FREE ESSAY ON TELECOMMUNICATIONS IN KOREA

TELECOMMUNICATIONS IN KOREA

INTRODUCTION
Telecommunications is a tool providing information services to both private and public
sectors. It is highly involved in society and helps a society grow and flourish. It
affects the ideals and trends of a society and, thus, is a very important factor in a
growing country. With an area of 99,019 square kilometers, and a current population of
44.6 million people, the Republic of Korea is a great challenge to connect through
telecommunication tools and projects.
Even with such a great expanse of land and peoples, Korea has succeeded in becoming the
eighth most advanced country in telecommunications. There are 337 telephones per 1000
people with an annual growth rate of 15.6% for residential subscribers, 10.1 % for
commercial subscribers and 245 for leased line data services. Thus, the question of how
Korea accomplished this in just a little over a decade comes to mind.
In this paper, I will give an overview of the developments of the Korean
telecommunications industry. Then through other literary sources along with the
telecommunications background information, I will show how the Korean Government's
practice of deregulation and liberalization has spurred on competition and, henceforth,
progress in the Korean telecommunications industry. 
CHAPTER 1:
History of Telecommunications
The first form of telecommunications in Korea began in 1885 with the first telegraph
which linked Seoul and Inchon which were located 35 km apart. The periods of
telecommunication development can be divided into three stages. In the first stage, 1885
to 1961, there was limited telegraph and telephone service available. They were mainly
for official business service. The Japanese occupation from 1910 to 1945 and the Korean
War from 1950 to 1953 stagnated telecommunication progress (Lee et.al 1). Only 120,000
telephone lines were installed in this period, supplying a minimal fraction of 0.4 phones
per 100 persons.
In the second stage, 1962 to 1981, significant progress in telecommunications occurred.
The government improved basic communications facilities by connecting rural areas by
phone and by creating training centers for telecommunication employees to keep the phone
lines running smoothly. Telephone subscriber lines increased to 4.1 million lines
offering 8.4 phones per 100 people. More importantly, long-distance telephone calling
circuits were boosted from 1,177 to 88,571 circuits, while international calling circuits
were increased from 12 to 274 (Lee, et. al 2). During this period, the government
installed the micro-wave network in 1967 and the scatter transmission network between
Japan and Korea in 1968. The first two satellite earth stations were built during this
period. In addition, a coaxial cable was installed to bring an automatic telephone call
service between major cities. In 1979, the electronic switching system (ESS) was
introduced to aid with the increasing number of phone subscriptions.
The third stage, occurring from 1982 to the present, illustrates a huge and dynamic
change in the telecommunications industry. First, in 1982 to 1986 an addition of 6.2
telephone lines were installed. Within this period, the participation of Korea in the
Asian Games and the 1988 Olympics placed telecommunications at a high demand. With the
10th Asian Games in 1986, an integrated automatic switching system was introduced. The
capability to install telephones immediately upon request became available. The 1988
Olympics brought the idea of launching Korea's own satellite in mind. Although a
satellite was not launched during this period, it made the idea more of a future plan.
Government Policies and Telecommunication Companies
The development of Korea's information society cannot be separated from the development
of the Korean government policies. This is because all telecommunication sources were
once controlled by the Korean government. Then as years went on, the government loosened
its reigns for other private and publicly owned companies to develop telecommunication
products which they could themselves market. This decrease in government control resulted
to a more competitive environment where progress prospered.
In the early 1980's, the Korean government Ministry of Communications (MOC) restructured
the public telecommunications sector which led to the transfer of government operated
telecommunications to a public corporation, Korea Telecommunication Authority (KTA) (Seo
154). Later in 1982, telecommunication powers were also given to a private company
entitled the Data Communications Corporation of Korea (DACOM). This was a turning point
for the telecommunications industry. Now the government did not have total control over
the industry. 
More importantly, later in its existence, KTA gave financial support to other
telecommunications industries to create the necessary equipment for telecommunications
such as coin telephone sets, a digital switching system, and fiber optical transmission
system, etc. (Seo 154). KTA also aided in the development of the Electronics and
Telecommunications Research Institute (ETRI), the first step for Korea towards an
indigenous and self-reliant technological society (Seo 156). Korea was to begin its own
research and development of telecommunication tools instead of relying on other
countries' imports. 
In 1984, KTA Research Center (KTARC) was created to build a technology base and to absorb
and adapt foreign technology according to the country's needs. KTARC provided guidance
and technical support to network operating group and industry based on the policy set by
KTA. Thus, research for telecommunications were now being conducted by the country's
universities, by EERIE, by KTARC, and by other privately owned companies. As the
capability of industry grows more and more complex, much of the work performed by EERIE
will be taken over by industry, leaving EERIE to move into high risk research and
development and advanced technological support. In 1987, the total research and
development investment by KTA is around 70 million US dollars. Thus, much has gone to
research and development, the base for telecommunications progress and technology.
Besides KTA and DACCA, two more telecommunication carriers were founded in the 1980's.
Korea Mobile Telecom (KMT), was established in 1984 to provide cellular and paging
services. The availability of mobile phones in 1993 covers 107 towns and cities, reaching
over 80 percent of Korea's population. Korea Port Telephone Corporation was established
in 1985 to provide communications services in the port areas. Furthermore, in 1991, the
business relationship between KTA and DACCA was changed so that KTA could provide data
communications services and DACCA international telephone services.
