Pyrhhic Victory for SK in Korean Bandwidth Auction?

In the words of a headline in The Korea Times, SK Telecom won a Pyrhhic Victory in the recently concluded bandwith auction here. For SKT, winning is bittersweet, the article reported, since it has to pay an enormous amount after repeated rounds of proposals and counterproposals with some describing it a “Pyrrhic victory.” The final bid by SK Telecom amounted to 995 billion won.
Opting to concentrate on cloud computing instead, KT declined to continue bidding for the 1.8 gigahertz (GHz) band.
“We decided to stop bidding for the 1.8 GHz bandwidth, to prevent social controversy and national loss following excessive competition in an auction that was held for the first time in the country,” KT said.
As noted by the Joongang Daily,The 1.8-GHz band is thought to be the most suitable for fourth-generation (4G) mobile communications technology. Many mobile carriers in Europe, the United States and Asia have chosen it for their 4G mobile telecommunication services. It can process data much faster than the 3G service, and thus carry out more tasks such as playing full high-definition content.
Both of the telecom giants were determined to clinch the band since the auction began on Aug. 17. As a result, the auction dragged on for nine days and 83 rounds, and the bidding price soared to 995 billion won ($919 million), more than double the minimum bidding price of 445.5 billion won set by the KCC.
The KCC, which ran the auction, did not place a limit on how many rounds could take place, nor how high the bidding price could go.
Finally KT backed off. When the auction resumed yesterday morning, KT bid for the 800-megahertz (MHz) band, and as the sole bidder, the company got it for the minimum bid price of 261 billion won.
“We withdrew from further bidding for the 1.8-GHz band in light of the social controversy about the overheated competition and national loss,” KT CEO Lee Suk-chae told reporters. “I thought if I use more than one trillion won on spectrum, KT won’t be able to do more important things.”

Naver Halts Mobile Baseball Broadcasting

The local media are reporting on an interesting example of the limits of mobile data networks in Korea.  As reported in The Korea Times, Naver has called an abrupt halt to mobile broadcasting of professional baseball games over 3G networks.
The country’s top portal stopped providing a mobile baseball broadcasting service through the 3G network only 40 days after its launch.
It says it halted the service as it didn’t want to offer poor quality viewing, but it evidently lacked proper preparation.
Following an agreement with the Korea Baseball Organization, Naver started broadcasting games from July 6, citing growing demand among baseball fans who didn’t want to miss any games on their way home from work.
The service immediately drew fans, with as many as 20,000 users logging on to the service using their smartphones or tablets at the same time only two weeks after launching.
“There was growing consumer complaints as the streaming often stopped. We determined that we had better stop it to offer better quality service,” a representative for Naver said.
The top portal, however, can’t be free from criticism that it launched the service too hastily. At the time there was concern that the mobile broadcasting would weigh too much on a 3G network already suffering huge traffic.
When watching a baseball game of about three hours on a smartphone, it incurs 700 megabytes of data traffic. Since as many as 20,000 people were watching a game simultaneously, the burden on the network was debilitating.

Smartphones Alienate the Elderly in Korea

I read with interest a short article in the Joongang Ilbo today, proclaiming in his headline that "Smartphones Alienate the Elderly."   The article notes that smartphones are eating up an increasingly bigger chunk of the Korean market, but are still proving too finicky or complex for senior citizens and people with disabilities.
It goes on to observe that the smartphones’ versatility can be too confusing for elderly people due to the bewildering number of applications, while the small displays and touch-screen typing can also be difficult to navigate, said Nam Si-uk, a professor at Sejong University.
“Many elderly men who originally wanted to own a smartphone are now changing their mind because the instruction manuals are too complicated,” he said. “It makes them feel inferior and frustrated.”  Click on the graphic, which accompanied the Joongang Ilbo article, to see a full size version.

