The Broadband Boom in Korea: What Sets Korea Apart?

Transcription

1 The Broadband Boom in Korea: What Sets Korea Apart? Dong-Ju Kim Korea University, South Korea Seon-Kyou Choi Myeongji University, South Korea Sangtaek Kim Ewha Womans University, South Korea A number of factors have been suggested to help explain the success of broadband in Korea. However, whatever factors are mentioned, just as many questions are raised as to why comparable roll out of highspeed Internet access has not occurred in other countries with similar characteristics. This paper argues that supply-side push and demand-side pull, a synergistic process, are combined to make broadband Internet access in Korea particularly strong. With a new type of supply of broadband capacity in the market, and an intensely competitive environment, prices dropped drastically and new killer applications were continuously created. This resulted in a supporting responsive surge in demand and sky-rocketing numbers of new subscribers. This is a very clear case of a positive spiral generated by the synergistic process of the market: success breeds success. In terms of broadband access to communication networks, Korea is by far the most outstanding performer in the world. According to OECD statistics in June 25, Korea had 25.5 subscribers per 1 inhabitants. The average OECD penetration rate was Various factors have been credited with the broadband success in Korea. The ITU (21a) noted that the popularity of IP telephony may have played a role. The OECD (21) has pointed out that the high level of competition between different infrastructure providers is an important factor. Hausman (22) and many researchers have emphasized that a higher proportion of people live in apartments in Korea, which increases population density and decreases the cost of providing broadband networks. Aizu (22) asserted that bottomup, grass-roots entrepreneurship and aggressive netizenship contributed most to the rapid explosion of broadband. Lee (22) argued that Korean Broadband success was brought about by policy initiative. Ryu, Kim, and Kim (23) also stated that policy and market Address correspondence to Seon-Kyou Choi, Department of Digital Media, College of Social Science, Myeongji University, 5-3 Namgaja-Dong, Seodaemun-Gu, Seoul, South Korea. seonchoi@mju.ac.kr factors contributed to the diffusion. However, regardless of the factors mentioned to help explain the remarkable growth, these factors raise just as many questions to why comparable roll out of high-speed Internet access has not occurred in other countries with similar characteristics. This paper first critically reviews the various factors that have been used to help explain the broadband boom in Korea: competition, government effort, geography, and culture. This review examines whether analogous development has occurred, at the same speed, in other countries with similar characteristics. Then, this paper argues that it is the synergistic supply-side push and demand-side pull process that explains the remarkable broadband expansion in Korea. This synergistic process amplifies the speed of development of broadband Internet access in Korea. This paper provides a detailed account of broadband success in Korea, within the synergistic process framework. IT-based education, IP telephony, Internet cafes, online games, cyber trading, and low prices are considered as forces playing significant demand-side pull roles. Competitive environments and new types of broadband supply have contributed to the supply-side push in the broadband market in Korea. This paper is organized as follows: The first section The International Journal on Media Management, 9(2),

2 provides a brief explanation of broadband experiences in Korea. The second section critically reviews the factors contributing to the broadband success in Korea. The third section explains the synergistic process of broadband development in detail. The fourth section presents concluding remarks. Broadband Boom in Korea In February 21, Korea s broadband penetration passed 1 subscribers per 1 inhabitants. It was more than double the next best performing country at that stage, which was Canada. Canada was the only other country that passed the 1% penetration rate as in 22. In around four years, Korea added 3.92 million DSL subscribers and 2.32 million cable modem subscribers (Figure 1). This lifted the national broadband penetration rate to 25.5 subscribers per 1 inhabitants. In Korea, cable modem services were available before DSL services. Cable modem services were introduced in July Hanaro Telecom, a CLEC (competitive local exchange carrier), began offering high-speed Internet services, over its own network, in April Hanaro put its emphasis on the provision of multimedia services to customers rather than voice telephony, unlike many new entrants to the telecommunications market. At the end of year 1999, only approximately 2,77,6 subscribers used broadband Internet access. Of this total subscriber base in Korea, approximately 67% used cable modems and approximately 32% used DSL. This pattern was reversed as KT, an ILEC (incumbent local exchange carrier), had vigorously competed in the DSL market and signed up 5.54 million subscribers to its DSL service by September 25, up from just half a million in mid-2, although starting service later than Hanaro Telecom and other cable providers. In September 25, of the total 12.5 million subscribers 55% used DSL and 33% used cable modems (Figure 2). KT served 51.7%, Hanaro Telecom served 22.9%, and other providers such as Thrunet served 25.4% (Figure 3). Driving Factors Revisited Numerous factors have been suggested to help explain the remarkable broadband growth in Korea: competition, government efforts, geography and cultural elements (Iizuka 22, Umino 22). This section carefully reviews each argument and critically examines whether comparable growth has occurred in other countries with similar characteristics. Competition The OECD (21) and many other studies (ITU 21b, 21c, 23b) argue that the success being experienced by Korea in the expansion of broadband Internet access is largely due to the competition among companies, different technologies, and infrastructure. There are a number of broadband service providers in Korea, creating subscribers 14,, 12,, 1,, 8,, 6,, 4,, 2,, Figure 1. Total xdsl Cable Modem Trends in broadband access in Korea (Dec Sep. 25) (Ministry of Information and Communications). 48 D.-J. Kim, S.-K. Choi, and S. Kim

