The Strategy for Building Information Society in Korea
The Strategy for Building Information
Society in Korea
Senior Information Officer
Informatics Program, ISG
The World Bank
The Conference for Financing Information Society
I Korea‟s ICT Status and Achievements
II Korea‟s Informatization Promotion Strategies
III Financing the Informatization
IV Success Factors and Future Tasks
V Cooperation between DGF/MIC and Latin America
VI Concluding Remarks
Korea‟s ICT Status (End of 2002)
Unit: 10,000 Subscriber
Digital TV : 1,080,000
68% Penetration : 7.3% of
2,500 of Total Household
of population IT Industry Production :
1,500 36% 160.1 Billion USD
(14.9% of GDP)
500 of households IT Export :
46.4 Billion USD
28.6% of Total Export
Building Network Based
• Leader in Broadband
• Leader in 3G Service
Engine of Economic
• Economic Efficiency
• 21.3% growth per year
• Building E-Government
II. Korea‟s Informatization
Korea‟s Information Promotion Strategies
Build-out Digital Divide
Resolving ICT Industry
Adverse Effects Promotion
Basic Plan for
Framework Legal & Regulatory
Strengthening the Informatization
Enactment of the Act on Promotion of Utilization of Information &
Formation of the Electronic Network Management Committee(’87.5)
The establishment of the informatization promotion system
- MIC for balanced development
- Informatization Promotion Act
- Informatization Promotion Committee
- Informatization Planning Office in MIC
- Special committee for the e-Government
Basic Plan for the Informatization Promotion
The Basic Plan for Informatization Promotion is established every
- Implementation plans for the area of administration, finance and
economy are in the form of rolling plan
Established the Cyber Korea 21(’99.3) and e-Korea Vision 2006(’02.3)
- Increase the impact of the informatization on all economic agents
including the public, businesses and the government
Legal and Regulatory Frameworks
A total of 187 acts have been enacted or revised based on the results of
the analysis of 7 rounds from ’95.
- 86 laws, including the Basic Act on Informatization Promotion, have been
enacted or revised for informatization promotion in the public sector
- 101 laws, including Acts on Digital Signatures and Online Digital Contents
Industry Promotion, have been enacted or revised for the development
of the IT industry and informatization of the private sector
Informatization Promotion Fund
The promotion of informatization requires large scale investment,
calls for cooperation of various organizations, and last for several years.
So, it is difficult to carry out the projects with the general budget.
The Informatization Promotion Fund was established as a special vehicle
to overcome the budgetary restrictions in order to promote the
informatization project. The fund is managed by MIC.
The Fund, based on government budgetary and private sector
contribution, created the system for letting the profits from ICT fields
be reallocated into ICT sector.
2. Network Build-out
Mondernize Fixed Line
Fast 2G/3G Roll-out
Mordernize Fixed Line
Up to early „80s, fixed line facilities were lagging behind in terms of
quality and quantity. (penetration rate was 7.2%)
- Financed the large-scale investment through installation fee, telephone
bond, tariff, etc
- Korea became the 10th producer in the world with the successful development of
fully digitized telephone switching system, TDX-1 in ’86
-1987 marks the opening of the ‘1 phone per person’ era, completing the
digitization of wide area telephone switching and achieving no waiting list for
telephone line installation
Those resulting high quality telephone networks provide the physical
basis for the roll out of xDSL, Broadband Internet.
Fast 2G/3G Roll-out
Up to the middle of the 80‟s, wireless services were limited.
- In ’84, Korea Mobile Telecom was spun off from Korea Telecom
- Successful deployment of CDMA with the investment of USD 84.44M from ‘89 to ‘96
- Introduced the competition issuing licenses of 1 cellular operator in ‘94 and 3 PCS operators in ‘96
- Licenses granted for 3G operators(2 for W-CDMA, 1 for CDMA 2000) in Mar and December, 2002
The number of mobile service subscribers surpassed that of the fixed service in Sep, ‟99.
The number of subscriber is now at 32.34 million, ranking 8th in the world as of Dec, „02 .
In addition, with the expanded usage of 3G service(CDMA-1X, launched in Oct „00),
the number of subscribers had reached 17.2 million as of the end of „02. By the end of
this year, 3G service(W-CDMA) will be offered in the Seoul metropolitan Area.