Results of Telecommunications Research and Development
Research and development performed by Korea would be lead to progress. First, it would
increase the technological capability in a key sector of the economy by providing the
necessary infrastructure for the introduction of advanced telecommunications services.
Second, technological dependence on foreign sources, and import of technology would
diminish. Third, the cost of acquiring technology especially in terms of foreign exchange
would diminish at least in the long run, by the substitution of import for local
production and by export earnings. Furthermore, enhanced indigenous technological
capability provides Korea with a stronger bargaining power in negotiating with the
foreign suppliers, which will ultimately be reflected in better condition of technology
transfer and lower cost system acquisition (Seo 153). Thus, Korea would benefit greatly
by performing its own research and developing its own products instead of relying on
other countries for its telecommunication tools.
Development of Different Systems to Extend Calling Lines
The first generation of Electronic Switching System (IS) appeared in the early 1960's.
But within a few years these were superseded by the system which reflected new concepts
based on the combination of communications and computers. Over the same period, digital
transmission techniques have also been greatly improved.
Computer control of exchanges, time divisions switching and the transmission of
information in digital form are the basis for the successful large scale
telecommunications connections throughout Korea. 
The recent development of microelectronics, space and optical fiber technologies made it
possible to spread new telecommunications services around the world. Besides voice and
text, huge quantities of visual information are being transmitted. Videotex systems
connect subscribers to data banks and display economic, financial and scientific
information as text or graphics on a television screen. In addition, services such as
video-conferencing, teletex and electronic mail are widespread. 
All of these services could be integrated into a single global network called Integrated
Services Digital Network (ISDN). An ISDEN comprises digital switching, computer control
and optical fiber digital transmission.
Telecommunications network consist of subscriber terminals, subscriber lines, local
exchanges, toll exchanges and interexchange circuits.
Subscriber terminals have evolved from the simple telephone set designed to provide basic
voice telephony. The current trend is toward increasing intelligence in the terminal,
enabling subscribers to perform a range of functions which enhance the telephone utility.
The terminals associated with other services such as facsimile and data have also become
more versatile and sophisticated. Already the concept is emerging of a multipurpose
terminal for text, data and other non telephone services as well as being used as a
telephone. An ordinary telephone line will be able to carry many of these services and
devices of this kind and would make it easier and cheaper to provide non telephone
services to rural and remote areas.
Subscriber terminals are normally connected to local exchanges by a physical pair of
conductors. The physical conductors are expensive, representing around 30% of the total
capital cost of plant in urban areas. However, in highly populated areas, a suitable
local network distribution system can be planned and installed that can be expanded
economically. Local networks use overhead or buried cables in various size and
flexibility points, allowing sufficient capacity to accommodate new subscriber. Various
means of concentrating traffic are available so that more than one subscriber may share
each physical pair of conductors.
However, local distribution represents the major problem of providing telephone service
in rural and remote areas. In rural areas, subscribers may be at a distance over 30 to 50
kilometers from the exchange and the terrain and environment communication transfer even
more difficult. Local network cost may represent as much as 70 to 80% of capital plant
cost which are themselves normally 4 to 5 times of urban cost.
An alternative to physical conductors, especially in rural areas, is radio telephony.
Ultra High Frequency and Super High Frequency systems have direct line of sight paths
between transmitter and receiver at a distance of 50 to 70 kilometers. In practice the
environment and terrain reduce this distance, Improving the utilization of frequency
spectrum is possible by using the cellular radio concept and other methods of dynamic
frequency assignment.
Manual systems with operators setting up connections using key plugs and jacks are still
used in developing countries. If attended for 24 hours a day, these provide reasonable
service with low investment, low consumption of power and simple maintenance.
In automatic analog systems, speech is converted into a electrical signal with varying
frequency and amplitude and calls are connected through separate switches in the system.
The oldest automatic switching system is the step-by-step system with 
electromechanical switches. Although extensively used, it becomes obsolete.
Cross bar systems operate at higher speeds, are less costly to maintain, and give
subscribers greater capabilities. But this system also will be obsolete and it is
expected to remain in a limited lifetime only to provide for the expansion of existing
systems.
The most recent generation of analog ESS have Stored Program Control (SPC). In SPC
systems the control functions are performed by a computer, and the switching matrix can
use solid state electronic crosspoints. Advantages include extensive remote operation and
maintenance facilities, built-in test and signaling units and practically no open
contacts, which make them less sensitive to dust and humidity. Normally SPC exchanges are
built in compact form and so require air conditioning, especially in hot and humid
climates. These systems are not yet obsolete, but most manufacturers are switching their
product line to digital ESS.
Digitalization of Telecommunications
It is the digitalization of telecommunications that has accomplished much of its
telephone connections. The TDX is a digital system. In digital ESS, voice or signal is
converted from the analog signal to a code form consisting of high speed on/off pulses.
Pulses of different conversations are separated from each other by discrete time
intervals and switched in turn by the time division switching system so that many calls
are multiplexed by the same switch. Digital exchanges are cheaper to install and maintain
than analog exchanges particularly in the larger sizes. Among the advantages of digital
switching are its compatibility with computers and potential cost and space savings when
operated in conjunction with digital transmission systems (Lee 27). 
The links carrying calls between exchanges may be symmetrical pair cable, quad cable,
coaxial cable, optical fiber cabled. The choice of medium depends upon bandwidth or
traffic volumes to be carried, the distance and terrain to be covered, the performance
required, the distribution of the traffic and the cost. Interexchange transmission system
in the past were analog but are now being superseded by digital systems.
