KOREA

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KOREAs Initiative for IT Application and the
Development of Internet March 1998 WAN-IL
CHOI National Computerization Agency
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• Contents
• Current Status of Information Infrastructures
• National IT Initiatives and Policy
• Internet Development and Policy

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Current Status of Information Infrastructures

• IT Production
• PC Diffusion
• Telecommunications
• CATV
• Internet
• Informatization Index

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IT Production

• Computer and PC Production (million Dollors)
• ? exchange rate 800 won/US
• 1997. 10 Computer 1,734,817 million won (US
  2,168)
• PC 962,362 million won (US 1,203)

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PC Diffusion

• Number of PCs Sold Domestically(thousands)
• Number of PCs in Use 7 Million (as of the end
  of 1997)
• Goal set in NBIS (National Basic Information
  System)
• - One PC per household by the Year 2000
• - 10 mil PCs diffused to offices and homes

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Telecommunications

• Market Structure for Basic Service
• - KT Monopoly Broken at the Mid, 1991
• - International Call Carrier Oligopoly (KT,
  Dacom, Onse)
• - Domestic Long Distance Jan 96. Duopoly (KT,
  Dacom)
• - Local Calls Duopoly (KT,Dacom)
• Telephone Lines per 100 population(1996) 44.4
• - U.S. 62.5 (1995)
• - Japan 48.8 (1995)
• - U.K. 50.5 (1995)
• Subscribers of Mobile Communications (thousands)

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CATV

• New Service on Mar 1995
• Number of Subscribers
• - 500,000 (Jan 1996) 5 of households
• - 1,700,000 (Mar 1997) 13.1 of households
• - 2,002,000 (Jun 1997) 15.4 of households
• - 2,452,000 (Feb 1998) 19 of households
• - 6,500,000 (by the year 2000, Projection) 50
  of households
• Time for Diffusion of CATV
• - 10 of households 8 10 years (Canada,
  U.S.A.)
• - 6 of households 8 years (Japan)

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Internet

• Number of Internet Host Computers (thousands,
  Jan 1997)
• ? 131 Dec 97

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Informatization Index(Overall) Korea 1990100
Korea U.S. Japan Singapore Europe
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National IT Initiatives and Policy

• NBIS, NAIS
• Master Plan and Strategy for Information Society
• Korea Information Infrastructure
• Policy Issues

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NBIS(National Basic Information System)

• First National Initiative of IT Use and
  Production
• 1st Five-Year Plan (1987 - 1991)
• 2nd Five-Year Plan (1992 - 1996)
• Consensus on the Potentials of IT
• Industrial Revolution vs. Information Revolution
• Strong Support by Government
• Funding Schedule
• NCB (National Computerization Board)
• Under the Executive Office of the President
• Effective Coordination among Government Agencies
• Computerization Promotion Meeting (Presidential)

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NBIS(National Basic Information System)

• Objective
• Economic Growth in Information Age
• Use IT to Improve Competitiveness
• Take a Position of Developed Nation in 21st
  Century
• Improve Quality of Life
• Provide Initial Markets for IT Industries
• Implementation
• Administrations
• Financial Institutions
• Education and Research
• National Defense
• National Security

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NAIS(National Administration Information System)

• Small and Efficient Government
• 1st Stage Developing the Separate Systems
• 2nd Stage Sharing Information among Agencies
• Pre-assigned Fund US 200 million (1987 -
  1991)
• Six Subsystems
• Resident
• Vehicle
• Hose and Land
• Employment
• Customs Clearance
• Economic Statistics

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Master Plan and Strategy for Information Society

• Legal Ground
• Basic Act on Informatization Promotion(1995)
• Basic guiding principles on building KII and
  creating information society
• Basic plan for informatization and implementation
  
• Establishment and operation of Informatization
  Promotion Committee
• Operation of Informatization Promotion Fund

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Master Plan

• 1st phase(1996-2000)
• laying the foundation for building a national
  information network
• 2nd phase(2001-2005)
• Spreading the usage of information networks
• 3rd phase(2006-2010)
• Promoting a higher level of information network
  usage

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Major programs

• Promoting projects aimed at accelerated usage of
  the information network in the public sector
• Building an information superhighway
• Creating the desirable environment for the
  information and communication industry
• Establishing a legal framework
• Ensuring information security and standardization

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Korea Information Infrastructure

• Aim To construct high-speed government and
  public information networks
• KII-G needs of public administration, research
  institutes, and universities
• KII-P needs of industry and general public
• Construction
• Operator Korea Telecommunication, Dacom
• Fund US 580 million
• Schedule completed by 2010

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KII and Internet

• KII promotes the usage of Internet services
• Internet becomes the integral part of KII
• Vitalization of Internet as a basis of
  implementing Electronic government
• Development of Web based application in the KII

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Policy Issues

• Demand-Pull vs. Supply-Push
• KII Plan coordinated by Government Supply-Push
  Model
• Experience of Failed System in NBIS due to
  Insufficient Demand
• Shifts of Interest to Demand Side
• Nature of IT
• Consumers potential needs and market demand to
  be developed
• Unforeseen yet popular services generated by
  enabling technologies
• Interaction and Synergy Effects of Demand and
  Supply

