Research Notes

Letter from South Korea: GSMA M360 Asia Pacific Event Offers Compelling Counterpoint to US and China

On September 7-8, 2023 GSMA M360360 APAC and Asia Pacific Policy Leaders Forum met in Seoul to highlight South Korea as the Open Digital Nation and to launch the eighth annual Digital Societies report covering the elements of the Digital Nation: Infrastructure, Innovation, Data Governance, Security and People. More than 1000 policy leaders from across the 50 countries in the region gathered for sessions on spectrum, 6G, 5G Smart Factory, AI, quantum, broadband cost recovery, and fair share. The event showcased South Korea a salient alternative to the digital hegemons and global oligopolies in China and the USA.

Strand Consult’s study of South Korea began in 2002 with its groundbreaking reports Korea’s mobile market – A window to 3G and the Korean Market for Mobile Services. Strand Consult has covered GSMA’s Mobile World Congress (MWC) for more than two decades. At MWC 2003 (then called the GSM World Congress), Strand Consult reported on South Korea 3G mobile operators showing the roadmap for the future.

Twenty years hence, South Korea is still leading the mobile industry, being the first to launch and commercialize 5G in 2019 and using its mobile advantage to power the k-wave of Korean content. In Korea today, 5G technologies enable live entertainment with AR/VR, the metaverse of digital human celebrities, and the mobile-powered self-promotion of millions of Koreans who upload their webtoons and cooking shows on Korean internet channels and platforms. Simply put, South Korea’s technology leadership amounts to catapulting k-culture with the k-network, driving the creative economy with global consumption of Korean content on Korean devices.

This note covers highlights from the presentations from Korea’s Ministry of Science and ICT, KT, China Mobile, Axiata, Globe Mobile, Samsung, Nokia, Ericsson, Huawei, 6G Forum, and KDDI, the panels on leadership and digital transformation, workplace diversity, and the Digital Nations awards.

The K-Network powers K-Pop and K-culture

Whereas Western notions of broadband posit the network as a dumb piper commodity, the K-network offers Digital Sophistication: a best in class, ever-improving set of mobile and fixed networks forming the foundation of the economy and society. While digital transformation and nation-building have been underway across the region for some time, the event demonstrated the bleeding edge of mobile married with technologies for AI, robots, quantum, and outer space.

Park Yun Kyu, Vice Minister, Ministry of Science and ICT (MSIT) spoke in English to introduce the nation’s singular achievement, world-class broadband of the K-network. Mr. Park described South Korea’s national journey in 5 stages of development: (1) informatizing administration; (2) nationwide high-speed internet; (3) first in the world 4G; (4) first in the world for 5G, and (5) speeding to 6G with quantum, cryptography, cloud, AI, outer space communications, and satellite internet.

Vice Minister Park turned to 6G applications like the “Human with AI + robot” which overcomes personal limitations, the self-driving wheelchair, the unmanned robot café, the smart factory, autonomous delivery/shipping/loading, and a metaverse of gamification for learning and play. In a series of speeches in New York, Paris, and Davos, South Korea’s Prime Minister Yoon Suk Yeol envisioned this evolution as part of a New Digital Order to share prosperity and “spread digital value through solidarity.” The Vice Minister then detailed how k-network services will be delivered with a “Charter of Principles of Digital Co-prosperous Society and Civil Rights” with its Guarantee of Freedom & Human Rights; Fairness & Tolerance; Safety & Trust; and Global Solidary & Cooperation.

The newly minted CEO of Korea Telecom (KT), Kim Young Shub, took the stage and addressed the audience in English. He recognized all too well that traditional telecom business models are in peril while Big Tech employs “innovation and agility.” “You must innovate from within, or you will be forced to change from the outside,” he declared. Such a pivot is KT’s move to become a Digital Native and AI enterprise with its investments other Korean enterprises like semiconductors (rebellions), software (Moreh), mindful intelligence(Mi:dm) , upstage and managed services with Magazone Cloud, and human capital (AI master’s degree program).

