The NBIS was the first national project on IT use and production in Korea, and it made a substantial contribution to the current information infrastructure in Korea. This section provides an overview of the structure of the computers and communications industries -- computers, telecommunications, CATV and Multimedia industries -- and users’ markets that are key to the future evolvement of NII. This section also describes the KII Plan in detail, including the vision, strategies, detailed programs, and schedules for implementation.
Table 1 shows the production and export of each of four groups within the IT industry, computers, peripherals, communications equipment, and semiconductors, between 1993 and 1995. In 1994, production in all four groups was $22.9 billion.60 The largest portion of industry production was in semiconductors, reflecting the strength of technology advancement in this area. Most computer production in Korea has been concentrated in personal computers. As shown in table 2, PC's accounted for about 91.2% of computer production in 1994. The PC industry has been advanced owing to the strategic support by the government since the mid 1980’s, when the NBIS project started, even though the growth rate of PC production started to slow down at the beginning of 90’s.
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Table 3 shows the number of PC’s sold between 1991-1994. As part of the NBIS the government was encouraging computer use in homes as well as offices, with a goal of 10 million PC’s being used in the nation by the year 2000.61 The number of PC’s was estimated at 1.445 million by the year 1990 (NCA, 1994), but since then the number of PC’s sold has sharply increased. In particular, it increased as much as 64% between 1993 and 1994. If the trend shown in table 3 holds, the goal set by government for the number of PC's in use will be met several years earlier than expected.62 Of approximately 1.2 million PC’s purchased in 1994, about half were purchased by households, about 35% by private organizations, and the remaining 15% by the public sector including government agencies and universities. Statistical information on the distribution of PC purchases among user groups in 1994 provides a rough idea about the ratio of households possessing PC's. About 60% of the total PC's sold in 1994 were 486 DX technology Table 4 shows that individuals in Korea spend slightly less than a fourth per capita on personal computers compared to the leading country, Japan, and a little less than a third of that spent by Germany, the U.S., the U.K. and France.
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Korea’s technological capabilities for producing computers are still very weak. In driving the development of PC industry, the government focused on comparatively low-technology components such as memory semiconductors and motherboards, while high technology components such as microprocessors were ignored. In the case of minicomputers, the government strategically chose to copy core technologies under the contracts with an American venture capital partner (Tolerant). The result was TICOM I for use in the government systems of the NBIS project, and sold in the commercial market. A consortium was formed by four major electronics companies, in cooperating with ETRI, to update the TICOM series. The TICOM project made some contributions to the development of computer technology, paving the way for further research and development. However, the production and use of TICOM minicomputers has been limited and mainly in the public sector.63
Telecommunications service providers can be divided into three groups: general service providers, specific service providers, and value-added service providers. The first two operate their businesses with their own networks, while the last group uses leased lines for VAN services. There are two network providers in Korea, KT (Korea Telecom), and Dacom.64 KT provides telecommunications services, and constructs, operates, and maintains public telecommunications facilities. As a public corporation controlled by the government65, KT maintained its monopoly in the basic voice market till the middle of 1991, when the Dacom joined in the international telephone service market. The market for domestic long distance became a duopoly of KT and the Dacom in January, 1996. Dacom was originally established in 1982 to construct and operate public data communications networks, especially for the NBIS project, as a monopoly. Since the beginning of the 1990’s, however, market for the data communications services has been opened in the process of the liberalization of VAN services, and Dacom has been allowed to join the voice market to compete with KT.
KMT (Korea Mobile Telecommunications Co.) and KPT (Korea Port Telephone Co.) are two examples of specific service providers. KMT provides cellular and paging services. The cellular market will remain a KMT monopoly until the second carrier enters into the market, scheduled for early 1996. Paging services are provided by a number of private companies, each of which is a monopolist in a geographically divided local area. The number of VAN providers has grown since the liberalization of the market in 1990, accelerated as a result of technology development and widening of its application areas, such as EDI, Email, CRS (computer reservation system), etc.
IT use today depends on the availability and quality of communications networks. The ambitious investment during the 1980’s eliminated the large backlog of demand for telephone lines, improving availability of telephone networks in Korea. As shown in table 5, however, the number of telephone lines per 100 population as of 1993 is still behind advanced countries. Mobile communications capabilities were even further behind; about one per 100 population in 1993, in contrast with 4.4 for the U.S. and 1.5 for Japan. However, the number more than doubled in 1994, and a second provider of mobile service is scheduled to begin business in the first half of 1996.
