Is $25 Bil. Info Ultra Highway Plan Full of Hot Air?

KCC's Master Plan Contains Unrealized Bits, Pieces of Unrealized Past Projects

By Kim Tong-hyung
Staff Reporter

Rarely does a year go by without the Korean government announcing a colossal project that promises to change the world of information technology as we know it.

The hype machine is hitting high gear once again, with the Korea Communications Commission (KCC) revealing plans to invest 34 trillion won (about $24.6 billion) over the next five years to build an ``information ultra highway,'' allowing Koreans seamless access to fast, robust information from anywhere and on any device.

But industry watchers wonder whether policymakers are overselling their initiatives to telecommunications companies, who are asked to finance the new plan despite having yet to gain from earlier investment in ``next big things.''

The KCC, the country's broadcasting and telecommunications regulator, claims that the new network will successfully leverage the competitive advantages of the country's advanced broadband and mobile networks.

The idea is to construct one massive Internet Protocol (IP) network that merges the country's broadband and mobile networks and allow users to connect from a wide range of terminals.

The ultra broadband convergence network (UBcN), which is slated for completion in 2012, will enable users to transmit data at an average speed of 1 gigabyte per second (GBp) through fixed-line connections and maintain the rate of 10 megabytes per second (MBps) on wireless connections, about 10 times faster than existing broadband and third-generation (3G) networks.

The government plans to replace 70 percent of the country's circuit-switched network, used for fixed-line telephony, with an IP network by 2013. About 50 percent of the mobile telephony network will be IP-based by then.

The government will spend 1.3 trillion won on the project and hopes to generate around 32.1 trillion won in investment from the private sector.

How Will It Look?

Although government officials are falling short of suggesting business models, they are claiming that the evolved network would breed a slew of next-generation information services and enable the country's ``second IT revolution.''

``The logic is simple ― a wider road will bring more cars,'' said an official from KCC's network policy division.

``Users will be allowed a variety of interactive services that will change their everyday lives and the growing market will provide operators with significant new sources of revenue. The broadcasting and telecommunication markets is nearing saturation, and to allow companies to sustain their level of investment, a massive expansion in infrastructure is inevitable,'' he said.

The KCC doesn't have an exact picture of what the future network will be like, nor of the services it will support.

However, that isn't keeping it from predicting UBcN will generate 17.7 trillion won in added value, around 48.5 trillion won in induced product generation, some 120,000 new jobs, and anything short of a cure for cancer.

The advanced network will allow households to receive ultra definition television (UDTV), with 16 times better image resolution than today's best standard HDTV, and support the mobile version of Internet protocol television (IPTV).

Policymakers also hope UBcN will breathe new life into WiBro, the country's variant of mobile WiMAX, which has been struggling for acceptance here. With UBcN enabling WiBro to achieve truly nationwide coverage, government officials are hoping the number of subscribers reaches 7 million by the end of 2012 from the current 200,000.

Currently, about 9.5 million Korean households have broadband connection of 50 to 100 Mbps. The government hopes to increase the number to 14 million households by 2012 and provide 1 GBp connections to 200,000 households by 2013.

UBcN will also increase the number of wireless users subscribed to data-enabled mobile services. The country's number of 3G customers, provided with mobile data speeds of 1 MBp, will increase to 40 million by 2012, and the fourth generation (4G) will manifest itself by 2013, the KCC said.

Coughing Up the Money

Despite the government's lavish projections, telecommunications operators are reluctant to push the big chips forward, especially at a time when profits are eroding due to a crowded market.

And it's questionable whether consumers will have room to spend more on new services when the average Korean household is already spending nearly 7 percent of its income on telecommunications expenses, among the highest rates in the world.

The UBcN project is actually a sequel to the 45 trillion won broadband convergence network (BcN) project announced in 1995, which provided the core of the country's current broadband infrastructure.

Fixed-line operators, having yet to recover their previous broadband investments, are now being asked to widen the ``highway'' tenfold. And mobile operators aren't too happy about paying for the expensive project when they have yet to gain significantly from their investment in building the 3G WCDMA network.

It's not as though the BcN project had delivered on its rosy projections. The Ministry of Information and Communication, the predecessor of the KCC, had claimed that the country's entire information network would be IP-based by 2010 and more than 90 percent of broadband networks upgraded to fiber-to-the-home (FTTH) technology.

However, as of 2008, only 7 percent of the country's fixed-line telephony network is IP-based.

``I think 32 trillion won is too large a commitment for a project that the government can't even suggest a detailed business model for,'' said an official from a broadband Internet company.

``There's a lot of ambiguous talk about the interactive television, public services, e-commerce and data services it could provide, but those applications are already capable with current networks.

thkim@koreatimes.co.kr