Conclusions

1. Exploiting the broadband opportunity: lessons from South Korea and Japan Conclusions Antony Walker Director, Intellect CEO Broadband Stakeholder Group Global Watch is a DTI service managed by Pera

2. Different yes, irrelevant no! Much to learn from both countries • Innovation • Take-up • Enablers • Inhibitors • Business models • Value and benefit

3. Innovation • Content genres similar to the UK: • music, games, video, community services, P2P applications, VoIP, e-Learning, e-commerce etc. • Some services more advanced, incorporating more rich media • Higher levels of take-up • Could be approaching a tipping point

4. Take up • Market for digital content is growing rapidly • Strong demand for personalised, interactive on-demand services and applications across a wide range of content genres. • Online and mobile advertising revenues growing • Continued trend towards user-generated content and social networking • IPTV and mobile TV still in their infancy - not clear how consumers will adopt these services, but commercial interest is strong.

5. Enablers • Top down strategies – create investor confidence about government commitment • Infrastructure competition - players seeking to compete through content • Vertical integration - encouraged by regulators in the interests of sustainable investment • Collaboration - between manufacturers and operators - developed platforms on which content developers can innovate. • High-speed connections with high quality of service - essential trigger to the take up of new rich media services.

6. Inhibitors • The accelerated pace of change creating disruptive opportunities and threats for all • Commercial uncertainty about business models, timing for market entry, technology choices, and the value of assets, delays investment • Some players seeking to slow the pace of change as they reposition themselves • Uncertainty about the regulatory framework for IPTV services has inhibited investment and delayed the deployment of services

7. Business models • Many services have succeeded with traditional subscription, advertising, or pay as you go business models. • Games industry been most innovative - ‘Items selling’, now being developed by other sectors. • Access to low cost micro-payment systems was a critical enabler for these models • Games companies first to recognise revenue potential of communities and to monetize social networking services.

8. Business models • Larger operators focusing on ‘quadruple play’ services and fixed and wireless integration • Some mobile operators moving to flat rate to encourage rich media take-up • Uncertainty about biz models for mobile and IPTV services. Few believe subscription or advertising alone will be sufficient. • Convergence is driving cooperation and alliances across the value chain, the acquisition of content assets by network operators, portals and ISPs and consolidation between operators.

9. Market opportunity • Despite significant growth, online or mobile distribution methods for digital content still only represent a very small percentage of total content sales by genre, suggesting that there is a huge opportunity for growth in these areas in the coming years. • There are early signs in Japan of a growing interest in international and niche content, which could open up new opportunities for UK content companies.

10. Social and economic change • ICT is being prioritised as a key economic driver • Recognised implications of broadband enabled ICT for their economic and social development. • Measuring progress in this area and its direct and indirect contributions to society and GDP. • ICT is being recognised as a driver of social change • Broadband and convergence are driving and enabling diverse social and societal change. • Emergence of new community social network services and the trend towards user generated content is shifting power towards the consumer / citizen. E.g. OhmyNews in Korea

11. Visions are user centric • U-strategies developed in close collaboration between government ministries, professional ‘think-tanks’, trade associations, technology suppliers and network operators. • Although, supplier led, both attempt to be ‘user centric’ - putting user benefit and experience at the centre of policy and strategy. • More forward looking, longer-term and visionary than European strategies and i2010

12. Payment, identity and trust • Critical enablers for innovation and growth and will become increasingly critical in a networked society. • This is an area where government can play an important role in working with the industry to ensure a benign user environment in the ubiquitous networked society.

13. NGA – leap of faith • Fibre deployment expensive and ambitious • No evidence of a clear business case • Believe demand for bandwidth will grow and that new services require guaranteed QoS in the access layer • Unlikely that operators would have come to this conclusion without strong government and supplier backing • Policy makers and suppliers focused on export potential of international markets

14. China Japan and Korea are responding to China • Korea and Japan feel the heat of competition from China’s burgeoning economy more acutely than we do in Europe. • Aware of China’s scale impact on the ICT sector • Prioritised ICT leadership and exploitation as part of their strategic response to China’s growing economic and political influence.

15. Exploiting the broadband opportunity: lessons from South Korea and Japan Recommendations Global Watch is a DTI service managed by Pera

16. EU Comms Framework Review – DTI/ Ofcom • Strong trends towards vertical integration and consolidation in Korea and Japan • Regulatory approaches being taken in these markets should be assessed in more detail • Determine whether they offer useful lessons that could be applied in the current review of the EU framework.

17. Establish UK Digital Readiness Index – ONS. • There is a measurement philosophy in Korea and Japan – what gets measured gets done. • The UK should establish effective metrics to assess the UK’s digital readiness.

18. Focus on payment, identity & trust – DTI • In an increasingly networked society, the challenges of ensuring a safe and trusted user environment will increase. • UK government and industry should be enhancing their collaborative efforts now, to address issues that will be critical to consumers in five years time.

19. Strategic initiatives • Review options for Next Generation Access (NGA) deployment and publish a plan – DTI/ BSG. • The UK will need to develop its own mid- to long-term route map for the evolution towards NGA in the UK. • Digital health for patient-centred care – DTI/DOH • Although not the primary focus of this mission, there are clearly significant and economic and social benefits to be gained from the diffuse application of ICT in patient centred-healthcare. More could be learned form the Asian experience in this area

20. Strategic initiatives c. Connected car and connected roads KTN – DTI/DOT • Both Japan and Korea are seeking to exploit the application of ICT in transport for economic, social and environmental benefit. A connected cars initiative in the UK could build on the recent Intelligent Networks Foresight study. d. Digital Olympics challenge – DTI/DCMS/ IAPThe relevance of the Ubiquitous Networked Society Vision should be considered in the context of 2012 Olympics.

21. Follow-up missions on IPTV – Intellect • Many forms and flavours of IPTV services are emerging in Japan and Korea. • Consumer reaction to these services and the evolution of the related business models will be instructive for UK players • Follow-up mission in this area would be valuable for UK companies.

22. Review the impact of China– DTI/FCO • The strategies being developed in Japan and Korea are, in part, incentivised by a recognition of the potential impact that China will have on the global ICT market. • DTI should consider undertaking a review of the strategic impact of China on the UK