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More important than the network capacity from the viewpoint of NII initiatives is the size of information services market. The real value of the physical networks comes into existence when they are combined with terminals to produce various services on demand. Prior to the convergence of computers and communications technology, voice communication has been the major telecommunication service. The history of providing network information services in Korea begins only with the NBIS project, and growth was slow at first. Yet as Table 7 shows, between 1990 and 1993 sales and the number of service providers grew substantially. The sales data include VAN services (Email, CRS, EDI, etc.), on-line search service for DB, on-line data processing services, and voice mail service. Annual growth was as much as 43%, and is projected to be further accelerated as the new applications are put on the market as part of the implementation of the KII. Forecasts of the future development of service markets along with the GNP data is provided in table 8. The GNP contribution made by telecommunications services is projected to be increasingly important in terms of the ratio of service sales to GNP.
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The service industry has been restructured by regulatory reform to increase competition in the market and to facilitate in providing various services enabled by the sophisticated technology. Efforts to advance the technological capabilities have also been emphasized. A success story can be seen in the TDX switch project during the 1980’s that made a significant contribution to the goal of one telephone per household. In order to further advance network switching and transmission capabilities and to keep pace with the coming multimedia communications, the government launched the BISDN project in 1992, which has a target year of 2015, mainly to be carried out by KT. The project has made major investments in ATM switching technology and transmission for fiber optics, key technologies for high-speed networks for multimedia communications, but the effects thus far are invisible (ETRI, The Electronics Daily, September 25, 1995). The investment in this direction will continue. Major electronics companies have already joined in developing key technologies for this component of the future information infrastructure, either through contracts with foreign counterparts or by the cooperation with ETRI.
At the beginning of 1990’s some of small and medium enterprises began importing foreign CD-ROM titles and drivers. Since then, multimedia products and equipment have attracted attention from major companies that recognize the importance of the multimedia industry in the coming information society. Large companies are paying attention to new business opportunities such as games, education, and entertainment. Newspaper and publishing companies have begun investment projects for developing electronic journals and newspapers. The Chosun Daily News, one of Korea's major newspapers, has established the Newmedia Institute to put special efforts in applying multimedia technologies for publishing purposes. The Choongang Daily News, another major newspaper, has developed a Internet application for publishing an electronic version of its daily newspaper worldwide.
Table 9 shows the sales in various types of multimedia industry products in 1994. Sales have risen threefold from 86.2 billion won or $108 million to 251.8 billion won or about $315 million in a single year. 1993 sales quadrupled from the year before. The number of CD-ROM titles sold in Korea in 1994 was estimated to be about 2.9 million, slightly more than 5% of the worldwide sales of 53.9 million. Sales of CD-ROM titles for educational purposes have been strong in the market, reflecting Korean parents’ high willingness to pay for educational devices.
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CATV can play a major role in providing network services envisioned in the future NII, such as homeshopping, news and entertainment programs. CATV is a precursor to publicly available, high-speed broadband networks even though at the moment it is neither integrated nor interactive. The CATV industry was almost nonexistent in Korea until early 1995, when cable TV began operation. KT launched a project in 1990 to build a pilot CATV system in a densely populated residential apartment complex in Seoul. This pilot system has been under test for five years, extending service into the local cities. During this time period, the government prepared legislation, the General Cable Broadcasting Act, enacted in 1991, to regulate CATV operations and select service providers. By law, the industry is divided into three groups: program providers, network operators, and system operators.
In 1993, KT and KECO (Korea Electricity Corporation) were selected as network providers. Their plan was to construct physical networks with coaxial cables or fiber optics connecting 600 thousand households by early 1995.66 Fifty-four system operators were selected based on geographic area. Each operator is allowed to provide individual subscribers in the designated local area with TV programs, which can be domestically produced or imported by 21 independent program providers. Each program provider is supposed to have its own special programming in music, movies, entertaining drama, news, sports, home shopping, religions, etc. By the end of 1996, the number of system operators is expected to have more than doubled to 116, enabling all local areas to be completely covered by CATV service.
The Internet is emblematic of the NII in the sense that NII will evolve by expanding the use of the Internet, and the current use of the Internet provides a hint on the future development of NII. Table 10 shows the number of Internet hosts67 in selected countries. By July 1995, the number of host computers connected to the Internet was estimated to be 6,642 thousand. Almost two thirds of host computers are located in the U.S., by far the leading country of the NII initiatives. The number of Internet hosts and the distribution of user groups in Korea are shown in table 11. The numbers are as of October 1995 cited by the NCA, which is representing Korea for Internet use. The number of hosts was 33 thousand, a sharp increase of 2.5 times over the year before. The main users of the Internet have been education and research groups, including universities, but use is now shifting to commercial users. The number of hosts in the commercial use more than quadrupled from a year before, passing the academic use in 1995. Internet use in Korea will be probably more rapidly diffused through commercial application.