Korea's broadband: revolution; What Korea is doing will have global impact

Chief Executive, The, April, 2004 by Assif Shameen

Although movies and videos on demand are still pie in the sky in the U.S. because of slow download speeds and high costs, they are a reality in Korea. For just 80 cents, you can download a Korean hit movie of the '90s in not much more than a minute. "What Apple's iTunes is doing to music in the U.S. now, broadband did to movies and TV archives in Korea two years ago," says Lee Jae Woong, CEO of Daum, Korea's largest Internet portal.

Daum beat off a fierce challenge from the likes of Yahoo Korea and Microsoft's MSN Korea in the battle for Korean eyeballs two years ago. Having spent tens of millions of dollars battling local players, MSN and Yahoo are now resigned to play second fiddle to portals like Daum, NHN and others.

At The Knock baang, most customers play network games like Lineage, Lineage 2, Counterstrike or Navyfield (a game that pits users against each other in high seas battle). Cho Kyn-Tae, 29, an assistant manager of a trading firm, says he is there "just to relax, meet people and play some online games." Cho spends three to four hours every day of the week including Sundays in a PC baang doling out up to 10,000 won (U.S. $8) a day for his habit. "I have a PC at home, but the speed of commercial broadband at the baang is much faster than my home broadband." Moreover, he says, "I can also find a variety of games here and meet new people." More popular baangs like The Knock add almost a new online game every week that keeps regulars like Cho returning to the dungeon. Korea alone now has several hundred game-design firms such as NCsoft and WebZen. Every young game designer wants to be NCsoft founder Kim Taek Jin or WebZen founder Sara Lee.

How did Korea get to where it is? A recent study on Korea's broadband leadership conducted by Britain's Brunel University cited "pricing, infrastructure, demographics, geography, deregulation and clear user benefits" as among the factors that have helped. "I wouldn't say it was just infrastructure or contents or indeed pricing that was responsible," says Minister Chin. "It was a combination of factors that has made us a global leader in broadband."

Chin says government policies aimed at improving the country's telecom infrastructure and fast-paced telecom deregulation in the '90s helped facilitate the journey. Some factors, however, are unique to Korea or Asia. The Brunel study cited the fact that 65 percent of Koreans live in clusters of high-rise apartment buildings, which makes it easier to roll out ultrafast VDSL broadband.

Foreigners are beating a path to Korea to discover just what elements of its success can be replicated elsewhere. "Everyone from the FCC in Washington to telecom policy makers from Nigeria have sent delegations to study our broadband phenomenon," says Kim Chang-Kon, vice minister for information and communications in Seoul. The Federal Communications Commission's Michael Powell and other top FCC brass, for example, are examining how Korea created such vigorous competition between telephone and cable companies.