1 BROADBAND POLICY IN SOUTH KOREA: THE EFFECT OF GOVERNMENT REGULATION ON INTERNET PROLIFERATION Jungmihn Jamie Ahn Hallym University Korea ABSTRACT Korea has led the world in broadband Internet market for many years. Factors which contributed to the growth and Internet proliferation in Korea, especially the role of the Korean government, have been intensely debated over the past years. While Korea benefited much from such IT development, rapid IT growth brought about a variety of negative consequences. With the wide proliferation of broadband Internet, Korea has been forced to deal with unexpected problems, such as Internet addiction, copyright infringement, violation of privacy, data breach, and defamation. This paper explores the factors contributing to the remarkable proliferation of the Internet and the current problems Korea is facing. It then analyzes the strict Internet regulations addressing these problems. Although appropriate regulatory policy will vary depending on the societal structure and prevailing technology of each country, this paper recommends that a minimal government intervention approach should be taken to address social problems caused by the Internet. KEYWORDS broadband policy, government regulation, role of government, internet regulation, 1. INTRODUCTION Where many countries are being challenged with the tasks of improving and making good use of information and communication technologies (ICT), Korea has been noted for its rapid and extensive deployment of broadband. In fact, Korea has led the world in the broadband Internet market for many years. Policies, as well as non-policy factors, have contributed and affected broadband Internet proliferation in Korea, especially the role of Korean government, have been intensely discussed over the past years.1 Page 1 / 16 There are several reasons for why Korean broadband Internet proliferation has increased dramatically and quickly than other countries. High speed Internet access became popular early on and the network deployment and distribution rate of personal computers (PCs) grew fast. As one of the world s most active telecommunications and Information Technology (IT) markets backed by strong government support, Korea has
2 been known test bed for new technology. Although Korea benefited much from IT development, rapid IT growth had a variety of consequences. As the Internet penetration nears close to 100%, Korea is facing with unexpected problems such as Internet addiction, copyright infringement, violation of privacy, data breach, defamation and Korean government has been combated against them through heavy-handed regulations. There s no doubt that Korean government beautifully orchestrated to adopt a massive scale broadband Internet deployment and led the country as the most advanced in ICT. Yet, the success in Internet proliferation has been largely attributed to the government s minimal intervention after the infrastructure had been laid out. I am with the view that minimal government intervention approach should be taken to address problems caused by Internet proliferation. And to suggest the legal approach government should take in addressing problems, the paper focuses on the changes of role Korean government played in structuring telecommunications sector. In the beginning of development, it was the dominant player and had stronger role in carrying out various policies, but once the telecommunications infrastructure had been laid out, it pursued a policy of minimal intervention and invited private sectors to develop and to deploy broadband. 2. THE CURRENT STATUS OF BROADBAND IN KOREA Korea has been considered as the world s most advanced economy in information and communication technologies (ICT) for years. Korea has the fastest Internet speeds in the world and has the highest rate of mobile broadband subscriptions among the 34 OECD member countries. As one of the most wired countries in the world, 97% of all households have Internet connection with an estimated 39.4 million Internet users, comprising about 81% of the population. Korea is also the leading country for mobile broadband. The mobile broadband market in Korea is well established and it has the world highest mobile broadband penetration of 91%. Mobile phone penetration rates reached 100% since March 2010, exceeding the total population. Smartphone users in Korea totaled 20 million in less than two years since the introduction of iphone in late 2009 and Korea now has 40% smartphone penetration. At this rate, Korea will see the fastest smartphone penetration rate in the world in G Long Term Evolution(4G LTE) commercialization began in July 1, 2011 in Korea and SK Telecom and LG U+ are competing Page in nationwide 2 / 16 network deployment by G commercialization as well as network deployment has been the top priority for mobile broadband, and high-volume deployment of Fiber-to-the-home (FTTH) particularly in rural areas is currently a big issue for fixed broadband. Korea leads the world in the percentage of homes that are connected to all-fiber networks and it is the first country in the world where more than 55% of households are using Fiber-to-the-home/-building