Technological developments are reducing cost and improving the quality of service.
Optical fiber cable is particularly suited for high capacity routes, leaving longer
distances between repeaters, further reducing cost and increasing reliability. Optical
fiber cable will be replacing coaxial and quad cable systems as the preferred medium.
Microwave systems are particularly suitable for medium and high capacity routes in
inhospitable terrain. Coaxial or optical fiber submarine cable is also an economic choice
in numerous cases for long distance or international transmission.
There are many advantages of digital switching and transmission. Such a network carries
data traffic as easily as voice traffic and therefore is used by many types of service.
The result is economies of scale and resilience when traffic on particular services
peaks. The computers within exchanges monitor and control the behavior of the network as
a whole system and open up new capabilities and techniques of operation. The flexibility
of digital systems also simplifies the physical design of networks so that the
limitations on serving large areas from a single exchange are reduced. KTA hopes to
digitalize all phone lines by the year 2005. 
CHAPTER 2:
Media
One specific industry that was directly in the reigns of the Korean government was the
media. The communications media in South Korea was under the dictatorial governmental
press control. This changed in 1987. A major historical Declaration released the media
from this tight hold. Future Korean President, Roh Tae Woo, would make the 29 June
Declaration explicitly calling for freedom of the press (Won 215). With the abolition of
regulations that previously limited the number of regional newspapers to one to a
province, a large number of newspapers were reopened or newly founded. Religious bodies
and other corporations began broadcasting on new radio channels. Now people could express
their opinions and publicize topics which were once prohibited by the government. There
was also a dramatic increase in the number of periodicals on the market. In addition,
with the lifting of the de facto prohibition against the establishment of new newspaper,
three general-interest daily newspapers, Hankyoreh Shinmun, Segue Ilbo, and Kookmin Ilbo,
began publication in Seoul with nationwide distribution. The effect of the June 29, 1987
Declaration can be seen by the skyrocketing of media sources. Whereas Korea had only 30
national and regional newspapers being published at the time Roe Tae Woo made his famous
1987 liberalization declaration, by the end of 1989, this number had more than doubled to
68. The number of periodicals published daily, weekly, monthly, bimonthly or quarterly
increased from 2,241 prior liberalization to 3,441 in December 1988. Another 109
periodicals were registered with the government in January 1989 (Won 217). Furthermore,
information Ministry figures for December 1989 show that Korea had 4,400 periodicals,
including 68 dailies, two news services and 819 weeklies (Won 217). 
Another important result of this 1987 Declaration was its repeal of the Basic Press Law,
the government policy which created hierarchy and multiple regulations for the press. The
Basic Press Law, effective in January 1981, contained a number of measures that
facilitated the government's control of media. This law contained a number of harmful
provisions allowing the government to confiscate media material, such as newspapers and
magazines, and which strictly defined the responsibility of the media. In addition, it
enabled the government to close a publication in instances where a publication engaged in
activity that went against its stated purpose of publication or disturbed the public
order by inciting violence or other means (Won 218). Publications could also be closed
down if they were found publications were found aiding and abetting or praising North
Korea. Thus, the repeal of the Basic Press Law led to a more open media. Journalists now
had a broader field to work with and were able to freely inform their audience of public
concerns.
On November 10, 1987, at the same time that the government repealed the Basic Press Law,
the National Assembly enacted new legislation for the broadcast media and amended the
Korea Broadcasting System Law. This legislation established a broadcast committee that
would ensure that radio and television stations were managed in the public interest. This
committee began operating on August 3, 1988. The committee founded the Seoul Broadcasting
System as a privately owned broadcast corporation, bringing Korea's broadcast industry
into a period of dual structure of private and public ownership (Won 219). Legislation
also worked further to keep broadcasting monopoly from occurring through the Broadcast
Culture Promotion Association which made the environment better for other companies to
open up. Thus, government has created a more open environment for other media companies
to start business.
Effects of "Freedom of the Press"
With the change in media consumers, from the elite to the general public, and from the
general population to the specialists, there has been a trend toward specialization. The
trend leads to a specialization according to ideology, political learning, specific
consumer state, or outlook on the news. This environment for a free-press leads to a
wider variety of news, opening up new avenues to express more opinions and more
viewpoints in a wider scope. This broadens audience knowledge. 
CHAPTER 3:
Present State of Telecommunications in Korea
At present, Korea has 20 million lines with 17 million subscribers which adds up to 42.6
lines per 100 people. The number of cellular mobile phone subscribers amounts to 785,000
lines and paging service numbers reach almost 5.5 million (Apt 338). There are some
285,000 public payphones in the country and coin operated units are being replaced with
cardphones.
As a result, Korea now has one of the largest telecommunications networks in Asia and is
the world's eight ranking nation in terms of the number of telephones installed.
In 1984, Korea successfully developed the TDX-AA, a domestically developed digital
electronic switching system, becoming the 10th nation to develop native switching system.
Enhanced systems like the TDX-1B and TDX-10 followed shortly after. In particular, the
TDX-10 system which has a capacity of 100,000 circuits and high interoperability, enabled
the installation of a large quantity of telecommunication lines.
Currently, Korea deploys about seven million lines with this TDX system, and exports this
system to various countries. Now Direct Distance Dialing (DDD), long-distance service and
international telephone services are available anywhere in the country, including rural
and remote area.
Other services currently available to Korea are E-mail, voice mail, electronic data
interchange, on-line data retrieval and database processing, code and protocol change,
and enhanced facsimile services.
