Development and Growth of Communication and IT Industry

The following is the fourth (Chapter 3 summary) in a series of articles on the book, titled “Corporate Korea’.—Ed.

By Kim Kwang-sooh

Thanks to four 5-year communication industry development plans of the government that started in 1962, Korea achieved gigantic development in communication industry as a pivotal component for rapid economic growth of the nation.

The number of fixed-line subscribers increased from 277,000 in 1966 to over 3 million in 1981. During this period, Korea installed scatter network between Korea and Japan, established the satellite earth station in 1970 in Geumsan, and deployed direct distance dialing (DDD) networks between Seoul and Busan in 1971. It also dualized international communication networks and modernized switching facilities across the country.

Since the 1970s, automated switchboards emerged while conventional magnetic telephone and common-battery switchboards declined. In early stages, the automated switching system market was dominated by EMD (Edelmetal Motor Drehwhler) switching systems of Gold Star Tele-Electric and Strowger-type switching systems of Dongyang Precision. To meet exponentially growing demand for communications, the government decided to develop EMD switching system as a major communication facility, and designated Gold Star Tele-Electric to produce such systems.

Prior to the 24th Olympic Games held in Seoul in 1988, the international community pressed Korea to open service businesses and communication markets. At the end of 1993, the government announced opening of its local and international call markets, while adopting competition system in the long-distance call and mobile communication markets. Accordingly, Korea Telecom (now KT Corporation), the monopolistic voice communication operator, was privatized and Sunkyung Group (now SK Group) joined the mobile communication service market by acquiring Korea Mobile Telecom, a subsidiary of Korea Telecom.

To actively cope with technology changes and industrial trends, the government enacted the Framework Act on Informatization Promotion and established the Ministry of Information and Communication in 1995, disbanding and absorbing the Ministry of Communication. Under the new act, the Information and Communication Ministry implemented policies of promoting information and communication industry, providing increased information, development and standardization of new technologies, and training of professional manpower. But the subsequent government abolished the Ministry of Information and Communication in 2008 and organized the Korea Communications Commission instead.

Korea started mobile phone service in 1961, and adopted the improved mobile telephone service (IMTS), new mobile radio system (NMRS), and semi-electronic IMTS in 1973, 1975 and 1976, respectively. After establishing Korea Mobile Telecom (now SK Telecom) as a subsidiary of Korea Telecom in 1984, Korea adopted the advanced mobile phone service (AMPS) with 2,658 subscribers in the first year. In 1989, Electronics and Telecommunications Research Institute (ETRI) initiated development of the code division multiple access (CDMA) technology under a license contract with the U.S.-based Qualcomm.

Led by ETRI, commercial CDMA technology was developed in conjunction with LG Electronics, Samsung Electronics, Hyundai Semiconductor (now SK Hynix) and Maxon Electronics. In October 1997, three mobile operators, KT Freetel (now KTF), LG Telecom and Hansol PCS (later integrated into KTF), launched commercial personal communication service (PCS) adopting CDMA technology. The number of mobile communication subscribers dramatically increased from 3.18 million in 1996 to over 47.07 million in mid-2009.

global information technology (IT) fever around 2000, Korea deployed broadband networks across the country, building advanced Internet environment. According to the United Nations Conference on Trade and Development (UNCTAD), Korea topped in the number of subscribers to broadband Internet with 8.4 subscribers in every 100 persons, and it ranked fifth in the number of Internet users in 2000. In 2007, Korea ranked first in the overall digital opportunity index (DOI) assessed by the International Telecommunication Union (ITU) for the third consecutive year, being recognized as the top IT country.

Ubiquitous broadband Internet connection enabled Korea to realize the IT dream and created unique IT culture. The number of Internet cafes increased to over 20,000 across the country and new e-business models, such as e-commerce, online games and voice over Internet protocol (VoIP) service, disrupted the conventional communication service market. The millennium bug, or Year 2000 problem, brought another phenomenal demand to the IT industry. In the early 2000s, the IT industry grew by 15% annually.

Established in April 1976, the Electronics Industries Association of Korea (EIAK) (changed name to Korea Electronics Association [KEA] in 2008) played pivotal role in rapid development and growth of electronics and IT industries. In 1967, Dr. Kim Wan-hi first proposed the government to establish an industry organization for efficient promotion of the electronics industry. Dr. Kim was elected as the president of EIAK in December 1978. Since then, EIAK had made notable contribution to development of electronics and IT industries, playing a key role in achieving $10 billion in revenue in electronics segment in 1987.

culmination of IT and high-tech industry, Korea hosted the World’s Fair in Daejeon in 1993, as part of its policy for expediting technology-driven economic growth under the theme of ‘The Challenge of a New Road to Development’. The international exposition was joined by over 100 countries and 33 international organizations with over 200 Korean companies taking part. Total number of Korean and international visitors reached 14 million. It was visited by over 2,000 buyers from more than 90 countries, clinching contracts for purchasing Korean technology products in value of $5 million. It contributed to popularizing advanced science and technologies among the people.

Since its launch in 1995, the Ministry of Information and Communication acted core part in development of IT and communication industry. Among others, it led commercialization of CDMA technology and implemented the so-called ‘IT839’ strategy in pursuit of new growth engines beyond broadband Internet service and mobile phone manufacturing.

The strategy was designed to build advanced infrastructures such as broadband convergence network (BcN), U-sensor network (USN) and IPv6, provide new services, including WiBro, digital multimedia broadcasting (DMB), home network, telematics, digital TV broadcasting and VoIP services, and to promote new growth engines, including next generation mobile communication, digital TV broadcasting, IT SOC, next generation PC, embedded software, digital content and intelligent robot. As the control tower of IT industry, the Ministry made notable contribution to positioning Korea as a mobile communication power and second strongest country in export of mobile phones in the world. But the Ministry was disbanded in 2008 after making significant contribution to development of IT industry and economic growth for 14 years.

-----------

The writer Kim Kwang-sooh is a veteran journalist in economy and technology who served at the International Cultural Society of Korea (predecessor of Korea Foundation) as director for international cultural exchange, and joined The Electronic Times, a leading daily in electronics and technology industries in Korea, where he worked for over two decades holding senior editorial positions. Kim is currently serving as a member of the editorial board at The Korea Post, a leading news and business English monthly in Korea. –Ed.