Deregulating Korean Telecom

Renowned as the world’s most “wired” country, South Korea has been quick to adopt and distribute cutting edge communications technology when it comes to both wired and wireless Internet gadgets.

Last year, the country led the world in smartphone penetration, with a rate more than four times the global average of about 15% and far outpacing the next runner-up, Norway, which showed 55% penetration. What’s more, getting online in Korea is lightning fast, with average connection speeds (14 megabits per second) far quicker than anywhere else.

When I lived in Seoul in 1998, I recall boasting to my friends that my neighborhood was among the first lucky few to receive a type of digital broadband connection in a pilot project. But that point of pride lasted only a year before broadband Internet spread quickly to nearly all Korean households at an affordable US$30 per month. In terms of fixed broadband Internet, the country already marked a 97% subscription rate per household by 2011, compared to 68% for the U.S. This high level of connectivity can be attributed in part to the density of Seoul’s greater metropolitan area home to 25 million residents and with a density of more than 16,000 people per square kilometer, or about three and a half times denser than the greater Tokyo metropolitan area.

When you consider South Korea’s affluence and high literacy levels, it’s not hard to see why the country has been a prime testing ground for communications technology firms. Nevertheless, it’s notable that Koreans were late in adopting smartphones compared to the U.S. and other Western countries. It’s widely believed that the delay was due to government efforts to protect domestic phone manufacturers from more developed global firms. In addition, delaying the introduction of smartphones in Korea enabled local telecommunications carriers to maintain their legacy platforms for developing and distributing software and content for a longer period of time and, therefore, they remained protected from open market competition.

Unfortunately, this came at a cost for users in terms of having less advanced technology at their disposal. Most advanced markets began using smartphones in 2007 while they were not offered in Korea until late 2009. Fortunately, Korean firms have demonstrated enough skill and drive to catch up technologically, and now offer competitive models that are increasing in popularity even in the West.

The success of Korea’s globally competitive entertainment industries, such as online gaming and "K-Pop," have been made possible in part because of the fierce competition in the global market. Korea should feel more confident in its ability to compete in an open global telecom market and take steps to deregulate the industry, as it has successfully done with other industries.

© Matthews Asia

© Matthews Asia

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