25 percent of South Korea's 12 million households will have the latest in broadband Internet by the end of year 2000.

South Korea is a remarkable example of how the opening up of the telecom market is being used to turn around the economic situation. One of the hardest hit countries in the Asian economic crisis, it seems to have risen back and is all set to lead the region in the deployment of broadband access. High-speed Internet access subscriptions in the country tripled last year, and are projected to reach three million by the end of 2000, as per data from the Korea Network Information Centre.

The broadband subscriptions are soaring with the number of broadband Internet users jumping almost 40 percent between May and August 2000. In June 2000, it crossed the 1.5 million mark as per data released by Ministry of Information and Communications (MIC). That represents 12.5 percent of the country's 12 million households, making Korea one of the world's leading broadband Internet markets. According to Bloomberg, over 4,50,000 people signed up for links provided by companies such as Korea Telecom, Hanaro Telecom, and Korea Thrunet, boosting the total number of high-speed Internet subscribers to 1.57 million. In view of the surge, it is predicted that 25 percent of total households will have the latest in Internet communications by the end of 2000, as against 5 percent predicted for US homes.

Hansuk Kim, head of the Management Research Lab at Korea Telecom, points to massive policy initiatives, competition, and the proliferation of online gaming and stock trading as the main driving forces behind the country’s burgeoning demand for broadband. South Korea is believed to have more broadband users than the rest of East Asia (outside Japan) put together. The Internet service charges in Korea are among the lowest for any advanced country and about half of that in Japan, according to the Organization for Economic Co-operation and Development (OECD). The Government initiated an Internet PC project to boost the sales of PCs and notebook computers. It also began certifying and rating commercial and residential building projects on the basis of high-speed Internet access provided by them. This initiative, which allows real estate owners to charge more if they provide broadband services, has resulted in a plethora of partnerships between construction firms, ISPs, and telecom services providers looking to build broadband-ready complexes.

In mid-2000, Korea Telecom, country’s largest telco, headed the pack with 4,91,349 broadband connections, followed by Hanaro Telecom with 4,28,527, of which three-quarters were connected via Asymmetric Digital Subscriber Lines (ADSL). Korea Thrunet, Korea’s first high-speed ISP, claims 3,93,111 customers for its cable modem service. The waiting list for high-speed Internet services—a result of the low cost and overwhelming popularity of broadband—dropped to 6,31,072 subscribers, down 14.8 percent, according to the MIC data.

In June 2000, Korea Telecom decided to promote the new ADSL technology over its previous ISDN protocol-based service. As a result, subscriptions to the service rose 112.1 percent to 2,97,800 and narrowed the gap between Korea Telecom and Hanaro Telecom, the leader in the ADSL market, to a little more than 20,000 subscribers. For the first time, the country's ADSL subscribers outstripped cable users. ADSL accumulated 6,78,923 subscribers against cable’s 5,63,656 subscribers. The cable Internet subscriptions increased by 35.3 percent.

With the four Cable Internet operators. Hanaro, backed by new deals to ensure a supply of sufficient equipment and infrastructure hardware, projects the number of ADSL subscribers in South Korea to reach 2,40,000 by the end of the year 2000, compared to just under 1,00,000 at the end of 1999.

Nearly 60 percent of the Korean households own PCs. With some 16 million surfers, Internet usage in South Korea is among the highest in Asia. Broadband connections recently hitting two million, Korea has the highest per-capita usage in the world.

With the demand for broadband service growing ferociously, the developers are racing to build digital homes pre-wired with high-speed Internet access—also called "cyber-apartments" or even "cyber-pads". The time is not far away when it will be difficult to sell unwired new apartments. Builders are tying up with telcos and ISPs to build homes that probably are the best equipped in Asia for the latest in Internet communications. Last year, 1.5 million households (i.e. one in eight) signed up for broadband service.

The country is ripe for a Net explosion. Just over half of its 12 million households inhabit apartment blocks, which are cheaper to upgrade than residential districts. It will cost some $1.5 billion to wire 3 million homes with a combination of copper, optical fibre, and cable. Telcos and developers will bear the bulk of the cost. In the past, Korea's dense concentration of residential towers was blamed for traffic congestion and pollution, but no more so in the Internet Age.

The chaebols—the traditional Korean conglomerates—are also wiring homes to LANs for tailored services. A pioneer, Daelim Industrial Co., last year launched fibre-optic service at Seoul’s Acrotown wiring about three-quarters of its 490 households. Ellina Park, 39, a resident, said, "Since moving into Acrotown, the Internet has become an essential part of my life. I learn music, listen to British radio, trade stock, and chat with my neighbors—all on the Net."

