Google and Globalization, II

The Economist has a new article on Google's success, or lack thereof, in Asia.  It manages to get several points right, but in the end it fails to offer a complete and coherent explanation for why Naver does so well in the Korean search market and why Google does so poorly. I have commented on this matter before, in a post on Google and Globalization in Korea , and an earlier post on "Why Google Must Succeed in Korea, for Korea's Benefit."

As the Economist article describes, part of the problem for Google in South Korea has to do with language and culture.   In other words, Google may be able to improve upon its Korean language presentation and could make its services more appealing to Koreans, culturally speaking.   However, this skirts around the main issue.

• Google is a search technology that uses robots in an effort to identify and classify all of the information on the internet, whatever the language.


• Naver, on the other hand, does not search the internet.  It is a Korean-language database, created for Koreans, to help them collectively answer questions, which explains why "Knowledge-In" is the most popular service.

So, trying to make a one-on-one comparison of Google with Naver really is comparing apples and oranges.  As I have argued in earlier posts, the popularity of Naver, or the lack of success for Google, whichever way you put it, says volumes about the information culture in South Korea.  Use of Google for search is indeed one reasonable measure of globalization here.

Media Bills Generate Controversy in National Assembly

The Joongang Daily today carried an article with the headline "Controversial Media Bills Advance" and a sub-head indicating that the T.V. unions were planning a general strike over the measures to ease rules on ownership.  The controversy erupted again when the chairman of the National Assembly's Culture and Broadcasting Committee introduced the media bills at a committee session yesterday despite pleas from the opposition not to do so.  The action takes the disputed bill one step closer to a final vote at the Assembly's main session.  The media bills were sent to the committee almost six months ago.  To protest the committee chairman's action the National Union of Media Workers said it would start a general strike at 6:00 A.M. today.

Fair Trade Commission Approves KT Merger with Freetel

There is an important bit of news today in the telecoms press.   The Fair Trade Commission (FTC) has approved KT's proposed merger with its mobile subsidiary, Freetel.  The antitrust regulator said in a statement that it doesn't expect the merged entity to create a monopoly.  However, it warned that KT would face tougher regulation if it finds that the company is abusing its market dominance.  The deal still needs the approval of the Korea Communications Commission, a government agency that oversees telecommunications and broadcasting regulation, as well as shareholder's approval.  The merger of KT, which holds 90 percent of the country's fixed-line market, with Freetel which has 32 percent of the wireless market, behind SK Telecom with 51 percent, would create the country's largest telecommunications company.  SK Telecom objects to the merger and anticipates that it will lead to unfair competition.

Sweeping Reduction in Cell Phone Costs for Low Income Koreans

A short but very interesting article in the Digital Chosun Ilbo  today.  It announced that low income earners will no longer have to go through complicated procedures to receive a reduction in their cell-phone rates.  During its operational report to the National Assembly, the Korea Communications Commission announced that a "sweeping reduction" would be implemented.

Would you read anything like this in the US Press these days?

Search, Blogs and Social Networking in Korean Cyberspace

A headline in today's Korea Times declares that "Daum Challenges Naver, Cyworld in Blog Battle."   The basic premise of the article is that web portals are increasingly relying upon user-created content to attract traffic.  Since acquiring Tistory blog services from Tatter & Company (TNC) in 2007, Daum's blog services have increased in popularity and are gaining ground on Naver, the market leader in blogging services.

It turns out that the web traffic reports that measure the popularity of blogs, also show that Cyworld, South Korea's leading social networking site attracts a lot of web traffic.  Daum and Naver both offer search services, whereas Cyworld is not a major competitor in this area.

It seems to me that in search, blogs and social networking you have three very different kinds of web services.  Although the Korea Times article compares the "blogging services" of each, Naver is basically a search engine, Daum is a web portal with search and other capabilities, and Cyworld is a social networking site, a la "Second Life." Search is a basic function that helps people locate the information they seek in the flood of information produced on the internet.  A blog is a way of publishing one's own information on the internet and networking with others interested in those topics.  Social networking has less to do with publishing anything and much more to do with simply socializing in a 21st century manner.

Because of their different origins and emphases it is extremely difficult to compare web traffic to the three sites compared in this article.  By their very nature, they are inherently aiming at different market segments to generate their traffic.

Local Loop Unbundling (LLU) in South Korea

An interesting article in The Korea Times  describes how rivals, especially SK Telecom are not happy about KT's proposed merger with KTF, the country's number two mobile operator.   KTF has a 32 percent market share in mobile and rivals claim that consolidation with its fixed-line parent would threaten the health of competition in the wireless market.  KT, suffering from declining voice business in recent years, counters that absorbing KTF is the only way it can stay competitive, now that its public-switched telephone network (PSTN) services have been exposed as a decaying business model.

Both the Korea Communications Commission, the country's broadcasting and telecommunications regulator and the Korea Fair Trade Commission, are reported to be leaning toward approval of the KT-KTF merger.  KT has the largest network infrastructure in the country, but it points out that its network is already open through local loop unbundling (LLU).  LLU is the regulatory process of allowing multiple telecommunications operators to use connections from the telephone exchange's central office to the customers premises.  The physical wire connection between customer and company is known as the "local loop."

Reportedly, rival companies have requested access to KT's phone lines in only 145 cases over the past eight years, as they also have the option of borrowing facilities from the Korea Electric Power Corporation and cable system operators.  According to Lee Hyung-hee, director of SK Telecoms CR strategy division, "KT rejected about 86 percent of the requests by SK Broadband to use its network, so it is hard to say that the LLU is working."  

