157 international patents and 39,049 domestic patents between 1990 and 2016,68) ranking 1st in the world in the ipIQ's comprehensive patent evaluation for the three consecutive years to 2013.69) Until the early 2000s, ETRI had more than 50% of the patent assets possessed by Korea's government-funded research institutes. In 2012, ETRI possessed 12,077 patents, or about 40% of the 30,586 patents owned by all of the country's government-funded research institutes,70) thus making ETRI Korea's leading institution in the intellectual property sector. Since 1992, ETRI has transferred 5,694 technologies to 8,041 companies,

67) http://www.kibo.or.kr 68) ETRI, 'ETRI's 40th Anniversary,' Feb. 2017, p.162. 69) As of 2014, ETRI achieved the world's top position for the third consecutive year in the US patent evaluation conducted by ipIQ, doing business as the patent board among 288 public institutions including research institutes, universities, and government agencies across the world. (Source: ETRI - 2017 p. 129) 70) The Science & Technology Policy Institute, 'Suggestions to Invigorate Technology Commercialization of University-funded Research Institutes, STEPI INSIGHT, Vol. 123, 08/01/2013, p. 15.

164 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 generating total royalties of KRW 828.7 billion. ETRI has also produced 354 business start-ups and 12 research-based spin-off companies in addition to ETRI Holdings, which it founded as its subsidiary in 2010 (See Table 3-6).

[Table 3-6] Trends of T/T achievements

Year No. of T/T No. of T/T Firms Royalties (Unit: \1M) 1992 82 250 7,049 2003 204 346 26,091 2004 166 230 37,471 2006 279 385 51,078 2010 226 300 32,847 2011 300 328 25,921 2012 295 368 36,364 2013 330 434 33,852 2014 538 619 34,671 2015 676 760 33,607 2016 535 599 37,225 Total 5,694 8,041 828,694

Source: ETRI, 'ETRI's 40th Anniversary,' Feb. 2017.

In the 1990s, in response to the increase in domestic computer and information demand, Korea expanded its investment in informatization and semiconductors, among others. ETRI also actively promoted business start-ups on its own and supported its former employees' business start-ups as part of its efforts to promote technology commercialization. In 1998, when Korea enjoyed a boom in venture business start-ups, ETRI launched the ETRI Technology Business Incubator Center to create an environment in which anyone with a technology idea can start a business. In 2004, ETRI established the IT Technology Transfer Department to take responsibility for technology transfer, technology evaluation and SME support, so that its research outcomes could be transferred to industries and commercialized efficiently. From 2004 to 2008, ETRI transferred 1,300 technologies to 1,800 companies as a result of its diverse T/T support activities for SMEs in particular, earning KRW 235 billion in royalties in the process. Qualcomm's royalties accounted for the majority of the royalties until 2004, when running royalties began to rise sharply. Between 2004 and 2008, running royalties jumped from KRW 6.6 billion to KRW 29.2 billion, with the total royalty revenues reaching KRW 45.5 billion.71) Through the Pre-incubation Support System that it launched in 2010, ETRI provides various forms of

71) ETRI, 'ETRI's 40th Anniversary,' Feb. 2017, p. 231.

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 165 financial and technical support so that ETRI researchers can prepare and launch their technology start-ups. As a result of its earnest efforts in the area, ETRI was selected as the best organization in the fields of technology transfer and commercialization in the 'Results of the 2016 Survey on the Status of Technology Transfer and Commercialization by Public Research Institutes’.72) Most notably, ETRI has executed 765 technology transfer contracts, while the runner-up, KIST, has recorded a mere 115 cases. ETRI has also topped the list in the number of foreign patent applications.

2.2. Technology Commercialization Platform

2.2.1. Life Cycle Support for Technology Commercialization

With the aim of invigorating the technology transfer of its researchers' R&D outcomes to Korea’s industries, ETRI has established a life cycle support system for technology commercialization ranging from the discovery of target technologies to technology value assessment, technology transfer and SME venture support. As shown in [Fig. 3-3], the life cycle support system includes R&D, IP creation, technology marketing, technology transfer, technology start-ups and follow-up support. The technology commercialization platform designed for the expansion of support for SMEs' growth is composed of the following elements: 1) R & D cooperation, 2) technology transfer / patent licensing, 3) technology commercialization support, 4) technology and patent support, 5) research personnel support, 6) research facility and equipment support, 7) support for the establishment/growth of start-ups/research-based spin-off companies.

