Wednesday, April 7, 2010

Question for Readers of This Blog

I would like to pose a question for readers of this blog, and would encourage you to post your answers as "comments."  If you do not want those comments to be publicized, please make note and I will respect your wishes.

The question is as follows.  How could South Korea, while possessing arguably the most advanced and dense digital networks of any nation in the world, be a laggard (80 or so other nations preceded it) in the adoption of the Apple iPhone and even Android-based "smart phones"?   In your answer to this question, I would appreciate it if you could specify the major reasons why this happened.  For example, was it a failure of government policy?  Was it that the private sector (LG, Samsung, SKT, KT) feared loss of profits?  Were there cultural or linguistic factors?

I would welcome comments from scholars, government officials, industry executives and any interested members of the public.


  1. The slowness of Korea's opening of its markets to foreign products and services is not relegated to telecommunications. The country, overall, has taken an extremely conservative approach to letting in foreign products, generally doing so only after domestic counterparts achieve similar levels of quality. While this protectionism may have initially helped Korean companies, eventually the lack of competition domestically hurt innovation and was bad for Korean consumers. It is difficult to say definitively what the ideal timing would have been to open markets in each individual industry and cut off the guaranteed domestic revenue stream. Open them too early and the Korean competitors may have gone out of business. Open them too late and you end up with a lack of innovation.

    There is an additional historical quirk in the development of Korea's telecomm industry that is important to keep in mind when analyzing why protectionism for mobile phones lasted longer than for other products like automobiles, air conditioners and TVs. To build its mobile phone network, Korea signed a technology deal with Qualcomm. In return for helping to build a nationwide CDMA network, Korean phone makers would be locked into long-term royalty agreements. After the mobile telecomm infrastructure was well established, the media, government and eventually the public turned against Qualcomm, saying that the company had duped Korea into signing a bad contract.

    I believe that this is a key factor in understanding why the government put so many non-tariff trade barriers in place in the telecomm industry.

  2. Erik,

    Thanks for your thoughtful comment. Both of your points are well taken. The question of when and how to open the market is not limited to Korea's telecoms sector, and the history of the choice and development of CDMA technology in South Korea definitely had a strong conditioning effect on the whole mobile communications market.

  3. I'll be looking at this area as part of a report on Click. The BBCs technology TV show on World News this weekend. I agree with comments here. I think protectionism stiffled data take up which then made investment in Wibro less surefooted.
    More at

    Take care