Presently, KTA is developing the HiTEL data communications retrieval service allowing
information to be retrieved by personal computer or HiTEL terminal and facsimile machine
for graphics, from various databases covering many subjects. Some 35,000 users are
currently linked to this system. In 1993, KTA's HiNET-P service was expanded to become a
national packet switching service offering a Korean interface. A packet leased line
service is available plus dial-up database access. A HiNET-C service has also been
expanded to become a national service. Value-added services currently offered by KTA
include voice information, voice mail, E-mail, Hi-FAX facsimile and HiVICON domestic
conferencing, launched in 1993. KTA is also involved in the R-J-K submarine cable project
linking Korea, Japan, and Russia, that was due for completion in 1995. KTA is also a part
of the Asia-Pacific Cable Network (APCN) project to connect ten Asian countries.
Satellites
Korea has now been investing in satellite communications. Satellites provide clear and
direct connections whether it be for telephones or radio and television broadcasting.
Thus, the satellite would be a major forward move into the future for telecommunications.
Specifically satellite can be used for long-distance telephone calls, for sending
television signals to remote areas in the country, for facsimile transmission of
documents that become increasingly important as Korea's business community continues to
expand, for video conferencing, for electronic banking, for electronic classroom
instruction, and for sending FM radio programs all over Korea (Lee et.al, 1). These
man-made satellites can also be used by the military for defense purposes. Furthermore, a
communication satellite will enable Korea to gain instant access to information from
other nations, thus narrowing the information gap existing between it and more highly
developed countries (Lee et.al 1). Thus, the satellite would actually keep Korea
up-to-date on technology and aid Korea in keeping a competitive edge in
telecommunications as well as in other social and economical areas. Hence, with the many
uses of the satellite, Korea has began its investment for the future.
Korea already receives international maritime satellite communications services among
navigation vessels or vessel-to-land communications through the INMARSAT-F3 satellite
through its earth station which was completed in December 1990. Since 1989 MOC has
considered launching geostationary satellites. In 1992, KTA signed a satellite purchase
contract with GE which would be assigned to Martin Marietta, and a launching service
contract with McDonnell Douglas for launching two MUGUNGWHA satellites with the
capability of 3,900 communications circuits, 3 video channels, and 3 broadcasting
channels in April and October 1995. As a preliminary step to acquiring satellite
operating techniques and creating demands for satellite communications services before
the operation of the satellites, KTA leased one set of 72 MHz-level Ku-Band transponders
form INTELSAT for five years that began in April 1992. Since September 1992, KTA has been
providing VSAT services through the INTELSAT satellites. Furthermore, in August 1992, the
Korea Advanced Institute of Science and Technology successfully launched a 50Kg-level
scientific experiment satellite, named KITSAT, through Arianespace. Planned satellite
services include trunk relay for public telephony, high speed data, VSAT, DAMA/SCPC rural
public voice/data, and direct TV broadcasting (Chung 66). 
CHAPTER 4:
Government Policies
The Telecommunications Basic Law and Public Telecommunication Business Law was amended
and the Korea Communication Commission was established to secure fair competition,
protect subscriber rights and decide on important telecommunications policies. Korea's
closed market system has been changing to a more open market system. The Korean
government has liberalized its regulations on foreign investment and government
procurement. The regulatory framework for telecommunications service providers are
governed by the Basic Telecommunications Law and the Public Telecommunications Business
Law. Under these two laws, the Korean telecommunications service providers are divided
into two main categories: network service providers and value added service providers.
Network Service Providers are telecommunications service providers who construct or own
their own circuits and transmission facilities and must abide by common-carrier
obligations, such as universal service. Value Added Service Providers are
telecommunication service providers who lease telecommunications circuits from network
service providers and use them to provide their services.
Network Service Providers are divided into two categories: General Service Providers,
which own nation-wide telecommunications facilities, and specific service providers,
whose service provision is limited to the geographically or technically limited sectors,
such as mobile telecommunications services.
General Service Providers can provide any or all of the following services upon
designation of the MOC: voice telecommunications, telex, lease circuits, lease equipment,
telegram, data communications, facsimile, and other miscellaneous services. Specific
Service Providers can provide any or all of the following services upon license from the
MOC: mobile voice telecommunications, paging, port telecommunications, airport
telecommunications, trunk radio communications, wireless data communications, and other
miscellaneous services.
On the other hand, Value Added Service Providers can provide the following services upon
registration with the MOC: on-line database and remote computing services, computer
communications services, data transmission services except voice telephony, telex and
facsimile services. Only domestic on-line database and remote computing services do not
require registration with the MOC. According to the Understanding, policies which were
signed by the Korean government, the value added services are defined as any serviced
offered over the telecommunications transmission facilities of General Service Providers
which employ such computer processing applications as: conversion of content, code,
protocol or similar aspects of a subscriber's transmitted information, provision of
additional, different or restructured information, and computer processing involving a
subscriber's interaction with stored information (Jeong 4). The Understanding also
illustrates the examples of value added services as follows: code or format conversion,
protocol conversions, store and forward, facsimile communications which involve store and
forward or one of the functions listed above, database, remote computer service,
electronic mail, electronic data interchange, message handling service, value-added
facsimile service and voice mail.
Business Sectors Open to Foreign Investment
With the enactment of the Basic Telecommunications Law and the Public Telecommunications
Basic Law, KTA and DACCA has provided only data communications, lease circuit, and
international voice telecommunications services. For any additional services, MOC
approval is required. General Service Providers are closed to foreign investment. In
addition, no one shareholder may hold more than 10 percent equity interest in General
Service Provider companies. Equipment manufacturers are not allowed to own more than a 3
percent equity interest in General Service Provider companies.