72) Korea Institute for the Advancement of Technology, 'A Report on the Survey on the Status of Technology Transfer and Commercialization by Public Research Institutes,' Dec. 2016

166 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 3-3] ETRI technology commercialization platform

Source: ETRI, ETRI Technology Commercialization Platform, 2016. www.etri.re.kr

The technology commercialization platform provides a variety of detailed programs to support each stage. For example, technology commercialization support, which is the third stage of the technology commercialization platform, consists of seven detailed programs including additional commercialization R&D support, the Gap-Bridge program, support to enhance commercialization models, technology value assessment, R&BD business opportunity support, overseas export/entry support, and technology-finance liaison support. ETRI also runs an on/offline technology concierge consulting center.

The most difficult task for most start-up ventures consists in finding ways to overcome the 'Death Valley' curve after receiving an initial capital contribution. In an effort to help them overcome the crisis, ETRI carries out the 'Technology Support-Follow-up R&D Program' whereby, based on running royalty contracts executed with business start-ups, ETRI helps them to resolve the various technical difficulties that can occur during the post-technology transfer period as their joint venture partner. Currently, ETRI conducts about ten technical support tasks annually. ETRI also runs the ETRI Consulting Support Center to help SMEs and venture start-up companies, and provides them with various forms of online and offline consulting services (See Fig. 3-4).

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 167 [Figure 3-4] ETRI technological support model

Source: Jong H. Park, “ ETRI Commercialization Program for ICT Industries“, ETRI, April 11, 2015.

[Figure 3-5] ETRI technology consulting services

Under its On-site SME Support System, ETRI dispatches ETRI researchers to SMEs that experience technical difficulties for one year to help them overcome technical difficulties including barriers to their technology commercialization efforts, with the aim of enabling SMEs to secure their core technological capabilities and ultimately increase their sales and profits.

168 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 2.2.2. Business Start-ups and Research-based Spin-off Companies

The foundation of business start-ups by former ETRI employees began in 1980 with the launch of Sambo Engineering. As of the end of 2016, ETRI had produced more than 580 business start-ups. The number stood at 17 until the end of the 1990s, then shot up and plunged again amid the venture boom and bust of the 2000s. The bust accompanied by the failure of technology start-ups and the emergence of an anti-venture mood in Korea ended up shattering entrepreneurship to a considerable degree.73)

In 2009, technology start-ups expanded again with the enthusiasm for Apple's iPhone. Based on the government's policy support, ETRI introduced a preliminary entrepreneur system and a special LOA benefit in order to encourage its researchers to launch business start-ups. The Pre-incubation Support System officially launched in 2010 helps incumbent ETRI researchers to prepare for technology commercialization and launch their own start-ups successfully. ETRI's pre-incubation program provides start-up consulting, management and marketing education, and a mentoring service, and enables business start-ups to reduce their initial costs by allowing them to reside in its incubation facilities and use their testing and certification instruments and research equipment. ETRI offers its researchers an unpaid LOA for up to three years to minimize their start-up risks and maximize their success potential.

[Figure 3-6] ETRI alumni businesses and achievements

Source: ETRI, 2016 ETRI Technology Report, 2016.

As of the end of 2016, ETRI's alumni companies numbered 230, accumulating total sales of KRW 1.8162 billion and a total asset value of KRW 2.1701 billion. Comtech

73) Chang H. Hyun et al. (2014), p. 194

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 169 Systems is listed on the Korea Stock Exchange, and eight companies including BIT Computer are listed on the KOSDAQ (See Fig. 3-6)74).

In addition to supporting research institutes' business start-ups, the Korean government has institutionalized the establishment of research-based spin-off companies in order to accelerate the commercialization of the research outcomes of government-funded research institutes. For the first time among government-funded research institutes, ETRI established a technology holding company called ETRI Holdings with capital of KRW 20 billion in May 2010.75) In November 2013, three years after ETRI founded its technology holding company, 17 government-funded research institutes in the field of science and technology joined forces to launch a technology holding company called Korea Science & Technology Holdings. What is most remarkable about this is that only ETRI has founded a technology holding company on its own and as its own subsidiary, which it runs very successfully in an effort to invigorate business start-ups, while all other government-funded research institutes have focused on technology transfer.76)

Currently, ETRI promotes the establishment of all its research-based spin-off companies through ETRI Holdings, which is responsible for selecting business items and partners for research-based spin-off companies in particular. ETRI conducts feasibility studies on the technologies of all its spin-off companies are carried out to determine whether to commercialize them and which business models to apply to them. The benefits enjoyed by the spin-off companies include a favorable corporate image associated with their use of public research institutes' brands, tax cuts, and commercialization funding designed exclusively for them.77) Since 2007, 38 ETRI research-based spin-off companies have been established, and a total of 32 companies including BT Works were in operation as of April 2016.78)

74) ETRI, '2016 ETRI Technology Report,' 2016, p.77. 75) Chang H. Hyun et al. (2014), p. 21 76) STEPI (2013), p. 15 77) Chang H. Hyun et al (2014), p. 195 78) ETRI (2016), p. 77

170 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Figure 3-7] Current status of ETRI research-based spin-off firms

Source: ETRI, 2016 ETRI Technology Report, 2016.