3 1% % % % 2% % xdsl Cable Modem etc Figure 2. Broadband access by type of service in Korea (Dec Sep. 25) (Ministry of Information and Communications). ratio 6. KT Hanaro Thrunet etc Figure 3. Broadband subscriber by large service provider in Korea (Dec Sep. 25) (Ministry of Information and Communications). a competitive environment and increasing the speed of network deployment. Thrunet began to provide broadband Internet service in the form of a cable modem in July Hanaro Telecom quickly followed both with optic ADSL and cable modem services, and KT followed with copper ADSL in December Korea had seven broadband Internet service providers with 12 million subscribers as of the end of October 25. Broadband Internet service providers also have a variety of access types for their services. The Broadband Boom in Korea 49

4 Few deny that the main factor that sets Korea apart is the high level of competition among different infrastructure providers. Strong and growing competition, however, exists in all other leading countries. That being said, strong competition, though important, is nothing peculiar to the broadband Internet market in Korea. Strong competition typically leads to lower prices of broadband Internet services. Figure 4 demonstrates the wide disparity in penetration ratios with similar broadband Internet prices per 1 Kbps, within the top 2 countries ranked by broadband penetration, showing a slight decreasing tendency in penetration ratios with increases in the prices per Kbps. The costs of broadband Internet access per 1 Kbps in Japan, USA, and Korea are very much similar, but the penetration ratios show great diversity ranging from 16.4 for Japan, to 14.5 for USA, and to 25.5 for Korea in 25. It was not until late 22 that Korea established regulatory network unbundling, which required allowing CLECs to compete better with ILECs that offer DSL to their customers. Accordingly, the competition in Korea was mainly facilities-based, and that, as some researchers such as Hausman (22) argue, may help explain the remarkable broadband expansion in Korea. The fact that the UK and Germany require network unbundling for their ILECs, but are among the worst outcome countries in broadband Internet access, is supporting evidence for their claim. However, policies such as unbundling and line sharing have played an important part, as OECD (22) clearly states, in growing the broadband access for business users in some countries. It is too early to conclude that facilities-based competition works more favorably for broadband Internet development. More evidence should be found before making appropriate conclusions. Government Efforts Government policy initiatives are often assumed to be the leading factors for success in Korea. The Korean government established a comprehensive KII (Korea Information Infrastructure) plan in as early as March KII was revised twice thereafter to accommodate technological progress and market development. KII-G (government) has been devised for the construction of a nation-wide optical fiber network and the provision of broadband services to government agencies and public institutions. KII-P (private) provided a policy framework to boost private sector investment in broadband infrastructure. The government also provided test-beds (KII-T) connecting GigaPoPs (Gigabit Point of Presence) in major cities as well as high-speed international links in Japan, China, Singapore, Europe, and the US, and supported R&D in new technologies such as IPv6, QoS backbones, and Multicasting backbones. 1 The government provided loans at a prime rate to service providers for investment into high-speed access networks. 2 It also established information education centers at post-offices and schools, and provided information education free of charge or at a nominal fee. A unique government certification program for cyber apartments, introduced in April 1999, has been regarded as facilitating in-building digitization. The government has endowed broadband buildings and apartments with official emblems (Table 1). Penetration (per 1 inhabitants) Korea HK Iceland Netherlands Taiwan Canada Finland Sweden Japan USA Belgium UK Macao Singapore Denmark Switzerland Israel France y =.6544x R 2 =.137 Norway Austria 5.. $. $1. $2. $3. $4. $5. $6. $7. Price in USD per 1 kbps Figure 4. Price per Kbps and the broadband Internet penetration 25 (ITU, 25). 5 D.-J. Kim, S.-K. Choi, and S. Kim

