An empirical study on broadband Internet diffusion in Korea

Abstract

Broadband access to the Internet has become an important policy issue in each country. In most countries it is considered to be most essential to build up information society and to take the initiative for e-commerce. Thus there have been great interests in broadband access to the Internet and thus many descriptive researches have been made. However we have not found empirical studies on the factors for the broadband diffusion yet. This empirical study examined the factors that contribute broadband diffusion worldwide and in Korea. Broadband gives some benefits such as high transmission speed, always-on connection with flat rate, and not tying up a telephone line. However it also has some limitations originated from technologies and the inheritance of many decades of monopoly provision of access network. The technical issue is summarized to the distance problem. The monopoly provision of local loop is related with the limit of competition and regulatory issues. Thus most countries have implemented asymmetric regulation to build up competitive market. However, in most countries incumbents`` market governance has been absolute in broadband market until today. As for the status of broadband worldwide, the number of broadband subscribers reached about 63 millions in 2002 from about 5 millions in 1999. The breakdown of technologies consists of about 50% of xDSL, 45% of cable modem, and 5% of others in 2002. Since June 1998, when Thrunet first provided broadband access to the Internet in Korea, the number of broadband subscribers dramatically has increased from 13,801 in 1998 to 10 millions (21.3 per 100 inhabitants) in 2002. It means that Korea is by far the best in terms of broadband penetration rate, and the second in terms of number of broadband subscribers. The dramatic increase in the number of subscribers comes from the intensive competition environment in Korea. As for broadband diffusion, Korea has taken exceptional path when we consider the relationship...