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CIAO DATE: 12/5/2006
Understanding South Korea and Japan's Spectacular Broadband Development: Strategic Liberalization of the Telecommunications Sectors
Kenji Kushida, Seung-Youn Oh
June 2006
Abstract
The ICT sectors of both South Korea and Japan developed rapidly, especially in developing high-speed, low priced broadband services. These networks can potentially provide both economies with new playgrounds for experimentation and innovation. Existing explanations of how these broadband networks and services were created tend to be confused and contradictory regarding 1) the roles played by the states, 2) the exact mechanisms of interaction between governments policies and programs, regulatory frameworks, and market dynamics, and 3) the politics driving each of the state-market interactions.
We find that differences in the institutional configurations of the two countries since the inception of their ICT sectors created a distinct set of political dynamics in each country. The initial telecom policy regimes of the two countries in their initial stages of liberalization were strikingly similar. However, the contrasting political dynamics drove Japan and Korea’s policy regimes along different trajectories. Driven by politicized conflicts and a series of negotiated compromises between the former incumbent and lead bureaucracy, Japan’s ICT sector underwent a regime shift, from which the market dynamics giving rise to broadband services developed. By contrast, Korea’s managed competition policy regime, once established, was stable and hierarchical, with a strong lead bureaucracy managing the sector and former incumbent, without significant political battles. The market dynamics in Korea, from which its broadband services developed, occurred within its existing policy regime without a shift comparable to that in Japan. Differences in the politics, stemming from initial institutional configurations and subsequent political bargains at key junctures drove the two regimes along different trajectories.
