ITU Telecom World 2003

October 14, 2003
Potential for partnerships essential for private business

GENEVA -- According to a recent report by the International Telecommunication Union (ITU), the number of worldwide broadband subscribers grew 72 percent in 2002 to approximately 63 million. It took Korea only four years to have broadband access in 70 percent of the country's households. How did Korea achieve such incredible growth in such a short period of time? There are several reasons.

In his keynote speech, Dae-Je Chin, Minister of Information and Communication for the Republic of Korea, explained the country's roadmap to success. With 48 million inhabitants, Korea has always been a densely populated country with a technological savvy consumer base - the key ingredients for growth potential and revenue opportunities. The Korean government proved to be the catalyst in the country's technological breakout by investing heavily in its telecom infrastructure. It invested in training and local human capital, implemented regulatory policy to encourage competition and played a major role in allowing private companies to engage in healthy competition. Korea is also a stable political and economic country, two very appealing qualities for potential investors. With aggressive marketing by industry businesses and receptive technology-hungry consumers, the increase in general Internet usage exploded. But more importantly, Internet use for business transactions increased significantly with Internet banking increasing by 150 percent and cyber stock trading by 100 percent. As broadband high-speed Internet connections are available to a majority of the population at a reasonable cost, it is changing the way Koreans live and work.

The question is -- Can the Republic of Korea's successful case study be replicated in other developing countries?

Jay Naidoo, chairman, Development Bank of Southern Africa (DBSA), said: "Nearly 85 percent of the world's population has little access to the benefits of ICT and in Africa there are less telephones than New York or Tokyo. Will investors come back to the sector? How do we rebuild trust and confidence? How do we attract investments into developing countries? These are the key questions that investors and developing countries are asking themselves right now."

Commenting on the industry's general lack of confidence in the market, Naidoo said: "What we have seen is an over-investment. There is currently a crisis of trust and confidence. We are at a crossroads - what is required is innovative, passionate leadership and vision to bring investments back into the sector."

The governments of developing countries need to set clear targets with their respective ICT industries. The challenge is for governments to implement a policy programme that ensures an economic and corporate governance regime is put into place.

Naidoo added: "Guiding principles for a sustainable model for a developing market are profit, transparency, accountability, innovation for people, courage and leadership."

Korea's case study is a good example of how government and industry can successfully exploit the market opportunity. The right balance between the government and the industry was found, but the success was ultimately demand driven. India and China are other markets where the right balance between industry and government could be found, which could potentially experience the same success as Korea.

There is a great deal of skepticism in the industry when it comes to investing as people do not want to make same mistakes that were made in the 90's. This has blinded investors and countries to the true potentials that are out there.

For Patrick Gallagher, CEO, FLAG Telecom, there are two main criteria that are conducive to creating the ideal environment for success. A good combination of government and business co-operation is a positive start to rebuilding confidence for investors. The potential for partnerships, especially local, are essential for any private business looking to invest in developing countries.

Massimo Castelli, marketing director, Telecom Italia, noted that the industry has lost a lot of credibility in the last couple of years with many companies taking advantage of market liberalisation and overspending in the process, without a viable business model. What the industry learned is that success has to be market driven. All new operators are now focusing their investments on market growth. In every development scenario, it is important for the industry as well as the government to share the same vision. This is a recipe for success.

The telecom industry can invest in markets that have created market credibility and a safe environment. For the market to regain confidence, private sector investment is essential, and these investors need the right environments to spend their money in.

The session concluded by agreeing that there is no blueprint for market success. A strong clear vision where a country should be aiming is the first step to establishing a partnership. Public, private and civil society need to agree on national goals with the government as the key driver. The government and industry need to look at why investors are not investing in their respective markets and then address the problem areas.

There is phenomenal growth coming through, and that's where people need to invest. In the end, it's about shared financial risk and shared financial reward. Broadband and the information society are the key words now and are major elements in the quest to achieving a ubiquitous community.

ITU needs to provide innovative leadership. One common goal is needed between government, industry and civil society, and independence for people to access information whenever and wherever they are.

We need to ensure that whatever we do is sustainable. This would ensure that the Republic of Korea's case study is not the exception but the rule.