Leading Broadband Network
In March 1995, Comprehensive Plan for KII(Korea Information
Infrastructure) was launched for the construction of a nationwide
- USD 9B was invested for this project. Government funds USD 1B for the
KII-Testbed KII-Government KII-Public
Main User Research Institute Government Home and Business
Investor Gov’t+Private Government Private
Main Target Testbed Backbone Network Access Network
- In December 2000, 144 call zones were connected through high speed large capacity
optical cables(155Mbps- 5Gbps).
- A variety of resources including CATV, telephone line, satellite, optical cables were used
for access network in KII-Public. ADSL was especially endorsed.
By 2005, USD 16.3B(government funds: USD 1.76B) will be
invested while service with speeds of 622Mbps for government and
business, and 20Mbps for households will be provided.
National Basic Information System was classified into 5 areas of
administration, finance, education and research, defense and national
security and carried out.
- National DBs for the essential information was constructed.
- USD 250M was invested from ’87 to ’96.
National Basic Information System, electornizing basic administrative
information and connecting administration, enhanced efficiency of the
public sector and high quality of administrative service.
E-Government Special Committee was organized to complete e-government
by 2002, and initiated the 11 key projects.
- Single Window e-Govenrment(G4C), National e-Procurement(G2B),
National Finance Information System(G2G) were implemented.
- USD 190M was invested from ’01 to ’02.
4. Bridging the Digital Divide
With the rapid rise of informatization, the Digital Divide between classes and
regions began to widen in the „90s.
Bridging the digital divide
- KADO(Korea Agency for Digital Opportunity & Promotion) develops regional informatization
projects, creates greater awareness of informatization, and runs computer education program
- Comprehensive Plan for the resolving the digital divide was established in ’01.
- 10 million people(21%of the population) education program completed.
- 4,397 information facilities have been setup for the free in remote and rural areas.
- KT is obliged to provide broadband internet service(1Mbps) to all farming and fishing
village by 2005.
5. Resolving Adverse Effects
With the spread of information technology, we witnessed the social
losses such as privacy infringement, computer hacking and computer
In order to keep these losses to a minimum, the countermeasures
for the adverse effects of informatization were established and
Implemented in Oct ‟99.
- Digital Signature Act(Feb ‘99) and Basic Act on Information Security(Jan ‘01)
- Certification Body for Digital Signature was designated(Feb ‘00)
- Personal Information Mediation Committee was established (Dec ‘01)
- Enforcing the law and regulation to protect against spam mail
Monopoly Duopoly Competition
Long Distance „96 ‟97(3)
International „90 ‟96(3)
Leased Line „90 ‟96(18)
Broadband „99 ‟00(6)
Mobile Phone „94 ‟96(3)
3G „03 ‟04(3)
( ) : Number of operators
KCC(Korea Communication Commission) was established in 1992
- 7 Commissioners(including the chairperson) Appointed by the President
- 3 Special Committees - Legal Issues/Contracts, Tariff, and Accounting
- 5 Divisions and 25 Employees
- Examine the agreement regarding provision of facilities and interconnection
- Investigate unfair practices and arbitrate consumer loss and damage
- Authorize the agreement between telecom operators
- Arbitrate disputes of network sharing and interconnection between operators
Regulatory Framework for Competition
Incumbent‟s market dominance has become strong through M&A.
Growing concern for the level playing fields.
- KT Privatization : Privatization Plan was setup in ‘87, the process was
started from 1993 and completed in Feb 2002
- Interconnection : Essential facility owners are required to provide interconnection
- Accounting Separation : Ban on cross subsidy of facility-based service operator
- Tariff : Approval(Local:KT, Mobile:SKT) and Notification(the others)
- Carrier Pre-selection for long distance introduced in ‘97
- Universal Service Fund : Introduced in Jan ’00.
- LLU (Local Loop Unbundling) introduced in ’02
• For : Local networks, Broadband Networks
• Type : Full Unbundling, Line Sharing, Bit-stream Access
- Local Telephony : Implementing stage-wise from Jun ’03 to Dec ‘04
- Mobile : Implementing in 6 months intervals in order of SKT(1st), KTF(2nd),
and LGT(3rd) from Jan ‘04
Long-Run Incremental Cost
- Assess the connection charge most effectively
- Plan to establish detailed plans based on policy research reports coming
Revise Universal Service
- Review the possibility of including the broadband in universal service after 2005
7. ICT Industry Promotion
Public-Private Partnership in R&D
Relied heavily on foreign technology and equipment until middle of 80’s.