It is not enough for KT to offer new services, Mr. Kim said. It needs a new digital first paradigm which enhances the customer experience, reforms and reboots the ecosystem with AI, and competes head on with Big Tech. He concluded with “It’s the courage to continue that counts,” a quotation attributed to Winston Churchill.

Samsung’s Woojune Kim Corporate President & Head of Networks Business announced, “Imagination is the beginning of creation,” channeling the Nobel laureate George Bernard Shaw. He described 147 years of telecommunications from wire to wireless and the emblematic innovations of successive mobile generations: the first cellular call 50 years ago on 1G; the first short message service (SMS) of 2G; the first internet files transfer of 3G; and the smartphone of 4G. Mr. Kim demonstrated that Samsung understands mobile operators’ business and positioned his firm as the “open” and competitive alternative to Huawei. He also made a dig at Big Tech, promising not to “break things.” “One thing you can’t do on telecom networks is break things,” he said.

Samsung Rising by anthropologist and tech policy expert Geoffrey Cain details Samsung all-out effort to challenge the iPhone, a thrilling story of how the company reinvented itself from building boxes to becoming cool tech while being Apple’s frenemy.However, it’s not enough, according to Dr. Seongcheol Kim of Korea University in an interview. “Samsung should have built an operating system. Then it could go head-to-head with every Apple product.” Dr. Kim who advises policymakers on intellectual property strategies for k-culture, describes the platform gap in the digital ecosystem, a space that Korea could fill for esports and streaming.  Indeed, Samsung’s transformation from hardware company manufacturer to software company partner was the presentation’s key theme.

For South Korea, the alternative to success is extinction—both figurative and literal. The nation is technically still at war with North Korea, and if South Korea does not innovate, it will become a de facto economic and cultural province to Japan or China. Hence the K-network provides sovereignty and survival.

Open vs. Closed Digital Nation

Yang Jie, Chairman of the state-owned China Mobile, took the stage. He spoke in Chinese with a presentation that lacked the polish of the prior speakers. It featured tropes about the “Three Integrations”, as if incremental digitization was on par with the invention of paper, printing, gunpowder, and the compass.  Mr Yang served up a word salad that sounded like the hit list of 20th National Congress of the Chinese Communist Party: “Integration of New-generation information Technologies is Inner Driver of Digital Innovation”. “Integration of Connectivity, Computing Forcing and Capability is Important Enabler of Digital Innovation” and “Integration of Information Services and Socio-economic System is Key Channel for Digital Innovation,” “Governance, Production, Livelihood”, and “Sci-Tech Innovation.”

However, the world’s largest mobile operator with 957 million subscribers should not be underestimated. The slide on esports made the message clear for first mover South Korea and the world: whatever you do, we will crush you with scale. He detailed how China Mobile enables digital twin capabilities, perception interaction, and partnerships with Tencent, FireWire Elite, and Bit Cycling. The “Ultimate Battle” is more than an esports game; it’s a moniker for the world war for digital supremacy. Check the stats on TikTok (ByteDance), Shien, and CapCut to get the picture of how China came from nowhere to dominate global ranking of mobile apps.

Even with its global dominance, China is not resting on its laurels. The new Central Science and Technology Commission (CSTC) takes over planning and policy setting for China’s science and technology development from the Ministry of Science and Technology and will “unify leadership” to “advance the establishment of national innovation system and technology structural reforms.” A Report of the first CSTC meeting indicates, “The reform of the science and technology management system is China’s first positive response to external challenges. We hope to create a new science and technology management system with clear goals, overall coordination, and strong organization, and thereby advance the process of modernizing our science and technology management system and management ability.”

Strand Consult’s report You Are Not Welcome: An Analysis of Thousands of Foreign Technology Companies Blocked by China Since 1996 describes how China’s closed digital nation model has systematically restricted thousands of foreign internet technologies like online news and media outlets, social media platforms, virtual private networks, content delivery networks, mobile applications, telecommunications equipment, cloud services, and other technologies.

