KOREA’s Initiative for IT Application and the Development of Internet March 1998 WAN-IL CHOI

1. KOREA’s Initiative for IT Application and the Development of Internet March 1998 WAN-IL CHOI National Computerization Agency

2. National Computerization Agency • Contents • Current Status of Information Infrastructures • National IT Initiatives and Policy • Internet Development and Policy

3. National Computerization Agency Current Status of Information Infrastructures • IT Production • PC Diffusion • Telecommunications • CATV • Internet • Informatization Index

4. National Computerization Agency 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)

5. National Computerization Agency 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 PC’s diffused to offices and homes

6. National Computerization Agency 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)

7. National Computerization Agency 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)

8. National Computerization Agency Internet • Number of Internet Host Computers (thousands, Jan 1997) • ※ 131 : Dec ’97

9. National Computerization Agency Informatization Index(Overall) Korea 1990=100 Korea U.S. Japan Singapore Europe

10. National Computerization Agency National IT Initiatives and Policy • NBIS, NAIS • Master Plan and Strategy for Information Society • Korea Information Infrastructure • Policy Issues

11. National Computerization Agency 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)

12. National Computerization Agency 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

13. National Computerization Agency 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

14. National Computerization Agency 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

15. National Computerization Agency 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

16. National Computerization Agency 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

17. National Computerization Agency 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

18. National Computerization Agency 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

19. National Computerization Agency 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 • Consumer’s potential needs and market demand to be developed • Unforeseen yet popular services generated by enabling technologies • Interaction and Synergy Effects of Demand and Supply

20. National Computerization Agency 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

21. National Computerization Agency 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

22. National Computerization Agency 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)

23. National Computerization Agency 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

24. National Computerization Agency 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

25. National Computerization Agency Restructuring of Industrial Organization and Internet Business • Overrule of Large Businesses and Economic Crisis • Strategic Shift toward SME’s 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

26. National Computerization Agency 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 R&D Investment for Internet Technologies • Government role in Electronic Commerce • Reformation of Regulations, Rules for Promotion of Internet Businesses

27. National Computerization Agency 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

28. National Computerization Agency Development of Internet Business Services on the CATV Network • Merit : Provide Internet Service in low price • Bandwidth • Status of HFC network

29. National Computerization Agency 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

30. National Computerization Agency Promotion of R&D 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

31. National Computerization Agency 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

32. National Computerization Agency 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.

33. National Computerization Agency Policy direction in Internet based EC • Foster market mechanism and private sector initiatives • More focus on production and logistics than consumption • Active participation to Int’l cooperation • Effective division of responsibility among government and private sector

34. National Computerization Agency 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 SME’s • Launching and supporting EC pilot project in the public & private sector • Risk taking and awareness elevation

35. National Computerization Agency Thank you !