Key Issues in Korean Broadband Regulation

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Key Issues in KoreanBroadband Regulation
July 10, 2003
Jong-won Seong Ministry of Information and
Communication
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Contents
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I. Definition of Broadband Internet Services

• General Concept of Broadband Internet Services
• Services which enable subscribers to use the
  Internet by accessing backbone networks with
  broadband subscriber loops
• ? ITU and FCC tends to categorize the broadband
  services by transmission speed.

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II. Technologies and Market Status
Technologies

• Major Commercial Access Technologies
• Development of Alternative Technologies

Market Review

• Overview
• Service Rate Structure
• Number of Subscribers

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Technologies

• Major Commercial Access Technologies
• ADSL
• Cable Modem
• Fixed Broadband Wireless Local Loop
• Satellite
• LAN Ethernet
• Development of Alternative Technologies
• VDSL
• 2.4GHz Wireless LAN

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Major Commercial Access Technologies

• ADSL
• Supports broadband Internet access by adding ADSL
  modem and DSLAM equipment on existing local loop.
• Transmitting speeds are maximum 10Mbps downstream
  and 128Kbps upstream
• KT provides ADSL service using existing copper
  local loop or building FTTC in densely populated
  areas
• Cable Modem
• Transmitting data using cable TV networks, not
  PSTN
• Transmitting speeds are maximum 10Mbps downstream
  and upstream.
• Multiple ISPs provide services, leasing
  Powercomms network
• Fixed Broadband Wireless Local Loop
• Uses 2.3GHz spectrum band.
• KT, HTI and Dacom acquired licenses, but
  deployment is negligible.

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Other Commercial Access Technologies

• Satellite
• Transmitting data to users by connecting land
  facilities and satellite
• Transmission speeds are 128Kbps3Mbps
• KT provides services to remote areas as an
  obligation to public interest
• A-LAN(LAN Ethernet)
• Uses LAN facilities and router of large
  residential complexes and private circuits for
  Internet connection
• Supports 10Mbps speed at a lower costs than other
  access technologies
• Big operators such as KT and HTI, and many small
  operators compete in the market.

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Development of Alternative Technologies

• VDSL
• Symmetric 20Mbps speeds both downstream and
  upstream
• Supports broadband multimedia services such as
  VOD and remote education
• Needs additional investments, such as building
  FTTC, replacing ADSL modem and equipment
• KT and HTI provide commercial services in select
  areas.
• 2.4GHz Wireless LAN
• Access to Internet near access points using PDA
  or notebook computer with wireless LAN modem

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Market Review

• Overview
• Service Usage
• Service Providers
• Market Competition
• Service Charges
• Service Rate Structure
• Number of Users
• Classification by access technology and provider

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Overview

• Broadband service is used as a physical means of
  internet access(connecting users PC and the
  internet), to access web search, e-mail and
  contents
• Service Providers
• Six main carriers including KT and HTI as well as
  many small value-added service providers and
  resellers
• Market competition
• Access technology ADSL and cable modem are the
  most common type of access technology in the
  market
• Service providers There is one dominant
  carrier(KT) and two secondary carriers (HTI and
  Thrunet).

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Service Rate Structure

• Flat-rate fees
• Rate plans of most dial-up services are
  usage-based
• Flat-rate system was adopted for the broadband
  internet service at an early stage
• Rate Levels
• Average monthly rate of non-premium ADSL/cable
  modem service is ? 33,000
• Monthly rates of other services that use
  different access technology are similar to the
  rate of ADSL/cable modem services

Rates of month broadband internet services(June
2003, unit KW)
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Number of Subscribers

• As of June 2003, subscribers surpassed 11 million
  
• Market Share
• Service Provider KT 5 m (48.5), HTI 3 m
  (26.9), Thrunet 1.3m (11.6), with combined
  market shares nearing 90
• Service Type ADSL 57, Cable modem 34, Home-LAN
  9

(unit one person)
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III. Key Success Factors virtuous cycle
Environment

• Densely populated residential areas (high rise
  apartments)
• Technology savvy consumers
• Large installed base of slow speed PSTN modems

World-class Infrastructure
Corporate
Government

• Heavy investment for infrastructure
• Training people for internet usage
• Policy to encourage competition

• Aggressive marketing for more subscribers
• Low and flat subscription tariff
• Many contents and game providers

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IV. Regulatory Issues
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Digital Divide

• Digital divide is an important social issue since
  information has become a determining factor for
  the quality of life in the information society
• Widening gap between information haves and
  have-nots, despite growth of broadband Internet

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Information Security Privacy

• Need for greater information security as the
  information society advances
• Computer Hacking Viruses
• Increase in information leakage and network
  crashes due to illegal hacking
• Increase in development and spread of computer
  viruses.
• ? eg. Internet Network Crash by Slammer Virus
  (January 15, 2003)

• Violation of Privacy Spam Mail
• Increase in privacy violations as more
  information becomes digitized and stored in
  databases
• Increase in spam mail has led to social and
  economic losses
• ? Types of Spam Mail Obscene Information, AD,
  Illegal S/W Promotion,
• Gambling
  etc.

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Difficulties of New ISPs

• Increasing gap between incumbent and entrants
  negatively effects profitability and marketing
  power of entrants
• With difficulties in cash flow, Thrunet
  (2003.3.27) and Onse Telecom (2003. 5.9) is
  managed by the Court.
• Financial status of entrants is very weak due to
  continuous debts and investments needed to deploy
  new services (like VDSL).

lt Annual Operating Profits of Entrants gt
(Unit 100 Million Won)
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V. Policy Issues
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Bridging the Digital Divide

• Various initiatives to bridge the digital divide
• Obligation by KT to build broadband network for
  broadband (1Mbps) access to low-demand areas
  (e.g. remote areas)
• Provision of the Internet service via satellite
  to schools and post offices in non-broadband-servi
  ce areas in accordance to Cyber Korea 21 policies
• Provision of Internet services to schools and
  public organizations via National Network
• Advanced Universal Services
• Determining the legalization of discount plans of
  broadband Internet for the handicapped and
  low-income levels
• Reviewing the need to enlarge the scope of
  universal services to include broadband Internet
  in consideration of speed of technological
  developments and informatization level

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Information Security and Privacy Protection

• Protecting the Information infrastructure
• Designating Information infrastructures and
  developing information protection plans
• Introducing a consulting system for information
  protection by designating private information
  security companies
• Doubling the Internet Exchange (IX) to protect
  the Internet backbone
• Prevention and Defense from Hacking and Virus
• Warning system for Hacking and Virus
• Increasing technical training and enhancing
  awareness for information protection
• ?Public announcements, print media, Information
  Security Award (ISA)
• Protecting personal information and regulating
  illegal spam mails
• Enforcing the monitoring of Internet sites and
  operating the reporting centers
• Guideline for Private Information Protection
  (April, 2002)
• Guideline for Regulation of Illegal Spam Mails
  (June, 2002)

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Enhancing Competitiveness of Entrants

• Encouraging autonomous efforts to increase
  competitiveness
• Market-based solutions
• Increasing competitiveness via MA, investments,
  etc.
• Policies to enhance competitiveness of entrants
• Reviewing competition policies so that entrants
  can compete in a fair-competition environment

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Thank You