Dr Hans Wijayasuriya, Axiata Group, Group Executive Director & CEO Telecommunications Business, & GSMA Board Member and Ernest Cu, Globe Group, President & CEO rounded out the conversation. The Malaysian CEO noted how Axiata intends to stay relevant and avoid the “Kodak moment” by collaborating with other mobile operators. He observed that the industry frittered away value through intense competition instead of building a shared platform. He called for global cooperation to build global platforms for interconnectedness, just like the industry accomplished for global roaming services.

The Philippines mobile operator reported non-core revenue growing 50 percent from 2016 to today. He chastised the mobile industry for not using the data on its own networks and then blaming OTTs for solving problems that the telcos ignored. Cu detailed the rise of G-Cash and the transformation from a mobile operator to digital money network to solve the persistent financial exclusion in the Philippines. Partnering with Ant Financial’s AliPay, Globe has become the leading digital wallet of the Philippines.

Cu added that, thankfully, the mobile market in the Philippines is stable after a consolidation; the leading operators do not cannibalize each other but compete and cooperate. The rollout of the wallet was facilitated by 4G, which required investment.  Globe innovated the market by focusing on customer need and marrying the complementary assets of financial tools. Such a partnership would be illegal under the Europe Union’s Open Internet Rules, and moreover, consolidation is discouraged. So Europe’s mobile operators have a difficulty to invest, a fact underscored by the €174 billion gap in investment.

5G Smart Factory

Both China Mobile and Huawei demonstrated the 5G-enabled smart factory. This would seem to make China Mobile even more relevant when global manufacturing demand is softening, and labor markets are challenged. China could possibly extend its manufacturing dominance with such factories.

In a subsequent presentation, Huawei claimed to produce the first 5.5G-powered, flexible production line. It detailed applications for warehouse inventory, production digitization, logistics, tracking, and consumer products manufacturing—applications which taken together improve production efficiency by as 30%, reduce stocktaking from months to days, and reduce the need for line labor by 80 percent.  It also detailed remote control, factory automation, and motion control. However compelling China’s smart factory demonstration, potential customers must consider the risks of espionage and theft which are built-in network features required by that nation’s intelligence and security laws and government practice.

One swords to ploughshares win would be to use the lower 3.5 GHz to build smart factories in the USA. Nearshoring with smart factories would clearly reduce supply chain risk. Jeff Ferry of the Coalition for a Prosperous America, an organization which promotes automation and increased efficiency, noted in an email, “Trade and industrial policy shouldn’t focus on the number of jobs but on creating and growing successful industries and enough of them to create all the jobs we need.”

He explained further that the US telecom and equipment industry is trying to convert manufacturers to install 5G private networks. Ericsson and Nokia can also deliver the offering suggested by Huawei. Importantly the software to run the networks comes from US companies and SAP. Huawei’s ability to rollout the smart factory will be inhibited by certain export control restrictions for 5G chips and software. As the 5G smart factory equipment and software get cheaper, companies will adopt these technologies and realize bigger gains, he said.

CA$H over Country

The USA, also a Pacific nation, has long prided itself on open innovation and an open internet but had little presence at the Open Digital Nation event. It’s not because of distance or resources; the US Embassy is but a stone’s throw from the event hotel and employs dozens of advisors. Event registration was free in any case. It may be that the USA, whose leading behemoth platforms account for as much as two-thirds of the internet’s value, is a less than credible speaker on openness. Indeed, US platforms display blocking, throttling, discrimination, prioritization, banning, censorship, and other anticompetitive practices for which they lobby for rules on telcos, standards of which they won’t uphold for themselves.

Netflix’s credo, that it has no obligation to pay or negotiate for the use of other’s networks, doesn’t go over well in South Korea, where every person and organization, including the public sector, pays to access the k-network. Funny enough, when Netflix and Big Tech lobbied the US policymaker for “open internet” rules from 2010-2014, they said the US should be like South Korea and ensure affordable, high speed, next generation broadband networks. Big Tech changed its tune when South Korea’s democratic government said that there’s no free ride on the k-network.