MIC, research institutions and manufactures launched partnership for developing
TDX and CDMA technology.
The domestic ICT industry could acquire technology and enjoy the cost advantage.
Expand R&D through ICT Human Resource Development
Need to increase the number and quality of highly trained workers to create a
R&D base and for the early realization of the information society
Established the Information and Communication University in 1998, established
IT related department in universities, sponsored research projects, media
support, and scholarship
Develop SW, Digital Contents Industry
Crack down on illegal copying, prevent sharing of software;support the production
and creation of computer games and multimedia contents, support new ventures
Financing the Informatization
for Public Sector
KII-G & KII-P Tariff Strategy
1. Informatization Promotion Fund
Goal Status of Fund Investment
Promotion of e-Government Funding: Total of 7.78 billion USD
Broadband Network Roll-out
- Government : USD 3.06B (39.3%)
Support R&D and Standardization - Private Sector : USD 3.59B (46.2%)
- Miscellaneous profits and interests:
Educating human resources in ICT
USD 1.13B (14.5%)
Investment: Total of 5.33 billion USD
Management - Broadband infrastructure and promotion:
USD 800M (15.1%)
MIC(overall management), IITA(specific - Informatization promotion:
USD 1.07B (20%)
- Infra for IT industry:
Fund Management Council (Evaluation) USD 375M (7%)
- Chair : Vice Minister of MIC - IT R&D : USD 2B (37.5%)
- Members : Director Generals of related - ICT Human Resource: USD 950M (17.8%)
- Standardization: USD 135M (2.6%)
2. Informatization Support Program for Public Sector (1)
Major support area & outcome
Search and support informatization projects that are difficult to
pursue at the ministerial or autonomy level
- Construct the infra for information integration and sharing among departments
- Maximize the effect of investment using economy of scale and scope
- Support projects that promote regional informatization and narrow the digital
From 1994 to 2002, USD 310M has been invested into 328 informatization
projects such as Local Government Administration Information System and
Home Tax Service
2. Informatization Support Program for Public Sector (2)
Assignment of General Budget & Fund
General Budget was used for the ministerial project that are directly
related to the management or expanded usage.
The fund mainly dealt with infra construction that is difficult to carry out on the
single agency level
- Projects that involve integration or information sharing among ministries
- Long term, large scale informatization projects with confirmed feasibility through the
pilot project which minimizing risks when implemented in the public sector
- Projects that need confirmation of adequacy when applying new technology or projects
dealing with pending problems that need to be carried out quickly
- Projects that research and develop coordination of interests, management methodology,
project management models, etc
Settlement After Investment
The risks that large scale network projects entail were dispersed and
budgetary limits were overcome.
3. KII-G and KII-P
KII-G Rate Structure of KII-G
The government invested public funds Exemption
and settled accounts after the completion
of projects. Facilities are reverted to the Government
business and investment funds are set Setoff
off by the user fee.
Private companies invest their own funds.
Government provide loans or portion of the funding as a means of narrowing
digital divide. Loan was provided USD 360M as the end of ‟02.
4. Universal Service Fund
Prior Competition : Subsidized by the profitable
To provide the basic
local long-distance and international services
communication services at
Early stage of Competition(’95) : NTS Subsidies
reasonable cost, the losses from
Fund and connection fee structure
facilities investments are
Rise in Competition : Shared based on revenue
subsidized by telecos
levels, with the enactment of the Business Act
Type 2002 Subsidy Fund
Local Telephony, Public Telephone
Total Losses : USD 470M
Emergency Service, Wireless
Subsidies(rate) : USD 220M (46%)
5. Tariff Structure
Implemented various tariff structure between „70s and „90s to create the
large scale investment resources for the network build-out
Major Service Tariff Structure
Fixed Telephony Mobile Phone
Installation Charge(USD 205) and Installation Charge(USD 550)
Telephony Bond (USD 170) Changed to deposit and subscription
Incremental increase in local service charge system after the introduction
charges of competition in 1996.