Launched as a venture investment company in 2010 with ETRI's own funds, ETRI Holdings uses ETRI's technologies and is participated in by SMEs. As a Daedeok Innopolis enterprise, ETRI Holdings is entitled to tax benefits since ETRI makes more than 20% of the holding company's cash contributions.

[Figure 3-8] The ETRI Holdings model

Jong H. Park, “ ETRI Commercialization Program for ICT Industries“, ETRI, April 11, 2015.

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 171 3. Surveys on Current Status to Promote Korea-Iran ICT Technology Commercialization

To ensure the effective implementation of this research and the realization of technology commercialization down the road, the relevant researchers have conducted three local surveys on Iranian ICT companies, research institutes and universities as follows.

[Table 3-7] Major Contents of Local Surveys on Iran's ICT Situation

Survey Time Major Discussion Contents No. - Ways of promoting technology commercialization (TEM, PAYA, AVAComm) 12.1. - 12.6 1st - Cooperation with ICT venture companies (e-Barakat Ventures) 2016. - Cooperation on education and training (Teheran University) / K.N. Toosi Univ.) - Ways of advancing into the telecom service and equipment markets (Paya Communications) - Data Center and Mobile Payment (Arya Hamrah) 1.19. - 1.24. - Cooperation on the construction of a Bio Industry Data Center 2nd 2017. and an operating system based on the MAHA system (Tadblir Group) - Introduction of technologies in ETRI's possession, cooperation on solar power generation, etc. (Markazi Provincial Government)

[Table 3-8] Major Contents of the 3rd Local Survey (July 2-7, 2017)

Targeted Key Topics Promotion Methods Iranian Firms RF/Antenna Design/ Bareghe - LTE - BTS-related technologies (Base Band Module) MIMO(Multi Input, - NB-IoT(LoRa) / Radio proposal submitted Pardis Multi out)

- Fixed-type Backhaul (Microwave) - proposal submitted - Antenna design and modem technology - proposal Broadcasting/Backh TAKTA submitted aul establishment - Simulcast broadcasting service of Stational 4K-UHD and Mobile (technical data provided)

- Storage technology (Data Center) - proposal submitted Data Center Farasoo - NOS (Neutral Operating Software) - proposal submitted Metadata analysis - Proposal for storage protection system submitted

172 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 [Table 3-8] Continued

Targeted Key Topics Promotion Methods Iranian Firms Nian Industrial Power Supply - BTS Power Solution - Introduction of related agencies Group for BTS - Hybrid Power – Introduction of businesses Farinesh SCADA/IoT - IoT Platform / OS / Applications data to be provided Fanavar

- Data Center / Meta Data Analysis - proposal submitted Data Mining Sahab - LBS (Location Based Service) / Big Data Analysis Multi-node Termination Service proposal submitted

Behdad - Technical cooperation for Antenna / TVWS(TV White Space) Optical Comm. Telecom Frequency / Optical Splitter, etc. - proposal submitted

- Promotion of the Smart Parking proposal - IoT technology-based cooperation (Platform, Sensor, Melat Bank IoT Module, GUI) - IoT service for gas stations (for unmanned monitoring of temperature, pressure and gas leaks)

- Access Gateway proposal - Media Gateway – proposal for SIP Protocol-based Pilot Project submitted - Proposal for MSPP (Multi-Service Provisioning Platform) Manufacturer Paya Comm. Pilot Project submitted Wimax - Proposal for TVWS (TV White Space) (Promotion of pilot systems in rural areas) - Proposal to build an SIP Protocol replacement application - Proposal for Smart Parking submitted

- DVB D2 value Added Application IRIB Broadcasting - Introduction of OTT (Over-the-top Content) business

- Logistic solutions PAYAN Airport Airport - Telecom Infrastructure - DF (Development Finance) Plan - proposal submitted

- Ways of cooperating on IoT Chip design - proposal Kavoshcom IoT, Circuit Design submitted (researchers and research-based spin-off Asia companies)