Indeed, the left of center think tank New America Foundation (funded in large part with Google money) praised Seoul in 2014 for its high speed, affordable broadband and KT for its transparency to publish its interconnection policy on its website.  In 2017 another Big Tech funded policy advocate, Public Knowledge, celebrated South Korea in its article, Why Does South Korea Have Faster Internet for a Cheaper Price Tag? In 2020, the Electronic Frontier Foundation inquired Why Is South Korea a Global Broadband Leader? and declared, “The United States Can Learn a Lot from the Policy Efforts of South Korea.” These articles emphasize the objective of keeping broadband cost low for consumers. Indeed, the implementation of network usage fees is yet another logical step in that policy.  Separately, a Korean Assembly hearing on Understanding Korea’s Telecommunication Rate Level: Current Status and Recommendations on September 11, 2023 observed that South Korea’s the cost of connectivity is equal and frequently a better value compared to other leading nations. Check out Strand Consult’s fact check of Big Tech’s claims about cost recovery.

Sadly, the Biden Administration’s tech policy amounts to little more than protecting Big Tech and campaign d donors. US State and Commerce officials can be found in the European capitals lobbying national governments against the very antitrust efforts that the Biden Department of Justice and  Federal Trade Commission pursue against Google and Amazon. American officials ordered the Dutch ASML (Europe’s leading smart factory)  not to sell its chip making machines to China while the American tool makers Lam Research, KLA, and Applied Materials get a pass. The new reportCA$H Over Country: How Three American Semiconductor Manufacturing Equipment Companies Support China’s Flourishing Legacy Semiconductor Industry at the Cost of American National and Economic Securityfrom China Tech Threat and Coalition for a Prosperous America details how select US players get workarounds in the tangled web of export controls.

Similarly, the Biden Administration targets pushover countries like Italy and Poland on fair share, arguing that the profitability of Big Tech is more important than connectivity for Europeans. A key actor in this offensive is former Google lawyer and New American Foundation executive Alan Davidson who brought unsuccessful litigation against the Federal Communication Commission for the Restoring Internet Freedom Order (See Mozilla v. FCC). As current Secretary of the National Telecommunications & Information Administration (NTIA), Davidson broke protocol by filing in the European Commission (EC) consultation on the “future of electronic communications and its infrastructure”, claiming that network usage fees would harm net neutrality. US and South Korean courts have found that network usage fees do not violate open internet principles. Moreover, the term “net neutrality” is not codified in US or EU law. It is inappropriate for Davidson, as a US government employee, to promote his personal preferences in his official capacity. In any event, the American people deserve better than an executive branch agency which appropriates Big Tech’s position as its own.

Fair Share and Broadband Cost Recovery

Strand Consult has described South Korea’s leadership in the innovation of the network usage fee and has chronicled Netflix litigation against cost recovery in South Korea. Strand Consult’s Dr. Roslyn Layton joined the GSMA 360 panel “Securing fair returns in a challenging business environment.” The panel featured Sanghak Lee, Korea Telecommunications Operators Association (KTOA), Vice Chairman & CEO; P.D. Vaghela, Telecom Regulatory Authority, India, Chairman; Chee Kheong Foong, Axiata Group Berhad, Chief Regulatory Officer; Konstantinos Masselos, Berec, Hellenic Telecommunications & Post Commission (EETT), President and Chair of the Body of European Regulators for Electronic Communication (Berec),  Simon Perkins, Cellcard, CEO, and Lise Fuhr, Director General of European Telecom Network Operators Association (ENTO). Big Tech was offered to participate on the panel but declined.

Mr. Lee recounted South Korea’s record: #1 in 5G speed by GSMA and Ookla (2022), #1 in fiber penetration by the OECD (2022), #1 on Bloomberg’s Innovation Index (2021), and #2 in ICT Development Index by the ITU (2017, last year of report’s publication). The panel observed that network usage fees are reasonable and promote the growth of Korean content, making South Korea the world’s #7 largest content economy at $115 billion annually. Moreover; about a dozen unicorns have been founded since 2016, according the database maintained by South Korea’s Ministry of SMEs and Startups, which itself just launched a “Startup Korea” effort to further new, privately held enterprises with a valuation of at least $1 billion.

