South Korea is world leader in the penetration rate and ranked second after US in the number of total subscribers. Some 98 percent of 200 towns and 1,200 counties nationwide are currently getting on the high-speed Internet.

The brisk competition among Internet service providers and the governmental support played a major role. ISPs under the structure of heated competition stirred up the facilities investment and lowered service fees to secure early stage users, putting up with losses.

The government prevailed in low-end Internet PCs and provided free Internet access to elementary, middle and high schools to promote informatization projects.

Shin Yoon-sik, chairman of Hanaro, which offered the world's first ADSL service in 1999, analyzed the unique resident environment of Korea, wherein 60 percent of total households are living in apartment blocks, was a favorable condition to build a bandwidth Internet network.

For the past four years, about W11 trillion won has been invested on the high-speed Internet network. Based on this, the Ministry of Information and Communication estimated W17 trillion of production induction in the information technology industry and new job creation for 350,000 people were made.

The high-speed Internet is the basis for transferring multimedia data such as images and voices at high speed, boosting mass replacement of PCs and subscription to ADSL or VDSL at every door.

Such an Internet environment played a key role for the start-up of venture businesses since the IMF financial crisis in 1998. New culture in cyberspace, including e-commerce shopping malls, online games, PC rooms, cyber stock trading, Internet broadcasting, cyber communities, and free Internet phones, brought a landmark change in daily life and leisure activities.

The government and communication businesses are investing another W13 trillion in expanding broadband communication network by 2005 in a plan for 13.5 million households to enjoy digital TV-level images and to upgrade Internet speeds by more than seven times the existing one, to 20Mbps.

Powered by the evolving Internet speed, the boundaries among industries are collapsing to be integrated. Korea Telecom is accelerating the integration of communications and broadcasting by sending out HD TV programs on the Internet through its home-networking project. Membership marketing by credit cards companies, department stores, and communication providers are based on Internet technologies.

However, not a few problems exist beneath the rapid growth of high-speed Internet.

Due to excessive competition and redundant investment, most providers, except KT and Hanaro, are suffering from serious losses. Thrunet and Dreamline have sold out their network facilities or have been taken over by a third business. KT and Hanaro also have been replacing expensive Internet facilities with less than two to three years of installation to a latest one, posing a redundant investment and worsening profit.

It is crucial to localize Internet equipment that is mostly composed of imported-components. With the industry running behind advanced nations in original technologies and China in low-end goods, some 200 ADSL modem manufacturers are only surviving.

Joint development of domestic-made equipment with huge investment by national research institutes such as ETRI and businesses is often useless owing to communication providers preferring foreign-made ones imported through dumping. Regarding this, Minister Lee Sang-cheol of Information and Communication said he was assessing a way to export operating know-how and Internet equipment overseas by organizing a consortium of middle to small venture businesses and communications providers.