5 Table 1. Status for Broadband Buildings and Apartments (as of June 23) 1st Class 2nd Class 3rd Class Semi 3rd Class Total Apartments Certified ,278 Preliminarily certified Buildings Certified Preliminarily certified Total 764 1, ,275 Source: Ministry of Information Communications. However, as Paltridge (23) correctly pointed out, Korea s success cannot solely be explained by government funding. The Korean government initiated low-cost loans during the Asian financial crisis, but operators could soon obtain less expensive capital elsewhere as the crisis eased. The Korean government did stimulate the market for backbone networks by financing capacity investment. However, backbone network markets are not barriers to broadband access in developed countries and not all countries with government funding experienced success in broadband access. Government policy pushes such as Smart Island in Singapore, e-japan in Japan, and Information Superhighway in the US do not necessarily guarantee broadband success and, therefore, government initiatives in Korea, though important, are not unique factors separating Korea from other countries that have not experienced success with broadband. % copper pairs USA Germany Japan UK(BT) France Italy km Length Figure 5. Access network length (OECD, 21). Geography A high proportion of people, nearly 48% of total households, live in apartments in Korea. This increases population density and decreases the cost of providing a wired telecommunication network. DSL services are currently provided within a radius of 4 5 km from a telecommunications exchange. 3 The fact that more than 9% of households are located within a radius of 2.2 km around a KT telecommunications exchange works in favor of ADSL provisions in Korea. Telecom Italia has provided an estimate for different countries for the proportion of local loops within a certain distance from a telecommunication exchange (OECD, 21, p. 1). For their network, Telecom Italia says that the average length of the local loop is 1.5 km. The company says this is about half the average for many carriers in other countries. According to Telecom Italia s data, the vast majority of European local loops are less than 1 km from an exchange (Figure 5). In Japan, nearly all local loops are less than 8 km from an exchange. Though larger proportions of lines in Korea are deployed short distances from an exchange, the proportions are not far ahead of those of other countries. This data suggests that high population density and, therefore, the high proportion of lines within an appropriate distance from the exchange are not unique to Korea. Figure 6 demonstrates a slight positive, though not strong, relationship between the broadband penetration ratio and population density for the top 2 economies ranked by broadband penetration. 4 Canada, Norway, and Finland, with low population density, show high penetration ratios compared to France and the UK, with high population density. Singapore and Macao have extremely high population density but broadband performance is not exceptional. High population density and low-cost network deployment play an important role in broadband performance. At the same time, it is easy to find economies with a large population density and poor broadband performance. Culture A number of researchers have emphasized the cultural characteristics, particularly the hurried mentality, with regard to the success of broadband in Korea. This resulted in the tentative conclusion that economic factors have less to do with broadband deployment in Korea. They have asserted that this mentality brought fierce competition in Internet cafes and led the Korean people to The Broadband Boom in Korea 51

6 Broadband Subscribers per 1 inhabitants 3 25 Korea 2 15 Iceland Canada Norway Finland Sweden Denmark Switzerland Israel Japan Belgium Netherlands y =.18x R 2 = USA Austria France UK Population density (per sq.km) Figure 6. Population density and the broadband penetration ratio (ITU, 25; UN, 25). quickly embrace this new technology. Korean people are often characterized by a hurried mentality, that is, those possessing a high degree of impatience. Nonetheless, it is not clear whether Koreans are second to none in this cultural and social characteristic. Taking this hurried mentality for granted, it still remains to be explained why similar expansions in other ICT fields in Korea have not occurred as rapidly in terms of broadband development. It took 13 years for the mobile sector to reach 6 million subscribers, which broadband access to the Internet accomplished in approximately 2 years (Figure 7). 5 It is not clear why it was believed that the hurried mentality only affected broadband Internet access and did not result in the rapid adoption of wireless subscribers. What Sets Korea Apart?: The Synergistic Framework Government policy pushes, infrastructure competition, favorable regulatory environment, attractive pricing options, high population density, response-savvy netizens, to name a few, have been used to help explain the remarkable performance of broadband access in Korea. As already discussed in this paper, these driving variables are important, but are not sufficient to explain why rapid broadband access to the Internet has not occurred in other countries with similar characteristics. Then, what sets Korea apart from other countries in regard to the rapid development of broadband? This paper argues that it is not factor-by-factor fragmentation, but the synergistic process that explains the remarkable expansion of broadband in Korea. That is, supplyside push and demand-side pull, a synergistic process, combine to make demand for broadband Internet access in Korea particularly strong. 6 Broadband success in Korea can be best explained within the synergistic process framework. A lack of demand pull usually means that investment is deployed ahead of market demand, while a lack of technology push implies that a technology bottleneck occurs without the development of more extensive broadband networks. There is a new type of broadband supply in the market, with a liberalized competition environment, prices dropped drastically, and new killer applications were continuously created. This consecutive process brought about a supporting responsive surge in demand, and the number of subscribers sky-rocketed. This is a very clear case of a positive spiral generated by the synergistic positive process of the market: success breeds success. Supply-side Push From the beginning, there has been a strong supply push from competitive local carriers. Hanaro Telecom, a local carrier, entered the local telecommunications business in The local voice telephony market, 52 D.-J. Kim, S.-K. Choi, and S. Kim