Importantly Mr. Lee described how investment fuels the next generation network, digital transformation, and an ever-increasing level of traffic and throughput. As such, Big Tech expecting a free ride puts it at odds with every person and institution in South Korea, including the public sector, which participate financially in the k-network.

Dr. Layton explained that the UN Broadband Commission kicked off the global effort for broadband cost recovery with its pioneering report in 2021 noting a $2 trillion gap in global broadband investment and a stalling of broadband adoption for some 3 billion people for lack of affordability. It calls for transparent, systematic, predictable payments by tech companies to support broadband deployment and adoption efforts as part of the global sustainability goals. The Axiata and Cellcard representatives explained the reality on the ground in the so-called G13 nations in Asia: Bangladesh, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, Pakistan, Philippines, Sri Lanka, Thailand, and Vietnam. Despite hundreds of billions of dollars of investment and unprecedented gains in connectivity, critical gaps remain and will not be closed without financial participation by the largest network users.

Learn more about Strand Consult’s Global Project for Broadband Cost Recovery.

Spectrum is more than important.

The GSMA event featured important sessions on spectrum and 6G with representatives from the 6G Forum, KDDI Research, Softbank, Ericsson, Nokia, LG Electronics, Huawei and others laying out their strategy and value proposition. The sessions showcased the growing gap in spectrum leadership between Asian nations like South Korea, Japan, and China over the USA.

South Korea plans to launch pre 6G in 2026. It launched its 6G roadmap just as 5G rollout was finished. Similarly, the nation’s road to 5G began in 2013 just as 4G rollout was finishing. In addition to R&D and technology partnership, spectrum plays a critical role in South Korea’s 5G leadership. 280 MHz in the 3.5 GHz band was awarded to SKT, KT and LGU+, and in July 2018, the three operators together with SK Broadband, agreed to roll out their 5G networks based on the 3.5 GHz band. All told, Korean operators have 10 times the spectrum as mobile operators in the USA for 5G.

The US has zero spectrum in its pipeline, a lapsed auction authority, and no lower 3.5 GHz frequencies, the band designated for 5G globally. While the US government is sprawled across the beachfront, taking up 12 times as much frequency as industry, America’s mobile industry faces a spectrum deficit of 400 megahertz by 2027 and nearly 1500 megahertz by 2032. China has already made 1160 megahertz of mid-band spectrum available, roughly 2.5 times more than the U.S. A reasonable proposal has been put forth to recovery a sliver of the lower 3.5 GHz for 5G.

As CTIA reports, South Korea and some 50 countries operate full-power 5G networks in the 3.3-3.45 GHz range. In more than 30 of these countries, 5G operates alongside the same US military radar systems that are used domestically, including Station-Keeping Equipment (SKE) the Airborne Warning and Control System (AWACS), the shipborne systems AN/SPY-1/6, and ground-based radars like the AN/TPQ-53.  What the US military says it can’t do in the USA, it is doing around the world.

Moreover, nearly 20 countries throughout Asia have deployed 5G in the lower 3 GHz band, with key examples of Japan, South Korea, Taiwan, and the Philippines demonstrating 5G operating alongside deployed U.S. military radar systems. Throughout Europe, several NATO allies operate AWACS radar systems in countries with lower 3 GHz 5G deployments. Ditto for the U.S.-Mexico border. These nations also use frequency coordination to ensure the full power of 5G in the 3.3-3.45 GHz. The US could do the same, and the US mobile industry even proposes a Spectrum Relocation Fund for the military to speed and ease its spectrum transition.  Other nations have already moved systems like AWACS to the L-band.

To date,  most US military leaders reject spectrum modernization on national security grounds, even though the US armed forces could receive a significant share of auction proceeds to modernize. Such an obstinate response that defense trumps economy falls flat in South Korea. That country puts equal priority to the economy and defense, and it has a rational spectrum policy putting the frequencies to their best use.