Fixed Service : Investment increased greatly to 7.5%(previously 3%) in total
investment, which reached USD 8.22B from „80 to „87.
Mobile Service: USD 930M from „85 to „95
1. Success Factors(1)
Adoption of a government led model
Application of effective policy vehicles including planning, laws and
regulations, funds and organization
Investments focused in the future demand of ICT
Building the infra and implementing e-Government and e-commerce
for the knowledge-based economy
R&D efforts in human resources, TDX-1, and CDMA technology
1. Success Factors(2)
Informatization Promotion Fund enabled focused investment in ICT.
Developed effective investment criteria such as settlement after investment
Attracted private investments with government‟s seed money.
Liberalization and open competition in local telephony and broadband
created the mass market that formed virtuous cycle by reducing the cost.
Unique habitat(60% of population lives in high rise apartment)
Rapid increase of internet users with the rise in computer usage and real
time information exchange
Online game, “PC Bang” as well as Internet Café
Strategic Regulatory Reform
Investment for the Convergence
Coordinating Optimization of
Divergent Interests Network Usage
2. Future Tasks(1)
Coordinating Divergent Interests
Establishment of a general office responsible for ICT and
maintaining strong government leadership giving ICT top priority.
Concentration on strategic areas such as construction of infra inducing
voluntary participation from the private sector
Solving Adverse Effects
Measures minimizing the adverse effects of informatization in all areas
including security and privacy, and preventing the digital divide
between the rich and the poor
2. Future Tasks(2)
Regulatory Reform for the Convergence
Continuous regulatory reform to encompass the convergence such
as telecom and broadcasting, etc.
Optimization of Network Investment
Prepare the measures optimizing network investment such as
interconnection and sharing of a base station.
V. Cooperation between
DGF/MIC and Latin America
1. Status of Cooperaton(1)
Development Gateway Foundation (DGF)
- DGF’s mission is to reduce poverty and support sustainable development
through the use of ICT. DGF is a not-for-profit organization, established
in Dec 2001, currently based on Washington, D.C..
- ISGIF (Information Solutions Group Informatics Program) of World Bank
supports the actual operations including human resources and technology.
- Operate the Portal(www.developmentgateway.org)
- Organize ICT Development Forum
- Operate the Research and Training Network
- Support e-Government Project (Grant Program)
- Support the Country Gateway(Grant Program)
- Provide electronic Procurement Service(dgMarket)
1. Status of Cooperation(2)
Major cooperation status with countries of Latin America
- 13 country gateways have been established in Latin America;
Argentina, Bolivia, Brazil, Colombia, Costa Rica, Dominican Rep., El
Salvador, Guatemala, Jamaica, Nicaragua, Peru, Uruguay, and Venezuela
(total 44 country gateways)
• Country gateways are locally-owned partnership-based initiatives that
pursue DGF’s mission on a local level
- The ICT Training Center(DGF-KTC) established in Seoul, Korea in Nov 2002
offered training programs for 24 participants from 12 countries such as Argentina,
Bolivia, Chile, Colombia, El Salvador, Guatemala, Jamaica, Mexico, Paraguay,
Peru, Uruguay, and Venezuela.(Total 128 trainees from 49 countries)
1. Status of Cooperation(3)
Ministry of Information & Communication (MIC)
Formed economic and telecommunication cooperation committee with
the major countries of Latin America to facilitate cooperation in the
MOU Agreements and Telecom Cooperation Committees :
Chile, Mexico, Brazil
Economic Cooperation : Chile, Mexico, Brazil, Argentina, Peru,
Venezuela, Paraguay, Colombia, Ecuador,
Bolivia, Jamaica, Uruguay, Suriname(13 Countries)
2. Future Cooperation
Continue its efforts in sharing knowledge and experience thru country
Gateway and promoting cooperation thru projects
Increase participation of DGF-KTC program(expanding the # of courses
from8 to 10; establishing the distance learning program)
Promote ICT related policies and human resources exchange
Organize seminars to acquire and exchange information
Create opportunities for experts and specialists to share experience in
different fields when necessary
• Information Society is a national goal for all countries.
• Strategic design encompassing the unique environment
is a key for the success.
• Korea‟s experience and success can be considered as a
reference for a unique model of development for the