7 subscribers 4,, 35,, 3,, 25,, 2,, 15,, 1,, 5,, Broadband Mobile Figure 7. Deployment speed in broadband and mobile services (1985 Sep. 25) (Ministry of Information and Communications). however, was unattractive due to a extremely low local call price. Hanaro thus focused its business target more on the broadband market rather than voice telephony. Although broadband technology was available as early as 1991, it was not until 1999 that Hanaro started a strong supply push and an aggressive marketing campaign. Hanaro s focus on the broadband market is in sharp contrast to cable companies in the UK. The UK cable companies focused on the voice market. This is due to the fact that higher local call prices prevailed in the UK telephony market. 7 Hanaro used both xdsl and cable modem technology. It quickly reached a customer base of 1 million subscribers, driven by the rapidly growing demand. This success prompted the Korea Telecom (KT), an incumbent carrier in voice telephony, to enter the broadband market. KT primarily used xdsl technology, and, with help of its larger size and existing marketing channel, surpassed the market share of Hanaro and became the number one provider in the broadband market in June 2. During the process of KT s market share upheaval, broadband subscription sky-rocketed. Competition played an important role in supply-side push. Deployment of xdsl technology was possible with rather simple upgrade of the network. In 22, regional cable companies also entered the market. Cable companies could also provide broadband service with the simple addition of cable modems and servers to their existing networks. A high level of competition exists between different infrastructure providers: copper and fiber ADSL, cable modem, Local Area Network (LAN), Ethernet Broadband- Wireless Local Loop and Satellite. The availability of a variety of broadband technologies adds to the competitiveness and dynamism. Table 2 shows the types of broadband Internet services offered by providers and reveals that intermodal as well as intramodal competition prevails in the market. The greater the competition, the lower the price. As Figure 4 shows, Korea is one of the countries with the lowest broadband prices. Though Iceland, Japan, and Taiwan are also ranked as countries with low prices, Korea, however, is peculiar as it shows severe competition in both intermodal and intramodal arenas. As Crandall (25) pointed out, Korea has the most aggressive policy of extending fiber optics to new residential buildings, particularly the large apartment complexes that have been built in recent years. The new type of broadband supply market ignited the supply-side push in the market. Another factor which is worth mentioning is that the broadband business in Korea has been categorized as value-added telecommunications. A company could easily enter the market, as the Ministry of Information The Broadband Boom in Korea 53