Also under the Basic Telecommunications Law and the Public Telecommunications Basic Law,
three Korean telecommunications companies, KMTC, KPTC, and KOTIS were licensed as Special
Service Providers. Special Service Providers are open to one-third foreign investment. In
addition no one shareholder, domestic or foreign, may hold more than a one-third equity
interest in any Special Service Provider company. No one equipment manufacturer or
government-invested enterprise may hold more than 10 percent equity interest in Special
Service Provider company.
In August 1992, the MOC initially issued a preliminary license for mobile telephone
services as a competitor of the Special Service company, KMTC. For the license, six
consortia associated with eleven foreign concerns such as GTE, Hutchison, Bodafone, Bell
Atlantic, U.S. West, Southwestern Bell, Swedish Telecom, Qualcom, Pactel, Mannesmann,
Nynex and BT. Since the selected consortium returned the license to the MOC because of
political turmoil involving the selected licensee, the MOC will issue another request for
proposal within this year. At the same time as the selection of the licensee for mobile
telephone services, nine preliminary licenses for regional paging services were issued to
nine consortia out of forty-one. Although foreign investment is allowed, no significant
foreign service concerns were involved with the forty-one consortia except Millicom.
As of February 1992, there exists 30 value added providers, 13 of which are joint venture
companies. AT&T, IBM, EDS, and AMCOR from the United States maintain a minority interest
in their joint ventures with Korean partners. Out of 30, only 4 Value Added Service
Providers are registered to provide international value and services. These companies are
Asiana Air, STM (joint venture between Goldstar and EDS), SDS (joint venture between
Samsung and IBM), and Trans World Net (Joint venture with Global Communications).
In contrast to the telecommunications services, foreign investment in manufacturing
telecommunications equipment may be freely made without any restrictions on foreign
equity ratio, etc. For example, Motorola has maintained a wholly-owned subsidiary for
manufacturing equipment in Korea. Such investment, however, must pass through the
Ministry of Finance (MOF) approval process under the Foreign Capital Inducement Law
(FCIL) that is generally applicable.
One issue related to the value added services is shared use of leased circuits.
Currently, while the shared use of Network Service Providers' domestic leased circuits
for data communications is permitted without any restriction on the relationship among
the users, the shared use of Value Added Service Providers' domestic leased circuits for
voice communications, international leased circuits for voice communications, and
international leased circuits for data communications is permitted only within the group
of entities which maintains a close business relationship. The scope of close business
relationship includes affiliates with 30 percent equity interest and business partners
which account for 20 percent of the total value of transactions. Users of Network Service
Providers' services within the same close business relationship are free to attach
exchange equipment. Currently only one end of a domestic leased circuit for data
communications is currently allowed to be connected with the public Network Service
Provider network.
Requirements for Joint Venture
Like any foreign investment in Korea, a foreign investor must obtain approval from or
file a notification with the Ministry of Finance and the Foreign Capital Inducement Law.
More specifically, foreign investment for those industrial sectors on the negative list
or which are subject to local equity participation requirements need approval from the
Ministry of Finance. For such approval, a foreign investor must submit a detailed
business plan and a joint venture agreement. The business plan must state the marketing
plan, the financial plan and other prescribed items. The joint venture agreement should
provide the rights and obligations of each party to the joint venture.
If the amount of investment is three million U.S. dollars or more, the joint venture
agreement will be reviewed by the Korean Fair Trade Commission to determine whether it
contains any unfair provisions according to the Anti-monopoly and Fair Trade Law. The
following terms will be regarded as unfair trade practices: the joint venture company is
unreasonably required to purchase raw materials, parts, equipment, related goods, etc.,
from the foreign investor or its designee; the joint venture company is prohibited from,
or is required to obtain prior approval for exporting any product it manufactures to
areas other than those were the foreign investor is engaged in ordinary sales activities
or those where the foreign investor has granted exclusive sales rights to a third party;
the joint venture company is required to export any product it manufactures only through
the foreign investor or its designee, except where the foreign investor or its designee
assumes an obligation to accept such product at internationally reasonable prices and
conditions at the appropriate time; and in light of the generally accepted practices in
international agreements of this nature, the contractual conditions are unreasonably
disadvantageous to the domestic investor (Jeong 6). The Korean Fair Trade Commission
might regard as unfair such provisions where a foreign investor elects directors in
excess of the equity ratio or a foreign investor has the tie-breaking vote in a 50/50
joint venture. The minimum amount of foreign investment is 50 million Korean won
(approximately U.S. $60,000). With Ministry of Finance approval, a foreign investor can
incorporate a joint venture company in accordance with the Korean Commercial Code.
A joint venture company establishing itself as a value added service provider must
register with the Value Added Service Providers by satisfying several requirements under
the Telecommunications Business Law. These requirements are as follows: the financial
requirement - the minimum capital is 50 million won;telecommunications facilities
requirement - maintenance of certain major telecommunications facilities and satisfaction
of the safety and reliability standards; and technical capability requirement - retention
of a minimum of two technicians (Jeong 6). Along with an application form, the
documentation for registration is limited to those to confirm the above. A registered
Value Added Service Provider must notify the MOC of standardized contracts with the
customers. An interconnection with networks of Value Added Services' required a
notification to the MOC. Interconnection between a Value Added Service Provider's network
and a Network Service Provider's network would be governed by a standardized contract of
the Network Service Provider. Where no standardized contract of an Network Service
Provider is available for the type of interconnection requested by a Value Service
Provider, a special interconnection agreement may be made subject to the approval of the
MOC. Furthermore, operating agreements between a registered Value Added Service Program
in Korea and service providers in a foreign country are subject to MOC approval.