6G Vision

Ericsson’s Magnus Ewerbring discussed connecting the cyber-physical world. It reviewed the first 5 years of 5G with more than 1 billion subscribers. However, that amounts to less than 15 percent of the total addressable market and just 35 percent of population coverage. He observed that 5G subscriptions will surpass 4G by 2027 and be the dominant technology until 2035-37. He described ways to enhance 5G with stand-alone networks, slicing, carrier aggregation, network exposure, RedCap, and use more all frequency bands. Importantly monetization must also improve.

For 6G, Ericsson plans to focus on merged reality, situation awareness, and massive twinning. These will enable critical massive, immersive and global communication and integrated sensing, compute and AI. He illustrated a continuum from the digital to physical reality with points for the digitized, programmable world, the internet of senses, sustainability, and connecting intelligent machines. These capabilities would deliver cognitive or thinking networks, trustworthy systems, and potentially limitless connectivity. The key 6G principles include operations in all 3GPP bands, spectrum sharing, open interfaces, standalone architecture, and reuse of investment for smoother 6G rollout.

Experiments in smart textiles with piezaresitive fibers could feel body pressure and movement. This would enable patient monitoring without clunky equipment, just the smart clothes they have on. Naturally cybersecurity takes on greater importance as the technology gets increasingly integrated with the person, and moreover, energy consumption of the device will have to be reduced to make connectivity economical and sustainable. This idea is being tested with zero energy IoT devices which could work without batteries.

Nokia presented the results of an internal strategy development and described how it sees that driving networks of the future. It identified the socio-economic and geopolitical trends of deglobalization, state-driven innovation, cybersecurity, and sustainability. It identified user needs as evolved experiences, service-optimized connectivity, new purchasing priorities, and digital-first. Nokia mapped this on a set of concentric circles for metaverse,cloud, web3, blockchain, and AI/ML.

KDDI described customer requirements for improved coverage and reliability for mission-critical use cases. It noted that a limitation for 6G and network slicing will be backhaul and optical fiber.  It described its attempts to improve the throughput of the radio access network by eliminating the cell edges. It illustrated an experiment which transforms networks from cellular to “cell-free.”

6G is a little like the Abominable Snowman, a powerful creature that people talk about but have not yet seen. The technology is still preliminary, and there is a long ahead. However, for those who want to see a suggested future, GSMA offers the opportunity.

Digital Leadership

GSMA brought many tech and telecom ministers and authorities as well as industry leadership. One insightful session, Diversity for Tech Summit – Digital Transformation and Leadership, featured a deep dive into gender equality in the tech enterprise. Soiee Jung, AI/Data Engineering Unit Leader/Vice President described LG Uplus efforts to integrate women into engineering and leadership roles. She observed how information for vital decisions was conveyed between male employees in during cigarette breaks and in the evening over drinks. LG Uplus implemented a series of knowledge sharing tools like Teams, Confluence, and Slack to codify knowledge in computer networks and to bring transparency to decisions. Today all employees can take advantage of knowledge in the enterprise.

Ms. Jung likened the corporate innovation to what the Fair Trade Act has done for competition in Korea. For example, a public official cannot accept a meal worth more than the equivalent of USD $40. This is seen an important step to lower barriers to entry for innovation and decisions.

Ahjung Lee provided another keynote on the launch of the UN Women Centre of Excellence for Gender Equality in the Republic of Korea. The mission of the Centre is to address and change discriminatory social norms and practices that perpetuate gender inequality in Asia and the Pacific.

Digital Nations Awards

Through its global and regional networks, GSMA plays an important role to highlight excellence in leadership and innovation. Its Digital Nation Awards showcase novel solutions and powerful stories featuring mobile technologies for example the reduction of e-waste by Maxis Berhad in Malaysia and the National Fuel Passby Dialog Axiata in Sri Lanka. This program, developed in response to a petrol shortage, was adopted by 93% of fuel stations across the country, with over 11 million transactions to date. The National Fuel Pass provides the public a convenient and easily accessible solution to obtain fuel and facilitate an allocation-based fuel distribution method, has also surpassed 6 million vehicle registrations to-date.

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