8 Table 2. Broadband Access by Types and Service Providers (Dec. 25) Total xdsl Cable Modem APT LAN Satellite Rate (%) KT 6,24,185 5,547, ,744 2, Hanaro 2,762, ,11 1,46,316 4, Thrunet 96,395 2,54 94, Onse Telecom 366, ,13 35, Dream Line 18,745 41,746 56,219 1,78.9 Dacom 227,191 95, , Powercom 89,49 59,256 3,234.7 VSPs* 1,114,478 9,234 1,87,343 17, SSPs** 247,121 38,493 42,12 166, Total 12,62,645 6,595,315 3,982,37 1,482,26 2,763 1 Note. *VSPs = value-added service providers, **SSPs = specific service providers (Source: Ministry of Information and Communications). and Communication imposed effective price regulation. 8 The lack of regulatory intervention and free entry led to fierce competition in both price and quality of services. Demand-side Pull Along with supply-side push, there has been timely demand-side pull in broadband access in Korea. Awareness, adoptions and integration, and affordability are all considered in promoting demand-side pull broadband. These dimensions are closely in line with what Reynolds (ITU, 23b) classified. Another fruitful line of categorization would be what Rogers (1995) suggested. He classified five characteristics influencing the adoption of new technologies: relative advantage (affordability), compatibility, complexity, reliability (adoption and integration), and observability (awareness). Awareness Korean society has traditionally put considerable emphasis on education. Korean parents, realizing the potential threats and opportunities of globalization, urge their children to acquire both English and computer skills in preparing for globalization. The Korean government has taken the initiative of providing broadband Internet access to schools for free or at reduced rates, and teachers have started to deliver homework using the Internet. Schools have provided an ideal environment to expose youth to broadband and once the students experience the experience of broadband, they are much more likely to demand broadband access in their homes. Highspeed access to the Internet at home is an advantage for children, and parents would also rather their children use the Internet at home, instead of in a PC Bang. Broadband is regarded as a family investment in education. Adoption and Integration Serome technology, a Korean venture firm, introduced its IP telephony service, DialPad, in Korea in January 2, right after the broadband Internet access service in One of the major attractions of the DialPad service was that it offered PC to PSTN phone calls free of charge. In its first month 95, users signed up and the number increased by 3, per month for the rest of the year and by December 2, some 4.3 million users had signed up for the service. The always-on feature of DSL and cable modems was obviously attractive to the users of IP telephony and the rapid increase in the use of IP telephony closely correlated with the boom in broadband access. This is not to say that IP telephony was a killer application for broadband access, but it is likely to be one of the advantages of broadband access to the Internet. It is also widely believed that PC Bangs and Korean Internet cafes have provided a taste of high-speed Internet access, which subsequently led people to use the same service at home. There has also been the bandwagon effect; the more people use high-speed Internet, the more people also want to use high-speed Internet. In 1997, there were only 1 PC Bangs in Korea but the number increased rapidly during the economic crisis in 1998 and 1999 and nearly saturated at 25, (Figure 8). The PC Bangs were first introduced during the Asian economic crisis by employees who were laid off from major electronic companies or the owners of small software companies whose business went bankrupt due to the recession. Although PC Bangs were first used as a gaming center, they eventually became more than game centers. Office workers use them to check private or web-sites during coffee breaks or after-work hours, students use them for preparing homework, and housewives use them to buy stocks or other goods and services online. Another critical element of demand pull was the popularity of online games such as Starcraft and Lineage, 54 D.-J. Kim, S.-K. Choi, and S. Kim

9 Figure 8. PC bang penetration (Korea Entertainment System Industry Association, 23). which required very high speed broadband access. The popularity of online games was far greater than expected. Korea is a nation with several professional online game leagues. Professional online gamers have become idols among Korean teenagers. The demand also ignited as the number of cyber stock traders and cyber banking traders increased. The always-on feature of the broadband Internet has been greatly acknowledged. As Figures 9 and 1 show, the increase of broadband subscribers is closely aligned with the increase in the number of Internet banking transactions and online stock trading accounts. Affordability As presented in Figure 4, Korea is one of the countries with the lowest charges for broadband access along unit: thousand , , ,86 3, , , ,85 8,39 8, , unit: thousand 12, 1,874 1, , , 6, 4, 2, Broadband Internet banking Figure 9. Number of Internet banking transactions and broadband subscribers (Dec Mar. 23) (MIC and The Korea Bank, 24). The Broadband Boom in Korea 55

10 7,, 12,, 6,, 1,, 5,, 4,, 3,, 8,, 6,, 2,, 1,, Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Online stock trading accounts Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Broadband subscribers Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 4,, 2,, Figure 1. Number of online stock trading accounts and broadband subscribers (Jan Oct. 23) (MIC and The Korea Securities Dealers Association, 24). with Iceland, Taiwan, Japan, US, and Sweden. Broadband access is priced as a flat rate. Unlike the USA, in which local rates are flat, local call charges in Korea are measured by usage rate; narrow band PSTN dialing access is relatively expensive and unappealing to consumers compared with flat rate broadband access. Furthermore, severe competition among providers has placed downward pressure on broadband prices, and many instances of price discounts, special promotions, and giveaways in broadband markets have occurred. Synergistic Process A lack of demand pull usually means investment is deployed ahead of the market and technological bottleneck is inevitable without utilizing existing networks to the full extent, alongside new network investment. The spiraling process of supply-side push and demand-side pull is believed to set Korea apart from other countries. First, the marketing strategy of Hanaro, a competitive local telecommunications provider, initiated a supply push. KT, an incumbent carrier, followed and other cable TV companies also entered the market. The regulatory environment also was favorable to supply with its leniency to entry, penetration pricing, and unbundling. This supply push, however, had been unsuccessful without the timely demand pull of awareness, adoption integration and affordability. These three elements, awareness adoption and integration affordability are believed to promote the wide diffusion of broadband demand across Korea. Korea had all three elements, while other nations lacked some of these critical demand diffusion elements. For example, the US had elements of awareness and affordability, but evidently lacked elements of adoption and integration. Clear broadband applications such as online games cannot be observed in the US, where the most popular form of game is the PC package game or video console game, which do not require broadband access. The synergistic interaction of supply and demand could be thought of as a success of a proper business strategy (supply push) in the right place in the right time (demand pull). The synergy could be generated if one can carefully design the environment for nourishing the seeds of technological and marketing initiatives of industry. Conclusion Much literature has emphasized the role of specific factors, in an effort to explain the success of broadband in Korea. Though the aforementioned factors are important, there is more to these factors affecting Korea, because not every country with similar characteristics experienced comparable performance in broadband Internet access. This paper first critically reviewed the several factors which help explain broadband success in Korea. While few deny that these factors may have played certain 56 D.-J. Kim, S.-K. Choi, and S. Kim

