ICT Industry

An Expert's View about IT and Telecommunications in Singapore

Last updated: 28 Feb 2011

Summary

Korea continues to be a world leader in broadband services. To capitalize upon this success, Korea is
now exploring more innovative technologies to support ‘next generation services’. Since 2008, President
Lee Myung Bak has made digital convergence across industries a key to Korea’s new “Engines of Growth
Strategy”. Investments in technology convergence across various industries (automotive, healthcare,
energy, shipbuilding, etc.) is planned to further the administration’s “Low Carbon, Green Growth” initiative
and ensure continued economic prosperity. The Korea Communications Commission (KCC) and the
Ministry of Knowledge Economy (MKE) are expected to lead other government agencies and oversee the
growth of new convergence projects, spending a projected USD 11.6 billion for Information and
Communications Technology (ICT) development. Korea’s pro-active government / industry cooperation
policy will promote the private sector to invest another USD 146 billion, over the next four years.

Investments under the new ICT initiative will continue to stimulate strong demand for relevant
components, equipment, software applications and content. These and other solutions will create more
opportunities for U.S.-based technology companies. The overall Korean market for Information
Technology (IT), telecom equipment, services, and software solutions was worth an estimated USD 200
billion in 2009. It is estimated to grow at an average annual rate of 3-4 percent over the next three years
until 2013. The best prospects for U.S. exporters include equipment and solutions for broadband
convergence networks (BcN), 3D/Smart Internet Protocol TV (IPTV), digital content, smart device
application services, voice over Internet protocol (VoIP), wireless broadband (WiBro) services, 4G mobile
technology, radio frequency identification (RFID)/ ubiquitous sensory networks (USN), mobile/social
commerce, cloud computing, smart grid, IT security and green IT technologies.

Market Demand

Korea maintains its lead in OECD broadband penetration with 30 subscribers per 100 inhabitants. As of
May 2010, 16.7 million households (out of 16.9 million) were using broadband services, which account for
more than 98.8 percent of total households in Korea. Nationwide BcN will be upgraded to allow data
transmission rates of 100 Mbps (Mega bit per second) enabling new-generation Internet Protocol (IP)-
based services and applications. KCC also developed its “Giga Internet Plan” to build an Ultra
Broadband Convergence Network (UBcN) by 2015, which will bring average network speeds up to
100Mbps for wireless and 1Gbps for wired. UBcN is expected to allow more advanced and virtual
services, including, interactive 3D smart IPTV, Ultra Definition (UD) digital TV, online games, ubiquitous
healthcare services, and other new technologies that will contribute to the continued growth in the ICT
industry.

1) Telecom/Broadcasting Convergence Service and Content

In December 2007, “The Internet Multimedia Broadcast Business Act” was passed by the National
Assembly and became effective in April 2008 to allow telecom service companies to offer real-time
broadcasts of popular terrestrial channels via IPTV service. As of July 2009, the three IPTV service
providers, SK Broadband, KT and LG Dacom provided as many as 75 real-time channels, in addition to
Video-on-Demand (VoD) reaching a total subscription of 1.7 million. With strong promotions, more stable
service quality and increased content led the market reached 3 million subscribers as of July 2010.The Korean telecom and broadcasting industry plans to invest as much as USD 3 billion on IPTV
infrastructure and USD 1 billion on digital content until 2013. KCC forecasts that the Korean market
demand for the broadcasting and telecom content, including IPTV content, is expected to reach USD 24
billion in 2012 from the 2007 level of USD 14 billion.

2) Voice and Data Convergence Services and Applications

The Korean VoIP service market is expanding rapidly driven by major carriers, including SK Broadband,
LG Dacom and KT, and is projected to be worth USD 5 billion in 2012. The number of subscribers to IP
phone service increased by 79 percent from 4.4 million in July 2009 to 7.9 million in July 2010, which is
expected to continue the growth and replace existing public switched telephone network (PSTN). KCC’s
number portability policy, effective since Aug 2008, allows the use of VoIP services with existing home
phone numbers and is one of the major factors motivating subscribers to move to Internet phone
services.