Protection of Technology
Korea has a full range of intellectual property rights: patent, trade secrets, utility
model, design, trademark, copyright on literary works and computer software and sui
generis right to layout designs. Korea is also relatively effective in enforcing and
protecting those rights in the unfortunate event that such rights are infringed in Korea.
An invention that meets the industrial applicability, novelty, and the non-obviousness
requirements can obtain a patent right for 15 years after the date of registration.
Regarding certain medicines and agricultural and technical materials, the Korea
Industrial Property Office (QUIP) may extend the term of the patent right for up to 20
years. A device that cannot meet the high level of creativeness needed for an invention
is protected under the Utility Model Law for 10 years after the date of registration. A
design of shape, pattern, or color, or any combination of these in an article which
produces an aesthetic impression on the sense of sight is protected for 8 years after
registration.
Regarding the protection of trade secrets, the Korean government promulgated the revised
Unfair Competition Prevention Law in December 1991. The Presidential Decree finalized the
effective date of the revised Unfair Competition Prevention Law as December 15,1992. Thus
any misappropriation of trade secrets can be prevented by an injunctive order. Monetary
damage claims can also be filed against the infringer.
A trademark is also protected for 10 years upon registration and such registration is
renewable as long as the trademark is used in Korea. 
The Copyright Law protects authors' moral rights during their life and economic rights
for their life plus 50 years. Computer programs are also protected by the Copyright Law
and the Computer Program Protection Law for a term of 50 years after the creation of the
program concerned. Registration or publication is not necessary for the copyright
protection of authors' work and computer programs.
Internationally, after Korea acceded to the World Intellectual Property Organization on
March 1, 1979, and the Paris Convention for the Protection of Industrial Property on May
4, 1980, it joined various international treaties: the Patent Cooperation Treaty on
August 10, 1984, the Universal Copyright Convention and the Geneva Monogram Convention on
October 1, 1987 and the Budapest Treaty on the International Recognition of the Deposit
of Microorganisms for the Purpose of Patent Procedure on December 24, 1987.
Regulation of Public Service Providers
Under the Anti-monopoly and Fair Trade Law, market dominant enterprises cannot exercise
their market power abusively by, for example, unreasonably determining the market price
of their goods or services. Furthermore, this law also regulates unfair concerted
activities, and other unfair trade practices in general. However, as long as any
enterprise is regulated by other laws, it is exempted from the Anti-monopoly and Fair
Trade Law. Since the Basic Telecommunications Law and the Telecommunications Business Law
strictly regulate public telecommunications service concerns, the Anti-monopoly and Fair
Trade Law would not be applicable to such extent.
Under the Basic Telecommunications Law and the Telecommunications Business Law, in cases
where a Network Service Provider competes with a Value Added Service Provider in the
provision of value added services, the Network Service Provider is prohibited from
engaging in any anti-competitive conduct such as cross-subsidization, predatory pricing,
unauthorized disclosure of customer-proprietary network information without the
customer's authorization, undue delay in announcing technical changes to its network or
network interface, or discriminatory access to network services of functions. Thus, the
MOC is in the process of developing a policy on competition safeguards, including the
open network service provision and cost-subsidization. 
Under the Basic Telecommunications Law and the Telecommunications Business Law, KTA and
DACCA, the two general service providers, are also strictly regulated as common carriers.
They must report service rates and standard terms and conditions of their service
contracts to the MOC. Although the Law Concerning Standard Terms and Conditions is
generally applicable to standardized contracts, it is irrelevant to the extent that such
contracts are approved by the MOC. They also cannot refuse to provide their services
without justifiable grounds under the Telecommunications Business Law. 
Chapter 5:
Literature Review 
Eun-Ju Kim states that policy determines a nation's telecommuncations competence (Kim
118). She states that policy in the field of telecommunications has changed from
regulation to liberalization. Government produced policy change aimed at encouraging
managerial efficiency in state-owned industries through reducing government intervention
(Kim 120) She further states that the primary policy in the 1980's can be summed up as
the introduction of liberalization or decentralization through separating the functions
of policy making and operating facilities and services in the field of telecommunciations
under political economic transformation. These different entities created by the
government in turn contributed to the development of basic telecommuncation facilities by
making steady investments. Kim refers to the separation of telecommunications
responsibilities from direct government supervision to other entities such as KTA, DACOM,
and ETRI. Through these entities, research and development was made possible. 
To introduce progress and enhance the telecommunication infrastructure, the Korean
government encouraged competition. In this regard, the MOC intended to introduce fair
competitive policy at various levels from the early 1990s except for local voice services
which will still be monopolized by KT. As a first step, KT for the first time began to
compete with DACOM to provide international telephone services from December 1991. The
MOC is planning to license other domestic and foreign companies to enter the
telecommunication competition.
On the basis of the new competition policy, a variety to low-cost services are expected
to be developed and provided; small and medium-sized companies will be promoted; and
various companies including the government will participate in regional and international
organizations through which they can extend cooperation among members. Competition will
add to lower-cost and higher quality telecommunications products and services.