11 roles in the development of broadband Internet access in Korea, they do not suffice to explain the differences among countries with similar characteristics. Then, this paper argued that the focus should be on the spiral or synergistic process of demand pull and supply push, rather than on specific factors. It is worthwhile to note that some success stories of broadband development in Korea as described in this paper involve the absorption of technological diffusion in ways that corresponds roughly to Fidler s Mediamorphosis (Fidler, 1997). He emphasized the complex process comparable to evolution in the emergence of a new medium, which is roughly analogous to the spiral synergistic process in that it is the complex interplay of perceived needs (demand pull), competitive and political pressures, and social and technical innovations (supply push). This paper carefully explained how Korea s broadband experiences focused on this process and may shed some light for the countries that want to succeed with broadband: Harmonization of demand-side pull and supply-side push is most effective. Successful broadband economies should have, on average, not only higher percentages of broadband access to the Internet, but also effective use of e-commerce and business applications over broadband. However, e- commerce is not yet widespread in Korea. According to a recent survey, 81.1% of broadband Internet subscribers are using entertainment-related content and 74.6% of subscribers are playing network games. This shows that the use of broadband is largely limited to entertainment and games, and not extended for business applications. Another characteristic of broadband subscription in Korea is that residential Internet use exceeds business use. Korean broadband Internet access market is now experiencing rapid restructuring because of financial difficulties. Dreamline merged with Hanaro Telecom, which is also experiencing business trouble. Thrunet, the third largest broadband access provider, has been under legal management. KT and Hanaro Telecom have been attempting to find strategies for generating revenue from the broadband market. This may be a by-product of excessive competition but should not be interpreted as evidence against competition. Acknowledgments We thank the participants of the International Conference on Digital Convergence of Cyber-communication Academic Society 26 for their helpful comments. Remaining errors are the responsibility of the authors. The first author gratefully acknowledges financial research support from Korea Research Foundation Grant (KRF B119). Notes 1. The investment for initial KII plan amounted to approximately 24.5 billion dollars. See basic plan for advancing broadband infrastructure MIC ( 2. Loans worth $77 million were provided in 1999, with an additional $77 million in 2, to invest in less densely populated areas, small cities and towns, and regional industry complexes. This public funding program was extended to include rural areas, with additional investments amounting to $923 million (MIC). 3. This distance is being expanded due to technological developments such as rate adaptive modems and 2 Wires DSL loop extender technology. 4. Hongkong, Singapore, and Macao are excluded in this graph due to the excessive population density which distorts the positive relationship. Their penetration ratios are 21.3, 11.9, and 9.7 with population density 6,47, 6,333, and 17,699, respectively (ITU, 25). 5. Korea Mobile Telecommunications Corporation (KMTC) enjoyed a monopoly during the 11-year period between 1984 and Not surprisingly the cellular penetration had only reached two subscribers per 1 inhabitants by As the digital CDMA voice services (IS-95A) were launched in January 1996 and four new operators entered the market, competition brought in the rapid uptake of mobile subscriptions in the late 199s. 6. The supply-side push and demand-side pull, a synergistic process, slightly differs from the network effect, without which the synergistic process occurs as sectoral transformation from agriculture to manufacture and services. 7. Recently, the UK cable companies have performed badly and have been reorganized through a merger into two large carriers. 8. Recently, the Ministry of Information and Communication put the broadband business in the realm of a network telecommunications service. The network service requires a license to enter the market, and the Ministry regulates prices. 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