3 (FTTH/B) connections. 3. FACTORS CONTRIBUTING TO BROADBAND INTERNET GROWTH 3.1 ACTIVE GOVERNMENT INVOLVEMENT The extensive role of the government in creating demand in broadband through policies is considered as the most remarkable characteristic of Korea s broadband growth. The strong bureaucratic approach in the beginning of telecommunications development changed to a light-handed approach as the government invited more private sectors by privatizing public telecommunications corporation. Initially, Korean telecommunications industry was under the direct government ownership and exclusive operation. A government-owned corporation was established later on and it was finally liberalized after the privatizing of the government-owned corporation. To show the changes in the role of the government in the development, I have divided it into three periods. A government monopoly (1960s1981), a government-owned corporation monopoly ( ), and the period of broadband revolution induced by competition among public and private corporations(1990-present) GOVERNMENT MONOPOLY (1960s -1981) Korea saw the value of information network system as early as in 1970s. Until 1981 the Ministry of Communications was given responsibility for telecommunications operations. This meant policy adopted by the government was the goal for telecommunications industry. Korean government launched a series of telecommunications improvement policies and the most notable policy was to build information welfare society which would provide universal service to rural and urban areas. Implementation of the policy began with construction of Korea s first digitally switched network with a fiber optic backbone. The project gave Korea one of the most modern telephone networks in the world when completed in June The government decision to expand telecommunications facilities when most developing countries gave lower priority to telecommunications had been the foundation for Korea s remarkable broadband development GOVERNMENT-OWNED CORPORATION MONOPOLY ( ) Telecommunications sector entered into a new stage from On January , a 100% government-owned monopoly carrier, the Korea Telecommunications Authority (KTA), was established. Moreover, laws such as the Law on the Establishment of Korea Telecommunications Authority (1981), the Page Framework 3 / 16 Act on Telecommunications (1983) and the Telecommunications Business Act (1983) were enacted to support new market structure. These laws allotted all telecommunications services to carriers designated only by the Ministry of Communications. So although there had been a few common carriers in the market, they could avoid competition since their business did not significantly overlap with each other.
4 The convergence of computing and communications facilitated the call for liberalization of market and pressure to liberalize the market came both from inside and outside Korea. In 1987, the government eased restrictions on the use of the network, inviting private companies to provide database and data processing services and initiating a plan to privatize KTA. Further relaxations on the use of the public networks, of leased lines, and on the construction of private networks occurred in 1987 and During the rapid expansion in the 1980s, the government successfully executed policies, such as one telephone per household, direct dialing system (which subscriber calls direct without operator assistance), and the elimination of delays in installation. Slowly over the decade, the environment shifted from monopoly towards competition. In 1990, the government segregated the market by compartmentalizing facilities-based and valueadded services and by international, long-distance, and domestic markets, progressively licensing competitors in each market over time BROADBAND REVOLUTION THROUGH COMPETITION While the world was calling attention to the need for information superhighways in 1994, the Korean government decided that a fiber optics network operating on a national level was crucial for economic growth. It therefore supported a pilot project with US $1 billion in grants to build the backbone to connect government and public facilities. By being the first customer, the government eliminated the start-up risk which private industry would not have been able to fund. Korea Information Infrastructure (KII) fiber optic networking plan was laid out from 1995 to The KII project is considered as a big advancement in comparison to other network projects because it involved a massive government-industry partnership with the private sector playing the major role in development. The period between 1991 and 2002 is characterized by broadband revolution. Strong competition of public and private corporations provided new networks and new technologies. The government managed the competition gradually by way of granting licenses for each market. The Telecommunications Business Act was revised in 1997 and 1998 to simplify administration processes. The Framework Act on Informatization Promotion was enacted in 1996 to provide legal basis for implementing informatization, while the Act on the Management of Knowledge Information Resources in 2000 and the Promotion of Digitalization of Administrative Work for E-Government Realization were enacted the next year to support broadband development. The fact that Korean government also promoted demand for broadband is highly notable. The government put together a series of programs to facilitate computer use and Internet education both at school and Page home. 4 / 16 In 1999, Cyber Korea 21 was implemented to create Internet-friendly environment. The plan to upgrade the information structure, e-korea Vision 2006 in 2002, and the third Master Plan, Broadband IT Korea vision 2007 in 2003 all show active government efforts in creating demand and in providing long term strategies for broadband proliferation. By 2002, many areas of society became computerized and connected to the network, increasing
5 overall productivity and efficiency FROM BROADBAND TO GIGABAND As telecommunications appeared on the scene with a positive impact on national competitiveness, the government recognized the future needs of a ubiquitous network and more management strategy. This interest was reflected in the IT839 Initiative (renamed as the u-it 839 Plan), which forged a new drive to lead the growth of the Korean economy. The IT839 Strategy is deemed as the most significant strategy to encompass Korea s overall IT policy. Under this strategy, the development of eight (8) new IT services were introduced to encourage investment in three (3) key network infrastructures, which in turn promoted the development of nine (9) new growth engines. The construction of a broadband convergence network (BcN) began in The threephase plan to build BcN is in its third phase now, providing wired-wireless integrated networks and services to a total of million subscribers