In June 2006, Korea’s two domestic cellular service providers KT and SK Telecom commercialized the
“WiBro” (now more commonly known as mobile WiMax) and more than USD 1.3 billion has been invested. However, uptake among the Korean population has been lackluster, with no more than 400,000
subscribers being attracted to the service as of July 2010. This is due to a number of reasons including a
lack of nationwide network coverage, device selection ambiguity, and killer applications like VoIP. The
future of the service depends on value-added convergence services like voice over WiBro network
through smartphones (smart phone capable phones in Korea have a ‘010’ prefix), tablet PCs, mobile
IPTV, location-based services (LBS), and other developing 4G technology standards that would induce
further investment by the carriers. KCC is also considering a number of policies to offer incentives for
additional investment by industry.

3) Radio Frequency Identification (RFID) / Ubiquitous Sensory Networks (USN)

The Korean Government has designated 17 industries as new growth engines (NGEs) which will drive the
future economic growth. The government plans to spend USD 20 billion over the next five years on
NGEs, and RFID/USN is one of primary engines acting as a foundation. RFID/USN spectrum band is
being reallocated by June 2011, from 908.5-914MHz to 915-923.5MHz and some 68 new Korea
Standards (KS) have been developed to guide and encourage the Korean RFID industry.
The “4 Major Rivers Restoration Project” is a massive domestic infrastructure project that will heavily
leverage RFID/USN technology. The project aims to apply IT technologies to selected areas along the
nation’s waterways to enable real-time monitoring and management. The KCC and Korean Ministry of
Public Administration and Security (MOPAS) have designated several cities as models to implement its
ubiquitous technology for “U-City” project. Projects include tunnel control, subway safety, waterworks
management, waste management, and tourism services, all of which are targets for ubiquitous
technologies.

4) Cloud Computing

ICT service and solution providers are fast-preparing for “Cloud Computing” technology, to comply with
green IT initiative and smart work environment. Cloud computing allows virtual sharing of computing
power, storage, applications, etc. over a network resulting in savings of energy and efficient use of IT
resources. Samsung SDS has signed an MOU with Cloudera and LG CNS is partnering with Microsoft to
deploy the technology for their affiliated companies to use from 2010. Ministry of Knowledge Economy
(MKE) is focusing on cloud computing as part of Green IT initiative to improve resource efficiency and
establish environment-friendly infrastructure. The Korean government is planning to invest USD 600
million over the next five years in cloud computing technology development and pilot services, which will
offer opportunities for U.S. hardware, software and IT service companies.

5) Smart Phones

Smart phone demand has been spurred by KT’s introduction of iPhone 3GS in November, 2009 which
have sold 880,000 units in 10months. The total number of Google’s operating system, “Android”-based
smartphone subscribers have also reached 1.2 million as of August, 2010. Samsung’s “Galaxy” series
have, also based on the Android Operating System, has also contributed to the smart phone phenomena
in Korea. In July, 2010, the total number of smart phone subscribers in Korea reached 3 million and
some projections suggest the figure might double by the end of this year and exceed 10 million in 2011.
Along with the growth rate of smart phone subscriptions, the usage of Wi-Fi has increased significantly,
resulting in a 64% increase in data traffic from October 2009 to March 2010. Mobile service providers will continue to invest in the wireless broadband technologies and offer an increasing variety of smartphone based services.

Korean telecom companies are investing in Long Term Evolution (LTE) mobile services based on the 4th
Generation (4G) mobile technology and offering 10 times faster throughput than current 3G technology.
With speeds up to 200Mbps, 4G communications is expected to begin by late 2011 and all three local
operators are planning to invest more than USD 3billion until 2013 in this new medium.

Read the full market research report
 


Posted: 18 February 2011, last updated 28 February 2011

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