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Policy Issues

• Roles of Government
• Strong Leadership in Economic Development Plan
• Different Environments in Managing the KII Plan
• Limited Roles of Government
• Bureaucratic Attitudes Are Still Alive
• Mixed Attittudes Held by Private Sectors
• Preferring liberalized business environment
• Seeking for direct government supports

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Internet Development and Policy
History of Internet use in Korea o 1982
Installment of SDN(System Development Network)
between Seoul National University
and Korea Institute of Electronics and
Telecommunication o 1986 Establishment of
KRNIC(Korea Network Information Center) at
KAIST o 1987 Interoperation of SDN with CSNet
(9.6Kbps) extending to Research and
Education Network o 1994 Starting ISP Businesses,
Providing Internet services to the Public o 1994
KRNIC move to NCA(National Computerization
Agency) o 1997 Establishment of Commerce Network
in KOREA, stimulating Internet
Commerce
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Status of Internet Usage
o Status of Internet in Korea o Internet
Usage for Commerce - Market size for 96 6.3
bil won (US 4.2 mil) - Projection for year
2000 61.4 bil won (US 40.9 mil)
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Internet and New Businesses

• Application of Internet Technology to existing
  Businesses
• - Banking, Shopping, Distribution, Retailing,
  etc
• - Improving Efficiency and Productivity
• Intra-firms
• Between firms
• Between Producers and consumers
• Generation of New Businesses
• - Huge Business opportunities provided by
  Large number of Users connected
• to the Internet
• - New production system and distribution
  channels
• - Access to cyber market requiring Small
  Investment

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List of Internet Businesses

• Internet Network Service Providers (NSP) KT,
  Dacom
• Hardware Manufacture
• Internet Connection Service Providers (ISP) 22
  (98.3)
• ? Commercial(98. 3) 18, Non Profit ISP 4
• Web Hosting Service Providers (WSP) 120 (97)
• Internet Based S/W Developers
• Homepage Building Service
• Internet Contents Providers
• Internet Telephone and Fax

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Restructuring of Industrial Organization and
Internet Business

• Overrule of Large Businesses and Economic Crisis
• Strategic Shift toward SMEs and Internet
  Businesses
• New Government Strategy in favor of Small
  Businesses
• Recognition of Internet as a means of Supporting
  Small Businesses
• Easy Access to World Market with Modest
  Investment
• Internet Technology enabling New Ideas into
  Businesses along with Venture Capital

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Strategies for Development of Internet Businesses

• Improvement of Internet Backbone Network
• Development of Internet Business Services on the
  CATV Network
• Government Support for Internet Businesses
• Promotion of RD Investment for Internet
  Technologies
• Government role in Electronic Commerce
• Reformation of Regulations, Rules for Promotion
  of Internet Businesses

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Improvement of Internet Backbone network

• For the Short term Examine traffic on the
  existing Internet
• backbone to solve bottleneck point.
• For the long term Use PUBNET and ATM to
  build Super-
• high speed
  Internet backbone
• - build more IX (Internet exchange point)
• - 33.6Kbps ? 56K
  bps

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Development of Internet Business Services on the
CATV Network

• Merit Provide Internet Service in low price
• Bandwidth
• Status of HFC network

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Government Support for Internet Businesses

• Support Model Project of Commercial Activity
  based on Internet
• Support Next generation Internet Pilot Project
• Support APAN (Asia Pacific Advanced network)
  Activity

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Promotion of RD Investment for Internet
Technologies

• Direction
• - Driving force to develop new technology
  through Industrial-educational
• cooperation
• - positive utilization of Forward Delivery
  Trial Network to verify Internet
• technology which will be developed
• - Reinforce exchange information between
  Standardization and R D

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Government Roles in EC

• Constructing technical infrastructure
• EC related technology
• Standards for electronic document
• Physical network infrastructure
• Preparing legal and institutional arrangement
• Constructing the environment for elevating the
  social acknowledgement on EC
• Establishing the national strategy for issues on
  global EC and internal cooperation

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Government initiatives for EC In Korea

• Government took full initiatives in major areas
  during the introduction of EDI in Korea
• logistics, customs, taxation, procurement
• Market formation as a investor and a user
• Promulgated independent EDI law for the first
  time in the world(1992)
• EDI is considered an integral part of the major
  social overhead capital
• MOTI(Ministry of Trade and Industry) and
  MIC(Ministry of Information) are major actors in
  EC policy.

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Policy direction in Internet based EC

• Foster market mechanism and private sector
  initiatives
• More focus on production and logistics than
  consumption
• Active participation to Intl cooperation
• Effective division of responsibility among
  government and private sector

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Some Measure for Expansion of EC over the Internet

• Tariffs on Internet transaction
• Visible merchandise tariff as present
• Invisible product tentatively tariff-free
• Regulation on Contents
• Development of consumer protect measure
• Self regulation against harmful contents
• Preparation of Electronic Fund Transfer Act
  (during 1998)
• Operation of EC supporting Center for SMEs
• Launching and supporting EC pilot project in the
  public
• private sector
• Risk taking and awareness elevation

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Thank you !