In Wireless, South Korea Extends Its Lead

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Next spring, South Korea will roll out the most capable commercial wireless system in the world, a new service called WiBro, or Wireless Broadband. America should pay attention: In terms of the availability of both commercial wireless systems and high-speed broadband, South Korea is well ahead of the rest of the world. Soon it will extend its lead.


Nearly 80% of the population in South Korea has a cell phone connected to the Internet. Most South Korean households also have high-speed Internet services much more capable than most in America.


WiBro is a portable high-speed Internet access service that will be available in urban areas. Whether speeding along highways or sitting in offices, South Koreans will have data speeds of at least one megabit per second and as much as 50 megabits a second. That is more than fast enough to accommodate the latest electronic games, high definition television, or applications not yet invented.


Most American households do not yet have high-speed access much less wireless services. We will not have the same capability for several years. And South Korea’s ascendancy in advanced consumer technological services has taken place in a short period. Ten years ago, the country was well behind America.


South Korea has applied industrial policy to make advanced technologies available to ordinary consumers. Two hundred other countries have tried similar policies, often with disastrous effects; in Korea, at least for the past few years, it has worked. The government subsidized broadband deployment to households, and the net result is that most households have broadband. When South Korea wants to develop wireless broadband, it clears a broad swath of spectrum and assigns it to two companies (Korea Telecom and SK Telecom) with clear instructions of which technology to deploy.


Technological advance has not yet resulted in abnormal economic growth for South Korea. Although growing faster than America, it starts with a much lower level of economic activity and its economic growth rate is similar to that of other East Asian countries (e.g., China and Malaysia) where consumer technologies are no better than in America. But there is wide belief that South Korea will gain long-term economic advantages from its leadership in technology.


America sits in limbo. It has neither South Korea’s industrial policy nor the reliance on market forces where we have so often succeeded. Despite enormous technological capabilities, we stumble in developing new consumer wireless technologies. Regulatory uncertainty has thwarted many investment attempts in recent years.


We have the same technology for wireless services as South Korea, but, like many other countries, our system is incredibly inefficient. Our spectrum is splintered in small fragments. Willing buyers and sellers could aggregate these parcels of spectrum and put them to their highest-valued uses, but regulatory reviews slow transactions. Our spectrum is left fragmented and often dedicated to old technologies. Money can buy almost anything in America except large blocks of cleared spectrum.


Ordinary property status with simple contracts could place spectrum in its highest-valued use. But our government, as well as those around the world, repossess spectrum licenses held by one set of private companies and then give them away or sell them to a different group of private companies to use them for a different purpose. The process can take decades. For most types of property, these steps are considered expropriation or an unconstitutional taking. For spectrum, current law holds government intermediation as enlightened policy.


We have much to learn from the South Korean experience. The wrong lesson would be to imitate it and imagine that our officials can engage in beneficial industrial policy. That strategy works in Seoul but not Washington.


Our own unsuccessful industrial policy has included regulatory vacillation and a spectrum policy bereft of property rights. It’s time we tried what works best in America: clearer property rights for spectrum.



A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.


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