New York Times: What Convergence? TVs Hesitant March to the Net

An article in today's New York Times just illustrates that the United States is on another planet than Korea when it comes to media convergence and offering of television services via the internet.  Three major providers here are now agressively marketing IPTV services, bundled with attractive voice and data services in so-called "triple-play" packages.  The government, through the newly-established Korea Communications Commission, is trying to remove obstacles to "convergence," as if to say "bring it on!"  Meanwhile, in the United States, many are suggesting that it will be a slow transition to the inevitable.  The debate discussed in the New York Times never took place here, nor will it, and we are moving on to other things.  I'm not suggesting that it will be a completely easy road ahead, but as a consumer, I'm happy to live in the Korean media market versus that of the U.S., thank you.

Revenue Problems for Korea's DMB Industry

Despite healthy levels of viewership, the latest reports suggest that advertising levels on South Korea's Digital Multimedia Broadcasting services are not providing enough income to sustain the business.  As a result, according to The Korea Times , the nation's six terrestrial DMB operators are considering halting their coverage on subway lines in a desperate move to shed costs and keep the business afloat.  Less than three years ago they had jointly invested to complete transmission networks in subway lines, allowing commuters to watch World Cup football games.

The number of viewers has not been a problem. About one-third of all Koreans have access to mobile television, dubbed digital multimedia broadcasting (DMB) here, with free terrestrial DMB services garnering around 16 million users and another 1.8 million subscribed to satellite-based DMB, a pay-T.V. service provided by TU Media.

Instead, finding reliable revenue streams for the DMB services has been the major challenge.  Since terrestrial DMB services are free for users with television-enabled terminals, advertising is the only source of revenue for the operators.

Intel to Invest in Three U.S. Fabs in the Next Two Years

The announcement that Intel will invest $7 billion to expand and transform three U.S. manufacturing plants should be good news for Korean electronics companies.  Business Week reports  that, as early as this fall, the company plans to start shipping the world's first microprocessors created at the atomic 32 nanometer level--transistors so small that 4 million of them could fit in the period at the end of this sentence.  Intel CEO Paul Otellini said in a speech that "the chips produced by the new fabs will become the basic building blocks of the digital world, generating economic returns far beyond our industry."  By shifting to a more advanced manufacturing process, Intel hopes to make inroads into selling chips not only for PCs, but for consumer electronics, cell phones and other internet-connected devices.  Such chips could substantially lower development costs for Samsung, LG and their international competitors.

Korean Chipmakers Widen Technology Gap in Memory Chips

Just after my previous post about Samsung Electronics development of 40 nanometer technology for manufacturing memory chips, Hynix announced on Sunday that it has developed the world's first one gigabit DRAM chip using 44 nanometer technology!  These announcements make it clear that Korea's main semiconductor manufacturers have opened up a technology lead over their major rivals in other countries.  Reports in the Korea Times and other local press noted that prices of DRAM chips are gaining momentum after the German-based firm Qimonda filed for insolvency.  The productivity of this latest DDR3 (double data rate) chip will be 50 percent greater than chips now on the market.   Production costs and power consumption by the chips will also be lowered.  A significant aspect of this development is that it is based on technology advances within Hynix.

Another World's First in Memory Chips for Samsung Electronics

As reported in the JoongAng Daily, Samsung Electronics has developed DDR2 dynamic random access memory using 40-nanometer technology, becoming the first among the world's leading chipmakers to do so.  This new technology allows Samsung to enhance production by 40 percent over the current 50 nanometer technology that it and Hynix are using.  The 40 nanometer DRAM chip also consumes up to 30 percent less electricity than chips produced with the older technology.

For chip makers, developing higher DRAM density means they can cut production costs and lead market trends by providing the latest DRAM chips at higher prices. Since chips are produced from a wafer, the smaller chips are, the more chips are produced out of one wafer.

This new development gives Samsung a head start on its rivals and industry observers said it will take two years for them to catch up.

Korea to Build Ultra-Broadband Internet by 2012

I must confess that I was not surprised today to see the local press prominently covering the announcement by the Korea Communications Commission that the government and communications industry would invest some $25 billion over the next five years to build an "information ultra highway."  After all, when then-U.S. Vice President Al Gore gave a famous speech at UCLA in 1994 about the need for the U.S. to build "Information Superhighways," the U.S. failed to do so, but Korea actually built information superhighways.  The Korea Information Infrastructure project, started in 1995, was originally planned for completion in 2010.  However, because of technological advances and industry competition, it was completed a full five years early.  It laid down fiber optic backbone links connecting over 140 cities and towns in South Korea---a massive construction project, but very successful.

Koreans, perhaps more so than any other people in the world, have learned the importance of speed in the information age. Japan would be a close second in this recognition, as I learned at a Seoul conference on Ultra-Broadband last Fall.  This is a lesson that Microsoft should have learned before it released Vista, an operating system that actually ran more slowly than its predecessor, XP.

As reported by the Chosun Ilbo , the Korea Communications Commission on Sunday said it finalized plans for Internet services at an average speed of 1 Gbps through fixed lines and 10 Mbps through wireless. One Gbps allows users to download a 120-minute film in just 12 seconds.

As reported by the Korea Times ,the ultra broadband convergence network (UBcN), which is slated for completion in 2012, will enable users to transmit data at an average speed of 1 gigabyte per second (GBp) through fixed-line connections and maintain the rate of 10 megabytes per second (MBps) on wireless connections, about 10 times faster than existing broadband and third-generation (3G) networks. 
The government plans to replace 70 percent of the country's circuit-switched network, used for fixed-line telephony, with an IP network by 2013. About 50 percent of the mobile telephony network will be IP-based by then.

This announcement about Ultra-Broadband is creating some stir and public debate here in Korea, but my guess is that the plan will be realized, at least as successfully as the earlier KII project that was completed ahead of schedule.  The reason?  Simply that customers here, and worldwide, enjoy the services that ultra-fast internet access provides.