nationwide.3 Having completed the first two phases successfully, the government established the Plan for Developing and Promoting Giga-Internet to improve communications infrastructure beyond BcN in April The GIGA Korea project is an IT innovation industry preparing for the next generation. The purpose of this project is to push ahead the goal of realizing a smart Korea by the year Giga-level Internet service will enable users to transmit data at an average speed of 1 gigabyte per second (GBp) through fixed-line connections and maintain a rate of 10 megabytes per second (MBps) on wireless connections, which is about 10 times faster than BcN. The Giga Internet pilot project aims to bring gigabit Internet connection to households by COMPANY PARTICIPATION AND FIERCE MARKET COMPETITION As seen above, the development of broadband was supported by various national level strategies, but the introduction of broadband was not created directly by a government plan. Broadband service and new technologies developed out of fierce of competition among carriers, although the government did provide infrastructure and offer financial support, such as preferential tax treatment and direct loans. The Korean government induced companies active participation in broadband through deregulation. Deregulation spurred the creation of facilities- and services-based competition in the market, which became the primary driver for the rapid rollout of broadband. The government worked closely with the private sector to encourage investments in broadband, giving them to participate actively Page 5 / with 16 the certain guarantees.6 As competition to gain market share increased, the deployment of high-speed Internet infrastructure accelerated. The government encouraged competition by granting key communications business licenses to multiple carriers. The Telecommunications Business Act of Korea (2011)
6 classifies telecommunications businesses into three categories (Article 5): 1) a key communications business that installs telecommunications line facilities and provide services such as telegraph or telephone service (e.g., current network operators like KT, SKT, and LGU+); 2) a specific communications business which provides a key telecommunications service via key communications line facilities (e.g., portals such as NHN & Daum Communications); 3) and a supplementary communications business which leases line facilities and provide services other than the key telecommunications services. In order to facilitate the high-speed Internet market and in line with deregulation, the 1997 revised Telecommunications Business Act started to allow businesses to provide services without having to install line facilities, as well as lowering entry barriers for Internet access services. To operate a key communications business one had to obtain a license previously, but the 1997 revision streamlined the process with a simple registration procedure to provide specific communications business. Seizing this opportunity, the Internet service market grew with 82 internet service providers (ISPs) and 19 million Internet users by the end of Deregulation encouraged throngs of new start-up companies to enter the market with new technologies that existing carriers had neglected. In 1998, Korea s largest cable TV network, ThruNet, first introduced broadband services for the first time and within a year, multiple operators (e.g., Dreamline, SKT, and Onse) launched ADSL services. In order to maintain a competitive advantage, companies came up with flat-rate price plans. Under a flat-rate plan, there are no direct links between consumption and the price of consumption. That is, users can consume as much bandwidth as possible, unlike usage-based price plans, where users pay for the bandwidth. Flat-rate pricing is simple and popular, but typically creates heavier consumption of services. While flat-rate pricing contributed greatly to broadband proliferation, it also led to the over-consumption of data. Aggregated network traffic nearly doubled yearly since 2001, as the number of subscribers grew at a much slower rate during that period. Flat-rate pricing has proven to be burdensome and inadequate to network operators as broadband markets have become saturated. In the meantime, flat-rate plans with unlimited usage have become common practice in Korea, which the wireless market naturally adopted later. Consequently, such intense competition allowed subscribers to enjoy fast-speed, quality Internet services at low prices. Between 2000 and 2002, Korea experienced the world s most rapid expansions of broadband penetration and scored the highest in measures of broadband quality. However, deregulation also produced a glut of service providers for the market size and quickly over-saturated the market. Page 6 / SOCIOCULTURAL FACTORS Sociocultural characteristics unique to Korea have stimulated the usage of broadband service. Koreans high literacy rate of 98%. Moreover, acceptance of new technology in Korea has been relatively quick. Korea is frequently referred to as the ideal IT test bed,
7 which has contributed to its early broadband deployment and new infrastructures like LTE, Wi-Fi, WiMax, RFID and M2M GAMES AND PC BANGS Korea is known for its robust online gaming. Online games, online education, e- government, PC bangs all have helped the rapid deployment of broadband bringing Internet into people s daily lives. PC bangs in Korea especially played an important role in the growth of broadband penetration. PC bangs are Internet cafés equipped with multimedia computers offering 24-hour high-speed Internet access through leased lines at low prices. Young Koreans have flocked to such PC bangs to play high resolution online games at high speeds something not available at home. This trend brought Korea to the Internet age faster than any other country EMPHASIS ON EDUCATION Another factor that helped boost Internet usage in Korea is Korea s obsession for education. Korean mothers are famous for putting their children s education as their top