Government Paternalism and Turf Wars
Government Paternalism and Turf Wars
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  • 승인 2006.04.01 12:01
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In a recent article in the New York Times, Korea was praised for the way in which its "aggressive conglomerates" were global leaders in some of the key frontiers of high technology. However, it went on to point out that there was an "unlikely commander" leading this attack on the world markets - the Korean government.
The article made an important point though when it questioned whether, despite the successes achieved thus far through the government-led strategy, this "paternalism would be tolerated for much longer by the chaebol (conglomerates) and other venture companies making forays into the global markets. The writer points out that history is full of examples of governments that tried and failed to successfully lead a country's economic growth. He goes on to quote a spokesman for Goldman Sachs in Seoul, who observed, "Korea's economy is outgrowing this old mentality of the government dictating to the market. The government's main successes have been in the fields of wireless and information technology, led by the Ministry of Information and Communication (MIC), with a budget of nearly US$1 billion to promote new technologies. The biggest success of the government's IT839 strategy launched three years ago has been MIC's rapid development of the WiBro or wireless broadband system in "partnership" with Samsung. The article quotes the former MIC minister Chin Dae Je as saying 'What works is government playing an important role as a facilitator for new technologies." In an effort to overcome the nation's overdependence on hardware, software development is now a main priority of the government and its new policy's emphasis is on setting standards and developing new technologies that allow Korea to control critical patents. A bitter lesson was learned from not controlling the rights to the CDMA technology for cell phones, which resulted in companies like Samsung and LG paying royalties to Qualcomm till today on every cell phone they sell. The Ministry says that it is trying to avoid failures by inviting academia and the private sector to help select new technologies - but it insists that a small country like Korea cannot afford to allow market forces alone to guide economic growth by picking the winners and losers. However, many people are beginning to question whether government policies are in fact holding back the development of cutting-edge technologies, as we have been seeing recently in the rapidly emerging convergence services between telecom and broadcasting. According to some experts, the bundling of services between telecommunications and broadcasting is spreading fast but they are struggling to take firm root due to excessive regulations. One of the reasons behind this is the ongoing turf wars between ministries and government agencies, instead of streamlining regulations in order to boost the new technologies and industries. Some of the convergence services suffering from setbacks, due to the protracted disputes, are satellite broadcasting, mobile broadcasting and Internet protocol (IP) TV services. The Ministry of Information and Communication (MIC), which is in charge of overseeing the telecom market, claims the bundling services should be under its control. To back its claims, the ministry says that those offerings originated from telecom networks. But the Korean Broadcasting Commission (KBC) argues that it should be the supervisor, claiming that it is in control of all broadcasting services and technologies. In particular, convergence is sprouting up in an area between telecom and broadcasting and Korea is taking the lead in setting the global standard for this technology through WiBro and DMB. For instance, telecom network platforms are presently carrying broadcasting applications as shown by the digital multimedia broadcasting (DMB), which is catching on here. The jurisdiction disputes between MIC and KBC is having a negative impact on domestic hightech companies as seen by KT, the country's top fixed-line telecom provider. KT invested about 1 trillion won to launch three broadcasting and communications satellites, Koreasat, in 1995, 1996 and 1999. However, the carrier could not take full advantage of the satellites for several years as its plan of launching satellite-based broadcasts with them was tackled by the KBC and cable TV operators, who worried thattheir profits would be affected. Government agencies, including the MIC and KBC have failed to agree on how to forge a new system due to their conflicting interests regarding which will have jurisdiction over the lucrative convergence services. Earlier this year, the government set up a taskforce with the aim of establishing a coordination committee in May to complete a new regulatory framework for the gray area that is leading to these "turf wars." One suggestion put forward by the MIC is to change the rules of the game. Instead of dividing services into broadcasting and telecom, the nation should instead classify them into "networks" and "contents." According to MIC director general Lee Ki-joo, it would be unwise to consider the two regimes of telecom and broadcasting as being completely independent. He favors a new horizontal structure, in which contents and network, not the telecom and broadcasting, have separate regulatory arrangements. Yet, the KBC is against the idea as it regards the measure as one directed at jacking up the stakes of the MIC in convergence. If these deep-rooted disputes between telecom and broadcasting authorities continue, the prospects for other new services with exciting potential like IP TV could also be seriously delayed or undermined. Two of Korea's telecom operators, KT and Hanaro Telecom, are technologically ready to launch this IP TV service but they are still waiting for the MIC and the KBC to resolve their differences regarding who will have jurisdiction over this service. If the government considers itself to be the leader of Korea's IT and telecommunications revolution, it is important that it should resolve these battles over jurisdiction in the convergence services sector as soon as possible. If it does not do so, Korea might well find that other countries are closing the gap and taking over as global leaders in the IT and communications market. And it might well find that patience is running out in the private sector.

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