Lessons for New Zealand in Korea's brightly lit revolution

By PETER GRIFFIN

The giant telescreens that light up the night sky of Seoul pulse on and off like a scene from the cult movie Bladerunner, blazing the logos of telecoms and internet companies - KT, KTF, SKT, LGT.

Among them, South Korea's telecoms operators have built some of the most sophisticated wired and wireless networks in the world, spawning a social revolution and an IT industry the envy of much wealthier countries - and a few digitally minded smaller ones.

You won't notice the cell towers and cabling as you stroll around Korea's World Cup-obsessed capital but they're there, clinging to inner-city buildings and buried beneath concrete, a hidden network fuelling Korea's domestic economy and foreign trade.

Korea's transformation can provide a lot of lessons for New Zealand, a late bloomer on the broadband front, even if our relatively small population and distance from the main internet hotspots present unique barriers.

How Korea became so well-connected is a story Government officials can tell in their sleep, they've been asked so many times.

Dan Hee-soo, deputy director of Korea's Ministry of Information and Communications, can give it in a few phrases - "open competition, purchasing power, flat-rate internet, low-price PCs, education, aggressive marketing, bandwagon effect ... "

The main factors, it seems, have been the privatisation of the all-powerful state-run telecoms operator Korea Telecom, financial and regulatory backing from a Government keen to steer Korea away from ship building and intensive manufacturing, and a population caught up in a deep love affair with high-speed internet and mobile gadgets.

Terry Yen, an executive of the CDMA Development Group, which helped to develop the technology that underpins Korea's mobile industry, says the ingredients were good services, great content and a receptive audience.

"The big question is whether these ingredients can be replaced so that third-generation (3G) mobile services are successful," says Yen.

"We're all betting the answer is 'yes'."

Korea's broadband internet explosion was a bit of a fluke. It started in the late 1990s with state-owned power utility Kepco. Its subsidiary Powercomm had laid thousands of kilometres of fibre-optic cable for its own use, but soon found it was using only 10 per cent of its capacity.

Around the same time, Seoul's cable TV market opened up.

Suddenly, a range of new cable TV companies and broadband internet providers were leasing Powercomm's cables for bargain-basement prices to deliver their services, adding the "last mile" of fibre to customers' doorsteps themselves.

It was a potent combination. South Korea was recovering from the Asian financial crisis of 1997 and was keen to leave old-world businesses behind. Investors were betting on the internet.

Providers such as Thrunet and Hanaro Telecom flourished as they stole a march on Korea Telecom, which shot back with its own broadband services, using its huge voice customer base to gain the upper hand.

But telecoms reform and competition aside, Korea has been blessed with a handful of elements that have contributed to the growth.

With 47 million people living in a small area, wiring the nation has been a breeze compared to the task Telecom faced in New Zealand.

TelstraClear still has the expensive task of building a local network in Auckland. Its plans to string up overhead cables around Auckland to provide high-speed internet, telephone and pay TV services have sparked an outcry.

In Korea, such plans would probably be rubber-stamped in the interests of increasing competition and lowering costs for businesses.

Some apartment blocks in Korea house 3000 people, 60 per cent of whom use the internet every day. That makes some buildings more profitable for telcos than entire neighbourhoods would be in New Zealand.

Then there's the gadget culture. It started with broadband internet - Koreans would cram into the "PC Bangs", internet cafes that sprung up like corner dairies.

Whether people were there to web-stream episodes of soap operas they missed on the TV, get married online, play online games or e-mail friends, the PC Bangs were always brimming.

The enthusiasm for technology and the internet is now even more obvious in the mobile phone industry.

Jung Yewon, a 23-year-old student, has temporarily dipped out of the connected culture of her homeland while she joins thousands of young Koreans studying English in Auckland.

"My friends [in Korea] use mobile phones for everything: music, accessing the internet, getting news, but not too much," she says.

"Mobile phone fees are very expensive in New Zealand. It's much cheaper in Korea and Japan."

It's the same story in Japan, says Luigi Cappel, who left mobile computing specialist Rocom Wireless to form an academy which teaches people how to use PDAs (personal display assistants and smartphones).

"I first dismissed developments in Asia as being irrelevant because we are different by nature, but I've changed my opinion.

"I believe many of the applications available to consumers in Asia will be of huge interest to the youth market in New Zealand."

Cappel cites DoCoMo, the mobile arm of telecoms giant NTT, which signed up 30 million Japanese mobile users in two years, thanks largely to the popularity of its i-mode data service, which delivers information in a form that can be easily displayed on a cellphone - a mobile "killer application" if ever there was one.

"I was surprised at the number of people who read comic books in Japan," says Cappel.

"DoCoMo has picked up on that with the ability to send and receive graphics, and is now going into photos and things like ring tones."

So what can we learn from Korea? IT minister Paul Swain has yet to see the broadband and mobile phenomenons in Korea first hand, but he plans to go there if he's still in government after the election.

"The infrastructure has been fundamental to Korea's growth and the same applies in New Zealand - it's about regional economic growth," Swain says.

The main drive of the Labour Government's policy on broadband has been to spread access as far and wide as possible.

What will people use high-speed internet for? What is stimulating broadband use among businesses? Those questions will be answered later.

"We've suffered the tyranny of distance," says an electioneering Swain, "but with decent broadband access and given we've got the Southern Cross Cable, we could be on the front doorstep of the world."

In one respect, New Zealand is following in Korea's footsteps with an emphasis on near-100 per cent cover and pushing projects to bridge the digital divide that stops some people from joining the internet revolution.

But the Asian nation has gone further, giving Government loans to internet service providers, starting ambitious internet training programmes that aim to reach 10 million Koreans and removing the red tape for IT companies looking to set up shop and export some of the country's intellectual property.

It operates the KII non-profit network, a national backbone network connecting Government laboratories, public agencies, universities and private research houses.

The Korean Government has made a substantial monetary investment in promoting firms working in an IT sector which has been growing at a rate of 16 per cent since 1998.

And the investments have paid off. The IT industry generated exports of US$51.2 billion in 2000, 30 per cent of the total.

The Government has made a direct investment of US$325 million to promote digital content and intends to put US$17 billion into its infrastructure by 2010 in a mix of state and private investment.

Swain points to the various broadband pilots around this country, the "tens of millions" announced in the Budget to wire all schools, the introduction of the Telecommunications Act and his move to set up the E-commerce Action Team which promotes broadband for business uses.

Still, we remain a relatively low-speed country.

Until the new regulations take effect and competition increases, broadband prices are driven down and connectivity is pervasive, catching up with the likes of Korea is going to be a hard task.

* Peter Griffin visited South Korea as a guest of Qualcomm.