priority. Once President Obama praised the zeal Koreans have for their children s education, but this zeal for learning is not limited to parents only. Koreans have always been eager to improve their lives by learning something new, and adopting something different, regardless of the cost. So when the Korean government promoted the use of Internet by implementing the Ten Million People Internet Education Project ( ), one million people signed up to learn basic skills for using the computer and Internet. For a Cyber 21 program which ran under this project, 70,000 housewives signed up in just the first 10 days. The enthusiasm for learning has helped to create and maintain the demand for broadband diffusion in Korea TECHNOLOGY SAVVINESS Lastly, Koreans are technologically savvy. Korean consumers, on average, change their mobile phones every 27 months. Korea is widely regarded as the optimal test bed for technology, as proven by the saying [I]f you are successful in the Korean market, success is almost guaranteed elsewhere in the world. The fact that the world-class cell phone manufacturers, like Samsung Electronics and LG Electronics, are Korean companies is significant factors, too. In addition, it provides insight into how Samsung Electronics became the biggest phone manufacturer in the world.8 The tech-savvy nature of Korean consumers, who are eager to be at the forefront of market trends, has fueled the remarkable development of Korea s broadband growth and diffusion. Page 7 / INCREASES IN DATA DEMAND After years of cutthroat competition in the telecommunications market, unlimited data at a flat monthly fee became the norm in Korea. Korean consumers enjoy the lowest prices in the world, but changes in user behaviors have started to overburden the
8 Page 8 / ADDRESSING ISSUES ARISING FROM BROADBAND GROWTH PTC 12 Proceedings network. That is, if text-based services like were used only occasionally before, users now watch podcasts and download streaming media on a regular basis. Relying on the speed and unlimited usage, many P2P and webhards have encouraged heavy uploaders to illegally upload movies and music files as a profession. A recent study analyzing the traffic of a network service center in downtown Seoul found that Internet networks became clogged mainly due to heavy users and illegal downloads of P2P and webhard services that took up 70% of the total traffic.9 P2P and webhards are not only blamed for causing the spike in data demand, but also for widespread piracy on the Internet. According to the Copyright Protection Center affiliated with the Ministry of Culture, Sports and Tourism, 32.5% of the entire illegal online downloads market via webhards amounted to 1.42 trillion won ($1.3 billion). The National Assembly revised Telecommunications Business Law in May 2011 and introduced new measures (webhard registration and a Webhard Three Strikes rule) in an effort to eradicate the illegal distribution of copyrighted contents. The proliferation of broadband and demand for online games also brought negative effects. The Internet and online games, together with PC bangs, are now considered to have caused Korea s Internet game addiction. A recent survey showed about one million, or 14.3% of the country s teen population exhibited symptoms of Internet addiction.10 Last year, a middle-school teen strangled his mother to death for forbidding him to play computer games. Another compulsive game player in his thirties died after playing games nonstop for five days. A couple let their three-month-old infant starve to death, while they played games online. In the hopes of curbing game addiction (especially among minors), the Korean National Assembly passed a controversial bill restricting access to online games for anyone under the age of 16 from midnight to 6 a.m. in April The effectiveness and constitutionality of this bill has created sever opposition in Korea, even prompting NGOs and the game industry to file constitutional petitions before its implementation. In sum, the Korean government has played a pivotal role in promoting broadband growth. The government successfully initiated and carried out many projects and policies. Korea s success in IT has been possible because of this active involvement of the government. However, up until now, Korea only concentrated on establishing external facilities and network deployment. In doing so, the government failed to contemplate whether there would be any side effects. Korea s strengths have always been facilities-based service or hardware. But, as the competitiveness paradigm in the technology industry shifts from hardware to software, software has become the key ingredient to success in the telecommunications sectors. The unbalanced growth and the side effects of rapid Internet penetration now impede further ICT development. In previous section, how Korea became a broadband wonderland and the factors that made the rapid development possible were discussed. How government policies
9 facilitated network deployment and contributed to the Internet proliferation, leaving software behind. Initially, competition in the telecommunications market led to high quality Internet services at low prices, but it also brought about an increase in data traffic and network congestion. Certain sociocultural characteristics stimulated broadband proliferation, but led to social problems like online piracy and Internet game addiction. This section will examine the legal measures and regulations addressing problems arising from the wide proliferation of the Internet. Transmission of harmful communications using telecommunications is prohibited by law.11 Various censorship requirements were imposed on ISPs to monitor users postings in order to prevent the circulation of defamatory or uncertified information.12 Real-name registration13 requiring Internet service providers to authenticate user names and resident registration numbers is being implemented while the risk of data and information breach persists. From the law preventing underage gamers from