The government also restructured its Ministry of Communication (MOC) to mainly monitor
and guide the various telecommunications actors as well as setting an overseeing
telecommunications policies. Its responsibilities of operating day-to-day
telecommunications business was delegated to separate entities. ETRI has gone ahead with
globalization of research and development. It has expanded and consolidated technological
cooperative relations with both developed and developing countries and established
international joint research programs.
Liberalization has enabled KT to promote the domestic telecommunications industry by
making maximum use of its procurement power. For example, KT has been installing
facilities at the rate of 1 million telephone lines annually since 1980, producing a
current total of about 17 million lines. This investment has enabled KT to provide a
stable market for local industries, and to help them upgrade their product quality by
implementing such measures as demand forecasting system and quality assurance system. All
in all, the implementation of its industrial policy reflects Korea's determination to
achieve a suitable mix of high-quality labor-intensive traditional industries and
skills-intensive heavy and chemical industries. Such a mix is regarded as allowing Korea
to prosper in the 1990's among the developed or industrialized countries that are moving
into high-tech industry and information-intensive activities.
The Telephone Bond Law was enacted in December 1961 in order to raise the capital
required for expanding and improving telecommunications facilities (MOC 143). This law
was replaced by the Provisional Law for Developing Public Telecommunications Facilities
in December 1979, which in turn was repealed in January 1988 when the demand for basic
telecommunications facilities was deemed satisfies. 
Changing policies and infrastructures go hand in hand with a set of regulatory reforms in
the field of telecommunications. The concept of deregulation or liberalization is based
on the view that, in a free market, exchange between individuals will lead to an
efficient or optimal allocation of resources.
E. Arnold and K. Guy state government intervention - whether through regulations,
policies or R & D (research and development) investments - seems to be a rule rather than
the exception in the processes of liberalization, privatizations and deregulation. Thus,
they state that the participation of the government is necessary to liberalize the
telecommunication industry.
J. Browett agrees with Arnold and Guy stating that changes in telecommunications in Korea
can be said to have been initiated and implemented by the government. An illustration
given was that a policy was adopted by the government to upgrade the priority of
investment in telecommunications during the 5th Five-Year Economic Development Plan in
1982 to 1986. As a result, telecommunciations investment was increased from 3% of total
national fixed assets in the 1970s to 7% in the 1980s. 
The Telecommunications Basic Law was largely revised to encourage all parties concerned
to invest in research and development into more sophisticated technologies and more
relevant socioeconomic policies in the highly competitive telecommunications environment.
KT has reinvested more than 50% of its total profits in the development of
telecommunications facilities. After being privatized, common carriers and operators in
several countries have tended to increase rather than decrease their tariffs to provide
high-quality services, which require financing of high-tech facilities. However, it is
also worth noting that Korea lowered its telephone tax from 15% to 10% in accordance with
the revised Telephone Tax Law in January 1988. The current tariffs for a local call have
been fixed at 30 won (about US $0.37) for both a subscriber's telephone and a public
payphone per three minutes - relatively cheaper than the rates prevailing in developed
countries. Owing to the introduction of competition in international calls between KT and
DACOM, furthermore, the tariff for international calls was reduced up to 3% by DACOM and
7% by KT. This information shows that privatization can be the answer to effective and
affordable telecommunication services.
He further goes on to state that economic factors, which are intertwined with government
policy, have also influenced the introduction of a decentralized or liberalized industry
in Korea. The government is aware that growth can be achieved only if Korea remains
highly competitive exporter and makes substantial progress in technological development.
He believes that decentralized decision making may become the most effective means of
achieving the efficient allocation of resources especially in a rapidly changing and
highly competitive telecommunications environment (800). Competition between companies
creates a business environment of efficient resource management and better access to
capital for investment so that the sector assumes its rightful key role in the
socio-economic developments to nations (198). Furthermore, competitiveness cannot be
maximized under bureaucratic intervention. Thus, liberalization is an important
ingredient to progress in the telecommunications industry.
According to R.M. Martin, liberalization has made the shaping of policy more pluralist,
increased the scope for lobbying by distributional coalitions, and given management
incentives to evolve their own strategies for acquisition of larger market shares (88).
Because companies are more free to function away from government regulations, they are
able to develop a more effective telecommunication market. Liberalization or decrease in
government control allows companies to freely research and develop their own
telecommunication products. Through their acquisition of profits away from government
control, companies have the incentive to produce better quality, lower cost products and
services.
Myung-Jung Kim also supports liberalization and privatization of the telecommunications
industry as in the broadcasting industry. She advocates the private system stating that
the new media industry is so vast in scope that state or public organization alone is
more than a match for its investment demand. A private system should be adopted to induce
private capital and vitality. From a corporation's standpoint it is a golden opportunity
for industries such as cable, satellite, and production and distribution of programs. She
goes further to state that deregulation of program content will be positively adopted to
satisfy program need caused by the introduction of multi-media and multi-channels.
Hyeon-Dew Kang states that government needs to reduce regulations to attract investors in
the broadcasting industry. Also public investment will make it possible to inflow
enormous capital, help providing sufficient programs, and provide management skills for
operating broadcasting system.
He further states that it is necessary to assure diverse types of ownership under a
flexible structure where it can combine one broadcast stations and others, broadcasters
and telecommunicators, and newspapers and broadcasting so as to meet the current trend of
globalizing the broadcasting industry (241). In particular, it can help cope with the
opening trends of broadcasting market by strengthening domestic corporates' predominating
positions.