Metro Signalling/ - Cooperation on railway signalling technologies Patsa Industry Data Center - Cooperation on construction of a data center server Shezan Accelerator Establishment of means of cooperating with start-ups (Accelerator) Teyf Discussion on establishment of methods of cooperation for IoT (Accelerator) the Iran IoT Forum Optical Comm. - Proposal for technological cooperation in relation to the Puya Tadbir Establishment OTN (Optical Transport Network)

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 173 4. Recommendations

Since the early 2000s, the Iranian government has been striving to support and foster SMEs and venture companies with the focus on techno-park designation and support for the incubation of knowledge-based firms with the overall aim of promoting science and technology. Most notably, the MICT has taken the lead in allowing the designation and operation of private techno parks in addition to the designation of private techno parks in an effort to promote the development of the country's ICT industry. The Iranian government has amended several times the country's relevant legislation to protect and support tenant companies in the complexes efficiently. However, the Iranian government's commercialization efforts are still in the early stage in terms of the systematic exploration of applicable technologies and its commercialization.

Meanwhile, the Korean Model of National R&D Project (ICT) Technology Commercialization Acceleration, which has been spearheaded by a national research institute, can be summed up in three scopes, as shown in Fig. 3-9.

[Figure 3-9] ICT Technology Commercialization Support Model of Korea

1. Venture Startup

2. SME Support R&D Institutes

3. IP Protection

In the first model, researchers themselves start up technology-based businesses based on their research institute's accumulated technological prowess. The research institute establishes an incubator based on its innovative technologies and provides financial and manpower support to the new business startups for a certain period of time until they can stand on their own two feet. In the second model, the research institute provides support to SMEs through cooperation with them: Through a technology transfer contract, the institute provides the technologies required by SMEs on their worksites, and its researchers dispatched to the SMEs offer them technical guidance directly at their

174 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 worksites in the form of technical guidance. In this model, the institute also helps the SMEs to apply for patents and such like and to establish and produce test instruments and test beds. In the third model, the research institute seeks to achieve technological dissemination through IP protection, followed by technology licensing and technology transfer.

The incubator, which may become involved in this three-step process, refers to a system whereby the research institute provides support through the national budget to startups launched on the basis of the intellectual properties possessed by the institute. Currently, the incubator system enables about ten startups to continue operating each year through a matching funds arrangement made with the companies themselves so that they can get through the so-called “death valley” phenomenon successfully. In Iran, the number of startups is increasing dramatically thanks to the MICT’s efforts to support them over the past ten years. However, it is somewhat unclear how the results of the country's national R&D efforts—spearheaded largely by the national research institute—will serve as a stimulator for the development of the country's private sector and, furthermore, how they will be transferred efficiently to innovative startups based in the country's techno-parks. The Iranian national research institute currently places considerable emphasis on the execution of massive national research projects. Iran is required to promote the establishment of a separate organization devoted to technology transfer or the launch of technology exchange to promote the commercialization of the country's accumulated research results and their transfer to the private sector more energetically.

While carrying out this research project, ETRI researchers visited Iran several times and conducted interviews and surveys on the current status of technology commercialization in Iran. During interviews and meetings, the research team met with representatives of ICT companies of Iran to share knowledge and cope with new demands for technology commercialization. Their findings are as follows.

In order for Korea and Iran to share Korea's commercialization experience and know-how and explore Korean ICT technologies that can be transferred to Iran, they need to build a continuous cooperation channel customized for efficient information exchange and technology exploration. Through such a channel, the two countries also need to exchange technology commercialization experts so that they can share knowledge about Korea's commercialization strategies and the related technical information accumulated over several decades. Based on such a structured cooperation channel, the enterprises of Korea and Iran can increase their opportunities for interaction, identify technology items that are mutually beneficial, and expand opportunities for mutual business cooperation. On top of that, to that end, both countries need to analyze their respective technology

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 175 commercialization support systems and then develop a mutually beneficial model of cooperation. To that end, this study proposes three types of ICT technology commercialization cooperation models between Korea and Iran, as shown below (See Fig. 3-10).

[Figure 3-10] Korea-Iran Technology Commercialization Cooperation Models

Model 1 is based on the establishment of a joint venture between Korea and Iran, which will take the lead in analyzing Iran's market and technology levels, selecting business items based on the commercialization of Korean technologies, and making investments in them in Iran. Prior to establishing the joint venture, comparative research needs to be conducted by the two countries' ICT experts to assess the ICT technology gap between the two countries. Based on the findings, the joint research team should present an area that is required by the Iranian ICT industry most urgently in view of its potentially huge impact on the Iranian national economy, identify comparable Korean companies and researchers (or engineers) in the field, and pinpoint detailed areas where technology transfer and commercialization can occur. For the survey and analysis required prior to establishing the joint venture, it would be most ideal for an Iranian national research institute to join forces with a Korean research institute that has a wealth of research experience in a variety of fields to conduct the survey and analysis together. Thereafter, a joint venture will be established to carry out its business and to achieve its integrated goals in its own markets.