playing online at night to online contents regulation, there are many government regulations that run counter to the nature of the Internet. This big government approach dates back to past experience of the Korean government. The successful growth of Korea's economy in the past 50 years has been remarkable and it was a product of the government s industrial policy. However, there were also aftereffects of rapid economic growth, such as increased rural-urban migration or the polarization of wealth. From the late 1980s to the mid 1990s, Korea had to pay high social costs for government-aggravated conflicts by unilaterally pushing policies originally intended to resolve conflicts. Nevertheless, the government strategies to solve Internet-related problems follow the same past trajectory. Evaluating that the hardware-oriented growth policy has been successful so far and comforting itself with the thought that unbalanced growth is merely collateral damage, the government is now taking an aggressive approach to strengthening and expanding its control over the Internet. However, this controlfocused approach is causing regulatory dissonance and the measures taken have encountered strong resistance. It seems that the success in the development of infrastructure and the support it had from the Korean people led the government to believe regulation is the solution to change the undesirable aspects of the Internet evolution and fix social problems caused by the Internet. The Korean government does not realize that the Internet has become an integral part of modern life and such a restriction will face strong opposition and trigger constitutional challenges. The next section will introduce and examines some of the highly contested regulations being carried out in an attempt to curtail negative effects of broadband proliferation in Korea. 4.1 MANAGING THE DATA TRAFFIC AND Page 9 ILLEGAL / 16 CONTENTS WITH WEBHARD REGISTRATION At the early stage of broadband development when increasing penetration is key, a monthly flat-rate fee might be appropriate, since it is simple for network operators and predictable for users. But in Korea, it has not only caused an increase of data traffic, it
10 also brought an increase of unlawful peer-to-peer sites and webhards that offer storage space online. Along with carriers efforts to control data traffic spikes by restructuring price plans and revisiting the network neutrality principle, legal measures have been taken to combat the circulation of illegal contents. Copyright infringement and distribution of adult material through peer-to-peer file-sharing sites and webhard companies has been a major concern in Korea for many years. They have easily escaped from crackdowns by using subscriber lanes under borrowed names. Until now, they simply closed their sites and opened new ones to avoid getting caught. Webhards and P2P companies fall into the supplementary communications business classification under the Telecommunications Business Act. Since supplementary communications businesses only have to report their business to the Korean Telecommunications Commission (KCC), it has been difficult to investigate and regulate webhards Furthermore, businesses worth less than 100 million won were exempted from reporting obligations. The law had allowed anyone to open a webhard service by lowering the entry barrier. But the revised Telecommunications Business Law created a special type of supplementary communications business (Article2) and granted a pertinent authority the power to review whether applications meet the registration requirements (Article 29(6)). Violating this registration requirement is punishable by a fine of up to 30 million won (US $28,000); and conducting a business without valid registration is punishable by imprisonment of up to three years or a maximum fine of 150 million won (US $140,000). A webhard three strikes rule has also been introduced to allow the KCC to revoke a webhard s registration when it was found to have repeatedly violated the Intellectual Property Rights Law. It applies when operators with three or more violation records are again imposed with a negligence fine. The strengthened registration requirement (Article 22(2)) has potential constitutional problems and it has been strongly opposed by Internet companies. In order to be able to register, a company has to prove that it: i) has taken the necessary technological measures which cut off illegal forwarding of the copyright work (in compliance with Article 104 of the Copyright Act); ii) has the necessary personnel and facilities to conduct such a business (to have two monitors to monitors the contents 24 hours a day); iii) financial stability of the business; iv) and other requirements as prescribed by Presidential Decree. First of all, the effectiveness of such a regulation is questionable when a server is located outside of Korea where Korean law does not apply. Requiring minimum capital of 300 million won to be registered as a special supplementary communications business and revoking the registration upon violation all excessively infringe the constitutionally guaranteed freedom to Page choose 10 / an 16 occupation and the right to engage in work. It also violates the principle of equality. since similar storage services are offered by portals and other OSPs that do not require similar registration. Although dangerously located on a constitutional border, the Constitutional Court will uphold the webhard registration. Government restriction of constitutional rights must