Other chaebols are copying Daelim. Samsung's property development arm has tied up with Hanaro Telecom to offer all-you-can-surf access for $36 a month. More than 5,000 families moved into the wired homes in 1999, and 10,000 are expected to do so in 2000, when Samsung plans to offer richer content—ranging from video-on-demand to kimchi recipes. And that comes with a carrot: two years’ free Net access.

Samsung's foray into wired homes prompted Daelim to form Icitiro Co., a consortium of chaebol and content providers. In April, a similar alliance called Techno Villages was formed among 13 construction companies—including Lotte, Daewoo, Kumho, and Kolon—and seven technology companies. Both consortiums are building portals for apartments.

Anyuser System Co., a $2.3 million startup, has even linked up with a fledgling telecom to lend out Web videophones. Featuring an icon-based touch screen to help newbies get started, they access a broadband and portal service combining Internet, telephony, and video for $18 a month. Anyuser began testing in April, connecting 1,000 homes to shops and government services. Residents can buy flowers, get patient data from a local hospital, book movie tickets, among other things.

The Government is strongly encouraging this broadband initiative. Last year, it began rating buildings based on the quality of their datalines. The greater the speed and bandwidth, the more developers can charge apartment buyers—an incentive to upgrade Internet hardware. The Government is also bringing in competition to lay the last-mile. All the new pipes will give consumers greater access to information about products and prices, boosting efficiencies and removing barriers to commerce.

PC Baangs, literally meaning "PC rooms", are a unique Korean, a phenomenon engulfing and strengthening the base of the information society in Korea. These Internet cafés are popular, especially among youth and students, because they are inexpensive, convenient and provide faster Internet access. Says Lee Yong Tae, chairman, Thrunet, "In my days as a university student we had tea rooms. Then came the beer parlors, video gaming parlors, and Western fast-food joints. Now the latest fad in Korea is Baangs."

These busy Baangs are part Internet Café, part video game parlor—the distinguishing characteristics being the rows of latest-model computers hooked up to the Internet over super-swift broadband network connections—mostly with 24 hours-a-day access.

Here, the youth pay about $1 an hour to match reflexes with each other, playing the latest multiplayer computer games such as Rainbow 6, Starcraft or Quake. Others cruise growing mass of broadband Internet content such as music and streaming video. The PC Baangs, bonding the new generation of Koreans to the machines, are road-testing the future networks.

There are presently an estimated 16,000 Baangs in South Korea, up from about 4,000 in June 1999. Industry insiders say there could be 40,000 by the end of 2001. According to one survey, 25 percent of all Koreans access the Net from a public establishment, each person spending about two hours online every session.

A story by Assif Shameen in Asiaweek goes thus: "Off a cramped, congested alley in Seoul’s Shinchon district, an unlit concrete staircase leads down to a subterranean den. Behind a metal door, marked only by a poster for a computer game ‘Diablo! Evil Has Survived!’, dozens of young men slouch in front of rows of PC monitors as they engage in mock combat with fellow gamers. The floor is sticky with spilled soda and beer. A large model aircraft hangs from the grimy ceiling, so low that you can crack your head on it. In a corner, three women in early twenties huddle together and giggle as they surf Internet entertainment sites. It is 8 p.m. on a Saturday night, and in South Korea, this is a hot spot." The students find Baang a cool place because there is broadband access, there are games and the interiors are just right to make them feel at home away from home, and log on for hours for high-speed Internet experience.

The nation’s embrace of all networked things makes turning a profit with a PC Baang almost as easy as point-and-click. Analysts estimate that these rooms are raking in combined revenues of about $6 billion a year. In upmarket districts, PC Baangs have thick carpets and velvet sofas, and access costs as much as $9 an hour. In the not-so-privileged areas, rooms may be average and crammed with up to 100 machines. Running two PC Baangs is considered better than running 10 restaurants.

Overhead is low—the recent recession leading to heavy decline in space cost—and traffic is heavy. Profits from a PC Baang are believed to be more than double that of a big video game parlor. The preferred customers are students who play games, send e-mails, surf the Internet and do not make trouble, quite unlike the stock players and gamblers who tend to loose control as they lose money.

With about a thousand new PC Baangs opening every month, analysts say total takings from these rooms—with profit estimated at $2 of every $3 in revenue—could more than double to $14 billion in a year. However, with the landlords becoming aware of the opportunity, the profit margins are likely to ease.

In Korea, mandatory Internet training in schools is starting from primary level next year. Another generation of Korean Netheads with a national psyche well suited to the Internet revolution will soon be coming up. It will be interesting to watch how fast Korea trains its pool of technology experts and uses the technology, besides building a sound financial system—to make a successful transformation to the New Economy, i.e. Korea.com.