Reversing an earlier stance, South Korea is trying to deter infighting among some of its industrial heavyweights by awarding a single personal communications services license to a consortium that includes everybody but gives control to nobody.
In early August, the Korean Ministry of Information and Communications was said to be leaning toward granting PCS licenses to three new applicants while excluding the two existing cellular service providers-Korea Mobile Telecommunications Corp. and Shinsegi Mobile Telecommunications Co.
Now the MIC reportedly has decided to award the license to a consortium tentatively named Korea PCS Corp., comprising large conglomerates, groups of small and medium-sized companies and the government-owned KMT-none of whom will be allowed an ownership stake greater than 10 percent.
The policy shift apparently is an attempt to avoid the type of controversy that plagued the awarding of a second digital cellular license in 1992. That licensing process began with five consortia applicants but the license was eventually awarded to the Sunkyong Group whose chairman happened to be the son-in-law of Korea’s then-President Roh Tae Woo. Public outrage at the perceived nepotism forced the government to revoke Sunkyong’s license.
Two years later, in 1994, the license was re-awarded to Shinsegi-a consortium including American wireless firms AirTouch Communications Inc., SBC Communications Inc. and Qualcomm Inc., and more than 250 Korean companies.
Drawing lessons from the past, the government hopes the fragmented, but inclusive, ownership structure of Korea PCS Corp. will keep attention and resources from being diverted from the real prize-Korea’s emergence as a major manufacturer of Code Division Multiple Access-based cellular and PCS equipment.
“The government is very enthusiastic about implementing a state-of-the-art wireless technology. This is the last big opportunity for Korean manufacturers to get into wireless,” according to Jonathan Tarlin, vice president-international at Washington, D.C.-based Economic and Management Consultants International Inc.
“They see this as their entry into wireless. It gives them a local market to work from to develop economies of scale. They can work out the bugs in Korea and then pursue other markets,” he said.
Tarlin noted that while most Asia-Pacific countries have opted for Global System for Mobile communications wireless technology as a first step, many are very interested in CDMA technology for PCS and next-generation cellular as well as for wireless local loop networks. CDMA success in Korea could portend a strong CDMA presence in China.
Adopting the CDMA standard on even a small scale in China can mean huge equipment orders because of the population base.
Significantly, the Ministry of Information and Communications’ original bidding guidelines for the PCS license demanded details from applicants on how they intended to acquire technical know-how.
“This is consistent with Korean policy,” noted Linda Gossack, wireless communications division director in the Office of Telecommunications, U.S. Department of Commerce. “Their digital cellular licensing also required transfer of technology for CDMA,” she said. “Equipment contracts had to go to Korean manufacturers.”