11 satisfy the principle of proportionality. The restricting measure must be: i) aimed at a valid purpose (the legitimacy of the end); ii) reasonable as a means chosen by the government to achieve and promote such purpose (appropriateness of the means); iii) the least restrictive among all equally effective options (use of the least restrictive means); and iv) a relationship of proportionality when the importance of public interest and the degree of infringement are balanced (balance of interests). Webhard registration was introduced to protect copyright by requiring webhards to register with the government will be considered as an appropriate means. Although setting how many monitors they should hire regardless of the size of the business or requiring 300 million as minimum capital seems to infringe the freedom of occupation, online copyright infringements have been so prevalent that imposing such requirements will not be deemed as a significant interference on the freedom of occupation. Also the Constitutional Court will most likely find balanced interests in that, while imposing limited restriction such as registration on particular business (i.e., webhard in this case), it can effectively prevent harmful consequences (of unlawful downloads) and, thus improve culture in society. 4.2 GAME SHUTDOWN On April 29, 2011, the Korean National Assembly passed the revision of the Juvenile Protection Act which restricts access to online games in a bid to stem game addiction among teenagers. The bill was proposed by the Ministry of Gender Equality and Family in 2010 after a series of deaths caused by game addiction. Article 25 of amended Juvenile Protection Act, known as the Cinderella law, prevents underage gamers from playing online game regardless of places and devices - whether at home with their own PCs or handheld device, or in PC bangs - from midnight until 6 a.m. Violation is punishable with a maximum of 2 years imprisonment or by a 10 million won fine. The effectiveness and constitutionality of the measure have been highly contested way before its implementation. Games have been long recognized as the media of expression that are protected by the freedom of speech and press in Korea.14 At the same time, the Constitutional Court has acknowledged that protecting minors can be a justifying reason for placing restrictions on basic rights. The logic is that minors are in a state of immaturity both mentally and physically, thus must be protected until they grow to be responsible individuals of personality within the social community. In this regard, the Constitutional Court has ruled that measures adopted by legislators for the protection of minors against harmful information on the Internet is justifiable if it is a means that is effective and appropriate for achieving the legislative purpose. However, game shutdown is an extreme measure which dictates how and exactly when minors can play games. A constitutional Page 11 / petition 16 has been filed seeking annulment of the restriction, as it would be difficult to pass constitutional review for the following reasons. First of all, the law restricts late night access of games regardless of the amount of violence or obscenity of the game. In Korea, all games are rated and classified General, 12+, 15+, and 19+ according to Article 21 of the Game Industry Promotion Act. The new law prohibits playing all rated, thus legal online games at night.
12 This is an overbroad restriction imposing a substantial restraint on circulation of constitutionally protected contents. Secondly, such shutdown violates the principle of equality. The application of the regulation is discriminative leaving too many exemptions. Initially, online games offered in real-time--pc games, video, console games, which require access to the network--were subject to regulation. It was to cover all Internet games (except arcade games) and for all game providers, online MMORPG provider, portals, SNS providers,which offer games in and outside of Korea. But as the effective date for the implementation of the shutdown approached, more and more exemptions were made. For example, it does not apply to games downloaded from the Internet that do not require network access to play. Among the few console games, the Sony Playstation Network Service is not subject to the law, whereas the Microsoft X Box is because with the Xbox, you have to purchase subscription for multiplayer gaming. Popular Blizzard games such as Starcraft, Diablo 2, and Warcraft 3 were exempted after Nattle.net announced the entire net would have to shut down every night in Korea to comply with the regulation.15 Third, this violates a minor s constitutional right to pursue happiness, which includes the right to pursue values and freedom of action. In order to justify the infringement, the measure has to be reasonable and the least restrictive means to protect minors. But the restriction is not reasonably tailored and there are many other less restrictive ways to achieve the goal. The government can impose more responsibility to parents, PC bang owners, educate the danger of game addiction or provide help, rather than limiting the access of online games after midnight. Applying the measure on a voluntary basis would be much less intrusive, too. Lastly, it violates parents rights to nurture and educate their children. Children's nurturing and education are parents' God-given rights. Legislation aiming to protect minors should not take away a parent s role. Also, the measure does not separate the public sphere from the private sphere, thus invading the home. A minor s entry into PC bangs at late hours is already prohibited according to the Game Industry Promotion Act.16 Minors would most likely be playing games at home during late hours and the law should not intervene in family matters unless necessary. 4.3 OVERCOMING THE SOFTWARE WEAKNESS Korea has been known for its hardware excellence. On the other hand, Korea' software industry has been the weakest link in the telecommunications sector. But to stay on top in the fast-changing telecommunications market, software competitiveness has become essential. The government has been showing efforts to promote the software industry since Various subsidy and tax reduction measures were adopted and a government-driven plan for cultivating talented Page 12 / personnel 16 was put into place. To support software industry promotion by law, the 1987 Software Development Promotion Act was wholly amended and renamed as the Software Industry Promotion Act in Whereas most of industry promotions are done by providing government subsidy or deregulation, the main characteristic of Korea s software policy has been promoting through regulation forcing industry to follow government policies. The best example