Friedland and Westlake also advocate deregulation as the means to technological progress
in telecommunications. They state that deregulation - a trend that began in the mid-1980s
- could be critical to the success of national economics ... Deregulation was supposed to
deliver goods by fostering efficiency through competition (66). They further go on to say
that liberalization has taken root in South Korea and some local firms are already
world-class players. For governments and the commercial operators, the basic issue is how
to achieve the most effective form of competition. To this effect, they quote a
Washington based privatization consultant, The general path is that you separate the
regulatory apparatus from the operation of the telephone system. Next, you corporatise
the telephone system operator. The next step is privatization and the development of a
profit mentality at the old operator. Finally, you license private common carriers or
niche players (67). Thus, the expert advocates that privatization is the way to healthy
competition which leads to progress. In their publication, Friedland and Westlake
illustrate countries that have licensed second carriers that have seen great improvement
in service. Japan was an example of this success. Japan, the first Asian country to open
its domestic long-distance market to competition, captured 22% of the market from the
established state-controlled provider to three private carriers. Because of this transfer
to private carriers, rates on long distance calls have been cut five times since 1988,
and are now around 60% cheaper than when liberalization began. They go on to state that
the benefits of liberalization, however, are not merely confined to the industry itself
... Better communications spur greater economic activity overall, which in turn produces
further growth in telecommunications (67). 
CONCLUSION
In the decade after the development of the telegraph, the first telecommunication tool,
Korea has rapidly developed its telecommunications industry to become a serious
competitor to more developed countries. The deciding factor to this conclusion, is the
government policies which changed from an authoritarian controller to a more liberalized
overseer. Government policies became less regulatory.
The turning point from a tight government control to a more liberalized industry began
with the delegation of powers to the Korean Telecommunications Authority. This separated
powers from one entity to two. Then the Korean Telecommunications Authority delegated
powers to other companies as ETRI and other research and development companies. Then as
time went on, the government allowed private companies to join in the telecommunications
industry. This liberalizing action and deregulation led to the competition necessary for
progress. 
Competition is the factor which invigorates technology. It gives companies the reason to
develop quality equipment and service at more affordable prices to the public in order to
compete with other companies. Also private companies are able to allocate their own
resources, relieving the great burden on the government. Liberalization and deregulation
is the process which Korea's telecommunications industry underwent. I believe it is the
factor which has brought Korea's telecommunications industry where it is today.
Liberalization and deregulation means that the government had reduced its regulations on
telecommunications companies so that the industry looks attractive to perspective
companies. It gives private companies an incentive to begin telecommunications business
to Korea. Thus, these companies answer Korea's telecommunications problems. 
Korea is serves as an illustration of a country which underwent many changes in
telecommunications government policies. The loosening of government reigns can be seen in
the media sector. The great increase in newspapers and periodicals after June 29 1987
Declaration of freedom of the press serves to show how deregulation can lead to increase
in production. 
Korea still has a long way to go. Its sight on satellites as an answer to
telecommunications is still tentative. Although it has not yet caught up with the more
developed countries, it is filled with the telecommunication tools as pagers, cellular
phones, and other value added services. Korea is booming on the telecommunications
superhighway.
Works Cited
Arnold, E. & K. Guy, Parallel Convergence: National Strategies in Information Technology.
London, 1986.
Browett, J. "The newly industrializing countries and radical theories of development."
World Development, V 13, P. 789 - 803.
Chung, Son Jon. "KoreaSat". Via Satellite. January 1994. P 66-67.
Friedlang, Jonathan & Michael Westlake. "Overcoming Barriers to Growth." Far Eastern
Economic Review. July 1, 1993. P. 66-67.
Jeong, Young-Cheol et.al. An Introduction to Pacific Hemisphere Telecommunications.
January 21, 1993. P.1-12.
Kang, Hyeon-Dew. Changing International Order in North-East Asia and Communications
Policies. 1992.
Kim, Eun-Jung. Telecommunications development in the Republic of Korea. 1989.
Lee, Sang-Chul et. Al. Satellite, Television and Images in Korea. January 1988. 
Martin, R.M. "Pluralism and the new corporatism." Political Studies V XXXIL, 1983 P. 86
-102.
MOC, Annual Report. Seoul, 1991, P. 143 - 144.
Morgan, Walter. "What is the Asia Market?" Satellite Communications. July 1995. P. 21
Seo, Jung Uck. Korean Strategies for a Digital World. P.26-42.
Seo, Jung Uck . Technological Self-Reliance in Korea Telecommunications. 1987. P153-56.
The Apt Yearbook. "KoreaSat". P. 223-224.
The Apt Yearbook. "Satellite Services". P. 337-340.
Won, Woo-Hyun. "Communication Scene of Republic of Korea." Asia Communication Handbook.
P. 215- 221. 
Table of Contents
Introduction 1
Chapter 1: History of Telecommunications 2
- Government Policies and Telecommunications Companies 3
- Results of Telecommunication's Research and Development 5
- Development of Different Systems to Extend Calling Lines 6
- Digitalization of Telecommunications 9
Chapter 2: Media 12
- Effects of "Freedom of Press" 14
Chapter 3: Present State of Telecommunications in Korea 15
- Satellites 16
Chapter 4: Government Policies 19
- Business Sectors Open to Foreign Investment 21
- Requirements for Joint Ventures 24
- Protection of Technology 26
- Regulation of Public Service Providers 28
Chapter 5: Literature Review 30
Conclusion 37 
An Overview of the Korean Telecommunications Industry
and its Liberization