Lucky-Goldstar won the latest battle between Korean manufacturing titans last week when it captured the only digital Korean phone license being offered to an equipment manufacturer.
Foreign entities were not allowed to participate in the process because international competition doesn’t begin in Korea until 1998. Equipment will be procured through a competitive bidding process that will include domestic and foreign manufacturers, according to the announced Korean rules.
Some U.S. sources question how beneficial this new market will be for U.S. companies. The government of Korea has told the European Union and the U.S. government it would not interfere in the equipment procurement of the new private licensees, but it also has publicly stated it would help Korean companies grow into top world manufacturers.
Three licenses for personal communications services were included in the Korean government’s recent issue of 27 telecommunications licenses. One PCS license was designated for a telecommunications equipment manufacturer, another was reserved for a non-telecom manufacturer and the third was set aside for current government operator Korea Telecom.
Seoul-based LG Group, formerly the Lucky-Goldstar Group, was considered a strong applicant for the manufacturer’s license from the beginning. It is the country’s major telecommunications equipment maker and supplied the Code Division Multiple Access system for operator Korea Mobile Telecommunications Corp. CDMA is the Korean government’s technology of choice for PCS.
To compete with LG for the license, Samsung Electronics had allied with Hyundai Group to form the Evernet Corp., dedicating $258 million of paid-in capital to building CDMA equipment. Evernet sees the PCS equipment market in Korea to be worth at least $1.7 billion by 2002.
A stir began in the Korean press when the non-telecom manufacturer license was won by a consortium led by Dacom Corp. LG holds a portion of Dacom, although how much LG owns has been a matter of public dispute. It may exceed the 10 percent allowed under licensing rules, according to international reports and U.S. sources.
Seoul-based Dacom currently provides domestic long-distance service, international service, data communications and system integration. Dacom’s partner in the venture was Hansol Paper Manufacturing Co. Ltd., which reported $688 million in sales last year. The Hansol-Dacom consortium has a technical collaboration agreement with U.S.-based Omnipoint Corp.
Criteria used to judge all license candidates included moral standing, financial capability, feasibility of the service plan, technical development and capabilities.