Model 2 is based on a partnership between Korean businesses and Iranian companies

176 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 (Iranian telecom carriers, etc.) to transfer technologies possessed by the Korean businesses to their Iranian counterparts or to arrange for Korean businesses to apply their technologies directly to the Iranian ICT industry. In this model, to expand business in Iran, focus will be placed on the products and services whose values have largely been verified in the Korean markets. This market-oriented model based on collaboration between the businesses of the two countries is applicable to areas with bright market potential due to the relatively highly advanced technologies involved.

Model 3 is based on Korean businesses' direct investment and participation in the Iranian ICT market together with consulting and assistance from Iranian companies for some necessary areas. In this model, the Iranian companies play the role of an advisor/coordinator so that the Korean company can make inroads into the Iranian market. The two countries' companies can elevate their cooperative relationship into a joint venture once their bilateral cooperation has generated positive business results.

To adopt any of the above three models, it is essential to conduct an in-depth examination of the Iranian ICT market conditions and technological maturity in each technical field in order to ensure smooth technology transfer and cooperation. Furthermore, it is critical to review all of Iran's regulations and restrictions on foreign technology imports well in advance. For more advanced Korea-Iran cooperation, a permanent cooperation channel needs to be established above all else. Through such a channel, it is necessary to increase human resource exchanges between the two countries: Iranian experts in the field of ICT could visit Korea to participate in technical training, while an increasing number of Korean retirees with expertise in the ICT field could be dispatched to Iran to provide technical counseling and support. In this process, the two countries should be able to narrow the technology gap and succeed in realizing a win-win technology commercialization and trade model.

It is proposed that, in order to promote the above mentioned specific business models more steadily, the two countries should seek to establish a joint R&D center with the mission of determining mutual demand and exploring areas in which both countries' national research institutes can take the lead in developing new markets in their respective countries. In addition to identifying potential areas of cooperation, the joint research center is also expected to play an important role in maintaining cooperative relations between the two countries.

Chapter 03_Proposals for the Expansion of Technology Commercialization in Iran 177 Reference

[Books] '2016 ETRI Technology Report,’ ETRI, 2016. 'ETRI's 40th Anniversary,’ ETRI, 2017. Chang H. Hyun et al., ‘A Quick Overview of ICT R&D Technology Commercialization,’ ETRI, 2015.

[Reports] 'The 2016 Survey on Technology Transfer and Commercialization by Pubic Research Institutes,' KIAT, 2016. Joo H. Kim et al., 'An Analysis of the Characteristics of Technology Commercialization and Suggestions for Strategic Promotion,' KISTEP, 2014. 'Suggestions to Invigorate Technology Commercialization of University-funded Research Institutes,' STEPI INSIGHT, Vol. 123, Science & Technology Policy Institute, 2013. Jong B. Park et al., 'Suggestions for Platform Construction to Promote State-funded Research Institutes' T/T and Commercialization,' KIET, 2008. Gil W. Lee et al., 'A Study on Ways to Boost Technology Transfer and Commercialization in National R&D Projects,' KISTEP, 2014. 'The 5th Technology Transfer and Commercialization Promotion Plan,' a joint meeting of the relevant ministries, NTSC, 2014. 'The 6th Technology Transfer and Commercialization Promotion Plan,' a joint meeting of the relevant ministries, NTSC, 2017.

[Theses] Park Woong et al., 'A Study on a Business Ecosystem Model for Technology Commercialization: Focusing on Its Application to the Commercialization of Public Research and Development Outputs,' Korea Technology Innovation Society, Vol. 17, No. 4, 2014.

[Websites] Korea Technology Finance Corporation (www.kibo.or.kr) Innopolis Foundation (www.innopolis.or.kr) Institute for Information & Communications Technology Promotion (www.iitp.kr)

178 2016/17 Knowledge Sharing Program (Industry & Trade) with Iran 2 Korea Technology and Information Promotion Agency for SMEs (ww.tipa.or.kr) Korea Institute of Science and Technology (www.kist.re.kr) Korea Institute for the Advancement of Technology (www.kiat.or.kr) Korea Institute of Industrial Technology (www.kitech.re.kr) Electronics and Telecommunications Research Institute (www.etri.re.kr)

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