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Broadband Policy Development in the Republic of Korea

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Broadband Policy Development in the Republic of Korea Broadband Policy Development in the Republic of Korea A Report for the Global Information and Communications Technologies Department of the World Bank October 2009 © Ovum Consulting 2009. Unauthorised reproduction prohibited Table of contents Executive summary ...................................................................................................................4 1 Introduction .............................................................................................................19 1.1 Scope of the report.................................................................................................... 19 1.2 Why Korea?.............................................................................................................. 19 1.3 Structure of the report ............................................................................................... 22 1.4 Methodology............................................................................................................. 23 2 The Fixed Broadband Market....................................................................................25 2.1 Definition ................................................................................................................. 25 2.2 Overview of the current market................................................................................... 25 2.3 History of market developments .................................................................................. 33 3 The Mobile Broadband Market ..................................................................................43 3.1 Definition ................................................................................................................. 43 3.2 Overview of the current market................................................................................... 43 3.3 History of market developments .................................................................................. 48 4 Broadband Services, Applications and Content.........................................................55 4.1 Services................................................................................................................... 55 4.2 Applications.............................................................................................................. 58 4.3 Content ................................................................................................................... 62 5 Facilitating Factors...................................................................................................65 5.1 Pre-existing development ........................................................................................... 65 5.2 Political environment ................................................................................................. 68 5.3 Pre-existing ICT development ..................................................................................... 70 5.4 Geographic factors .................................................................................................... 76 5.5 Demography and culture ............................................................................................ 76 6 Korea’s ICT policy framework ..................................................................................79 6.1 Informatisation Master Plans....................................................................................... 79 6.2 Evolution of master plans and frameworks .................................................................... 82 7 Supply-side broadband policies................................................................................86 7.1 Infrastructure and application development policies........................................................ 86 7.2 Content promotion policies ......................................................................................... 97 7.3 Industrial ICT policies ................................................................................................ 98 7.4 Regulation and competition policies.............................................................................. 99 © Ovum Consulting 2009. Unauthorised reproduction prohibited. 8 Demand-side broadband policies............................................................................106 8.1 e-Government policies ............................................................................................. 106 8.2 e-commerce and e-working policies ........................................................................... 107 8.3 e-learning policies ................................................................................................... 107 8.4 Digital literacy and digital divide policies..................................................................... 108 9 Case study analysis ................................................................................................111 9.1 Policy classification .................................................................................................. 111 9.2 Policy effectiveness.................................................................................................. 112 9.3 Lessons for developing countries ............................................................................... 131 Annex A. Glossary of terms....................................................................................................136 Annex B. Operator market shares..........................................................................................139 Annex C. Korean ICT bodies...................................................................................................142 Annex D. Legal framework for Informatisation......................................................................145 Annex E. IT839, BcN and the Government’s industrial policies ..............................................147 Annex F. The Government’s demand-side policies .................................................................153 Annex G. Interview respondents ...........................................................................................162 Annex H. List of figures, tables and boxes .............................................................................163 Annex I. Bibliography ............................................................................................................169 © Ovum Consulting 2009. Unauthorised reproduction prohibited. Broadband Policy Development in the Republic of Korea A Report for GICT 4 Executive summary The speed with which Korea’s broadband market developed is remarkable. Broadband services were first launched in Korea in 1998. By 2000 its broadband penetration rate was the highest in the world, remaining so until 2006: International comparison of broadband penetration rates, 2000 - 2008 40 35 30 Korea Netherlands 25 Denmark 20 Iceland Switzerland 15 Norway 10 Broadband penetration rate penetration Broadband 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Note: Penetration rates are calculated on the basis of total population SOURCE: OECD In the early stages of its development, the Korean broadband market experienced rapid expansion in supply and demand. Strong competition between access technologies was accompanied by a downward trend in prices and an upward trend in service speeds, with subscribers benefiting from one of the lowest prices per Mbps in the world. Korea’s achievements result from many interdependent driving forces. The scale of interventions by the Korean Government is impressive and provides a wealth of policy experience which developing countries may learn from. Equally important however is the role played by the private sector in helping to reach the Government’s objectives for infrastructure roll-out, and service and application development. The development of the fixed broadband market By June 2009, there were 15.9 million fixed broadband subscribers, equating to a household penetration rate of 94%. Currently, 122 players provide fixed broadband services, including eight fixed telecoms operators and 114 local operators and cable TV operators. Our research suggests that the fixed broadband market in Korea has evolved through four stages to reach its current level of maturity: • the introduction stage, 1998 – 1999: during this period broadband services were first commercialised in Korea; © Ovum Consulting 2009. Unauthorised reproduction prohibited. Broadband Policy Development in the Republic of Korea A Report for GICT 5 • the growth stage, 2000 – 2002: in the growth stage, the number of subscribers and household penetration rate increased dramatically; • market maturity, 2003 – 2005: during this period, the growth of broadband take-up slowed and signs of market saturation started to occur; and • the move to fibre (convergence), 2005 onwards: more recently Korean broadband operators have begun to focus on rolling out advanced next generation access networks. Fixed broadband market evolution in Korea, 1999-2009 The move to 16,000,000 fiber 100% Maturity 90% 14,000,000 80% 12,000,000 Growth 70% 10,000,000 Introduction 60% 8,000,000 50% % 40% 6,000,000 number of subscribers 30% 4,000,000 20% 2,000,000 10% 0 0% 19992000200120022003200420052006200720082009 Total subscribers penetration Note: Penetration rates are calculated on the basis of total number of households SOURCE: KCC, OVUM As in many other countries, the development of Korea’s fixed broadband market was initially closely linked to the cable
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