13 would be a ban preventing mobile phones from using anything other than Korea s WIPI (Wireless Internet Platform for Interoperability) operating system. In 2003, the government imposed a unique software platform called WIPI on mobile phones on sale. The purpose of setting this industrial standard was to save companies from unnecessary competition and overlapping investment. But developing a standard which is unique to Korea effectively protected the market, closing the entry of foreign phones, which resulted in a lackadaisical response to the iphone in Korea. As Korea witnessed Samsung s vulnerability when its software was put up against Apple s User Interface (UI) and applications, software became the new buzzword in the telecommunications sector. Triggered by this Apple phenomenon, the Ministry of Knowledge Economy has implemented a three-year World Best Software program that aims at helping the country s software field as competitive as the hardware industry. The plan includes one trillion won ($868.9 million) of government funding into the local software industry and the creation of 160,000 new jobs. The problem with the Korean software market is that it has been structured around conglomerates. Big companies usually subcontracted most of the software work to small companies at very low prices. The company that places orders for software programs gain the ownership and patent rights, and software companies are prohibited from selling the same program to other companies. When a small software company came up with a brilliant business idea, it was usually bought off by these conglomerates.17 Although there is a government policy to give preference to small companies for government IT projects, bidding against big companies is difficult since the system is structured for them to have lower achievements and financial standing. The Korean government needs to realize that the competitiveness of the Korean software industry can only be strengthened through deregulation and globalization. The government s recent change in direction to promote the software industry is a step in the right direction. The Software Industry Promotion Act was amended to mandate government to take steps to expand the participation of small- and medium-sized software businesses in order to ensure the sound development (Article 24-2). Also, big companies are now voluntarily seeking ways to maintain a balance between big and small companies that was lost a long time ago. KT, the largest fixed-line operator and the second-largest mobile service operator, has announced a plan to focus more efforts on software.18kt announced that it will pay software developers not only based on labor costs, but for their expertise and the future value of their programs. Developers will also be allowed to retain ownership of their programs. Industry players attempts to develop software have been set as well. Korea s top Internet portal, NHN, announced a plan to set up a software academy, investing 100 billion won over the next 10 years to train software engineers.19 Page 13 / 16 Government efforts to bring regulation up to global standards are improving. As explained above, all games must be reviewed and rated by the Games Rating Board before they become available to consumers in Korea. The board had insisted on requiring mobile game makers submit their products for review of their suitability, which
14 led Apple and Google to simply close their game category for Korean users. After getting much criticism that the law aiming to promote game industry actually restricts software development, the amendment to the Game Industry Promotion Act (also known as the Open Market Law) was passed into law on March 11, It now allows certain game products, which are not compatible with the ratings review by the Board to be rated by a distributor in accordance with the criteria agreed by and between such distributor and the Game Rating Board. As a result, mobile games got a two-year grace period, or stay of execution, from the game shutdown system. Although there are still a lot more to go, this is a dramatic shift from the government s previous approach, now recognizing the need to harmonize with global standards in IT regulation. 5. RECOMMENDATION As the accessibility of Internet increased, Korea s dependence on the Internet grew stronger. In a country where broad and fast Internet connectivity are taken for granted, many Internet-related problems have arose, among other things: Internet addiction, violation of privacy, information and data breach, defamation, online witch hunting, and online fraud. To address these problems arising from wide proliferation of broadband for both fixed and mobile, the Korean government has been doling out heavy-handed regulations. Throughout the world, governments play an active role in investing in and encouraging the growth of the Internet infrastructure. Governments are in a position to facilitate the development of IT industries by facilitating interactions between the public and the private sector. The Korean government is no exception and has played a significant role in IT growth through policies supporting in laying out the infrastructure. The Korean government changed its policy pattern during its IT growth by starting out with a government-driven policy to later change direction by encouraging voluntary participation of private sectors. Such changes in policy patterns over the past three decades may have been inevitable given the rapid changes in telecommunications environment and in demand. But as a result, Korea was able to take its place among top IT countries in the world. Governmental measures have two sides. Government can lead technological innovation by policy support, but from the moment when it cannot accommodate changes in technological development, such support becomes regulation. Self-regulation is a solution, even though it is often regarded as a temporary solution. However, most government regulations attempting to curtail negative effects of Internet proliferation are also expedients made in haste. Self-regulation in the right direction is better than a decisive law going the wrong way. Government regulations are kept being challenged on legal grounds because less intrusive Page alternatives 14 / 16 to outright prohibition exist, but are overlooked. Lastly, government intervention in the Internet evolution or Internet freedom must be rejected. Because restricting freedom on the Internet presents problems that have far more serious and far reaching consequences. This does not mean that the government
