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The future of the Korean ICT Industry Featured

Written by  Man-Won Jung
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Man Won JungIssue:Global-ICT 2009
Article no.:10
Topic:The future of the Korean ICT Industry
Author:Man-Won Jung
Title:President & CEO
Organisation:SK Telecom
PDF size:192KB

About author

Man Won Jung is President and CEO of SK Telecom. Man Won Jung has held various senior management positions in his15 years in SK Group including - CEO of SK Networks; Vice President of SK Telecom’s Internet Business Division; and Vice President of the Customer Business Development Division at SK Energy. Man Won Jung holds MBA degree from New York University and has a degree in Business Administration from Yonsei University in Korea.

 

Article abstract

During the last two decades, Korea has turned itself into a technological and industrial powerhouse and a worldwide leader in the development, manufacturing and use of Information and Communications Technologies (ICT). Some 30 to 40 per cent of Korea’s total GDP growth comes from the ICT industry. Korea’s ICT industry concentrates on hardware, but lags in software development. To recuperate its lead in ICTs, Korea needs to promote the development of smart technologies that facilitate the efficient use of resources, energy and infrastructure.

 

Full Article

The ICT industry in Korea Wired and wireless telecommunications technologies form the backbone of today’s knowledge and information society. Korea has established itself as a global ICT powerhouse by leading the development of the ICT-based society. It became the first nation in the world to commercialize CDMA technology in 1996, and went on to pioneer world-first technologies, such as CDMA2000 1X, EV-DO and handset-based HSDPA. A report by the International Telecommunication Union (ITU) in 2003 highlighted the strong advancement of Korea in the ICT sector saying Korea is “a country that no longer needs any ICT-related recommendations given the miraculous achievements driven by its ICT industry”. This year, Korea placed second in the global ICT Development Index released by the ITU in March. The ICT industry played a significant role throughout the development of the Korean economy. In the 1990s, it served as a major growth driver that pulled the country out of the financial crisis that struck across Asia during that period. According to a study by the Bank of Korea, the nation’s central bank, about 30 to 40 per cent of Korea’s total GDP growth is contributed by the ICT industry. Indeed, the ICT industry has been a major pillar of the Korean economy and has helped elevate the country as one of the leading countries in today’s global economy since the 1990s. The industry accounted for 15.8 per cent of Korea’s real GDP in 2008 from a mere 3.9 per cent in 1996. Research data from Korea’s Electronics and Telecommunications Research Institute (ETRI) indicated that the Korean economy has grown in parallel with the growth of the ICT industry, as CDMA technology in particular generated production revenues of 125 trillion won and created 1.42 million jobs. ICT industry’s challenges Despite its successful history, the Korean ICT industry is facing major challenges. It is experiencing stalled growth and a severe imbalance within the industry. The growth rate of the overall Korean ICT industry has been significantly reduced from 19 per cent in 1998 to 5 per cent in 2008 while the global ICT industry recorded an increased growth rate of 5.5 per cent in 2008 as compared to 1.5 per cent in 1998. Also, the rapid growth of the hardware sector stands in stark contrast to the weak performance of the software sector. That is, while Korean handset makers hold some 25 per cent of the global market share, the telecommunications service and the software sector account for a mere 2 per cent of the global market. The problems of the ICT industry loom large because the country’s telecommunication infrastructure is not fully utilized. Despite the implementation of e-Government projects aimed at building a Web-based government system and the fact that Korea’s high-speed Internet penetration rate is the highest among the world, the Organization for Economic Co-operation and Development (OECD) ranked Korea 15th among the 27 OECD countries in terms of the e-readiness rankings. ICT industry steps-up once again As mentioned above, the growth of the ICT industry has been far too concentrated on the hardware sector, which focuses on expanding wired and wireless telecommunication network penetration rather than the software sector, which creates innovative applications and value-added services. To correct this severe imbalance and make another leap forward, the industry must shift its focus from building the infrastructure to utilizing the infrastructure and enhancing competitiveness and innovation in new areas of opportunity like content, applications and solutions, as well as expanding the scope of ICT infrastructure utilization to benefit the nation, industry and individual user. First, the ICT industry must contribute to upgrading Korea’s national competitiveness by actively promoting the development of smart technologies that allow for efficient use of resources, energy and infrastructure. Smart technology refers to technology used to enhance efficiency by combining ICT technology with the existing infrastructure. Here the word ‘smart’ indicates the ability to control, monitor and optimize, which will result in strengthened sustainability of a nation and reduced inefficiencies. Smart grid, smart logistics and smart vehicle are just some of its many examples. Second, there is a need for the ICT industry to raise investments in business platform technology to improve productivity of businesses and industries. This will allow businesses to enhance their efficiency and scalability through ICT network-based business solutions provided in the form of on-demand services. Cloud computing is a good example. In addition, ICT can be applied to many other business areas such as finance, distribution, to realize m-payments and RFID services, thus increasing productivity of traditional off-line businesses. Last but not least, the ICT industry must develop technologies that can facilitate an individual’s knowledge-based economic activities in order to maximize convenience and efficiency in the process of acquiring, producing and sharing knowledge and information. The exponential growth of information has increased the need for technologies that can reduce time and effort required to find accurate data. Intuitive and human-friendly next-generation user interface technologies - that is, voice recognition, multi touch, movement recognition among others - will improve the user experience and efficiency. At present, the ICT industry is sparking the growth of various convergence services by integrating and connecting different areas of the industry. They include mobile TV (telecommunications and broadcasting), wireless Internet (telecommunications and Internet) and IPTV (broadcasting and Internet). However, these services are limited as they are partial integrations taking place only within the ICT industry. Thus, looking ahead, the ICT industry needs to create new markets by combining all areas of the ICT industry, as well as realizing cross-industrial convergence. Much of the economic stimulus packages presented by countries across the world in their efforts to overcome the global economic crisis, focuses on expanding investment in the ICT industry, such as broadband networks. This is because the ICT industry is seen as the most important social infrastructure in order to achieve enhanced efficiency and produce innovations in the overall economy. In this regard, it is crucial to utilize ICT to establish a smart infrastructure that lays the foundation for long-term economic growth. The number of mobile subscribers in Korea increased from a mere 784 in 1988 to 43.19 million - over 90 per cent of total population - in 2008. Wired and wireless telecommunication has evolved to become much more than a simple means of communication. For instance, convergence between the ICT industry and other industries opened new and promising service areas like mobile telematics (ICT industry-automotive industry), mobile USIM-based (Universal Subscriber Identity Module) finance (ICT industry-finance industry) and smart grid (ICT industry-energy industry). The Korean ICT industry must take the lead in creating a world where all global citizens can conveniently use communication and information services, by making the advanced technologies of Korea the global standard and actively using such technologies to improve productivity of all industries.

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