15 should refrain from regulating the Internet at all. It should help shaping the course of Internet evolution by providing useful and effective guidance for the parties in the Internet ecosystem. Still, the regulation should be kept to a minimum and leave the details and specifics to the ecosystem itself. For example, the Korean government s efforts in strengthening the software industry can be considered necessary and should be encouraged to play a greater role. However, deciding who can play games online at what time is something that should be left to the users themselves. Appropriate regulatory policy will vary depending on the societal structure and prevailing technology. As Korea s Internet penetration reaches close to 100%, lessons learned from Korea s approach in redressing certain problems will hopefully be useful in preventing, and/or dealing with, similar problems in other countries. REFERENCES Simon Forge & Erik Bohlin, Managed Innovation in Korea in telecommunications - Moving towards 4G mobile at a national level, Telematics and Informatics, Vol. 25, Nov Kim, Kelly & Raja, Building broadband: Strategies and policies for the developing world Kenji Kushida & Seung-Youn Oh, Understanding South Korea and Japan s Spectacular Broadband Development: Strategic Liberalization of the Telecommunications Sectors, BRIE Working Paper 175, June 2006 Nae-Chan Lee, Broadband Internet Service: Korea s Experience Yong-Hwan Lee, Note on ICT as a key engine for development: good practices and lesions learned from Korea, Worldbank Kyounglim 1 Yun et. al., The Growth of Broadband Internet Connections in South Korea: Contributing Factors, Sep ENDNOTES Kenji 2 Kushida & Seung-Youn Oh, Understanding South Korea and Japan s Spectacular Broadband Development: Strategic Liberalization of the Telecommunications Sectors, BRIE Working Paper 175, June 2006; Kyounglim Yun et. al., The Growth of Broadband Internet Connections in South Korea: Contributing 3 Factors, Sep. 2002; Simon Forge & Erik Bohlin, Managed Innovation in Korea in telecommunications - Moving towards 4G mobile at a national level, Telematics and Informatics, Vol. 25, Nov KII was divided into the New Korea Net-Government(NKN-G) which would provide network for e- government and public functions and New Korea Net-Public(NKN-P) which would provide broadband service to private sector. The Page 15 / 16 project successfully completed its first year of service in In 2009, the project was
16 4 PTC 12 Proceedings implemented mainly in the areas of pilot construction and service, quality management base construction 5 and operation. 1st phase of the plan had been for infrastructure building( ); 2nd phase for network constriction( ); and 3rd had started in 2008 to be completed by The Giga Korea project is enormous national R&D project which is unprecedented. According to this plan, 6 around 150 billion won will be invested to networking, data terminal, platform/software, contents/service and database business. Three-step progresses are planned for 2012, 2014 and 2019 respectively. 7 The government plans to replace 70% of the circuit-switched network with an IP network by 2013 by providing 1.3 trillion Korean won on the project and plans to generate around 32.1 trillion won from the private sector in investment. 98 Yong-Hwan Lee, Note on ICT as a key engine for development: good practices and lesions learned from Korea, Worldbank, p.4 ; Kim, Kelly & Raja, Building broadband: Strategies and policies for the developing 10 world, p14. Nae-Chan Lee, Broadband Internet Service: Korea s Experience, p.9 11 Samsung Tops iphone Shipments, The World Street Journal (Oct. 21, 2011) 12 (in Korean). (in Korean) ( ) 13 Article 53(1) of the Telecommunications Business Act states a person in use of telecommunications shall not make communications with contents that harm the public peace and order or social morals and good customs. Harmful communications were to be determined by presidential decree. 14 The law requires information providers to temporarily block contents which infringes upon any other s rights upon victim s request and delete content unwholesome for juvenile without delay. 15 The Internet real-name registration system had been introduced in 2004 under an amendment to the Public Official Election Act to prevent side effects of anonymity and to promote fair election. But in 2007, its application has been expanded after violation of privacy and defamation on the Internet resulted in suicides 16 of TV celebrities. 17 Article 21 (1) All citizen shall enjoy freedom of speech and the press, and freedom of assembly and association. These games were first developed 10 years ago, and did not implement personal identification for user sign-ups - which means that the user's age cannot be identified. Article 27 and its presidential decree restricts entry of minors from 10 p.m. to 8 a.m.. Both the government and big businesses bought software by pressuring subcontracted software companies to cut their prices. The price was decided by the labor costs of the programmers based on their they supplied. Engineers the key to software woes, Korea JoongAng Daily (Sep. 02, 2011) home n ewslist1 academic degrees and experience. No consideration was given to the function and value of the software Page 16 / 16