Digital Development in Korea(한국 디지털 발전사) Reviewed in The Electronics Newspaper

I was pleased to learn this past week that my recent book with Dr. Myung Oh, Digital Development in Korea:  Building an Information Society, has been reviewed by Korea's Electronics Newspaper (전자신문). Dr. Oh and I substantially finished the manuscript and delivered it to Routledge in London  in early August 2010.
Readers interested in the newspaper's Korean language overview of the book can find it here in the "Books Closeup" section.

Bidding War Over Mobile Frequencies in Korea Continues

The Joongang Daily reports that the continued bidding war for use of mobile frequencies in Korea is beginning to worry some experts.
Market watchers are concerned that a bidding war between the nation’s two largest telecom firms over an important mobile frequency band could end up hurting the winner down the road.
On auction since Wednesday have been slots for three mobile frequency bands: 2.1-gigahertz (GHz) band, 1.8 GHz band and 800 MHz band. The Korea Communications Commission (KCC) - the country’s telecommunications regulator - is running the auctions.
The bands are like roads for voice calls, text messages and data applications. They are finite public property, managed by the government and rented to mobile service operators on 10- and 15-year contracts. Securing vital spectrum slots are crucial to meeting surging data demand from smartphone and tablet PC users.
Previously the government had allocated the bands, but this year it decided to auction them off to the highest bidder.
It is the space on the 1.8 GHz band that market watchers are keeping their eyes on. The bidding war has already gone through 21 rounds and the price has risen from 445.5 billion won to 543.7 billion won.
“We cannot let our enemies have ‘the best weapon’ without a fight,” an SK Telecom official said.
Market watchers say the final price could be up to three times the opening bid and that worries financial experts. They point to cases in Europe, which held spectrum auctions between 2000 and 2001 that ended up burdening telecom firms and making them less competitive.

Google's Acquisition of Motorola Mobility: Its Impact in Korea

Google's acquisition of Motorola Mobility is making big news around the world, but particularly here in Korea, home of two major handset manufacturers, Samsung and LG.  As noted by The Chosun Ilbo, Google's US$12.5 billion takeover of Motorola Mobility not only allows the search giant to obtain a portfolio of more than 17,000 patents but also gives it the capability to roll out cheap-and-cheerful smartphones within a year or two.
The same paper published an opinion piece entitled "Korean IT Industry Needs to Make Fundamental Changes." It reads in part,
"The world's largest Internet company Google has acquired Motorola Mobility, the mobile phone unit of the U.S. company. So far Google has supplied its Android operating system free of charge to smartphone and tablet PC manufacturers, but now it has gone beyond the software industry and entered the hardware market. Motorola ranks eighth in the global smartphone market, but it is still a formidable force. The company was the first to market a mobile phone in 1973 and has around 17,000 mobile communications patents.
The smartphone market is divided between Apple's iPhone, which has an 18 percent stake, and Android-based handsets, which control 48 percent. Microsoft, another software powerhouse, has already teamed up with Finland's Nokia and is competing fiercely for a larger slice of the pie. Amid rumors that Microsoft may buy Nokia, we cannot rule out the possibility that the global smartphone market could be dominated by Apple, Google and Microsoft, which all have both OS development know-how and handset manufacturing capability."

How Smartphones Amplified the Crash

There is an interesting article in the Joongang Daily today on the role of smartphones in stock trading.  It argues that the increasing interconnectivity of the world, thanks in large part to smartphones and tablets, played a role in amplifying the stock market mayhem.
One big difference now compared to the 2008 sell-off is that mobile devices are in use by more people to trade stocks. And in Korea, which had been a smartphone laggard, smartphone use has exploded since the iPhone landed in Korea in late 2009.
Mirae Asset Securities and KB Investment and Securities were the first two brokerage firms in Korea to launch stock trading apps in February 2010. Other companies have followed.
“In recent trading through our company, trades made from smart devices accounted for 30 percent of all trades - and was as high as 35 percent at one point,” Cheon said. “Investment patterns have been changing with the wide distribution of smart devices. People are using their smartphone to trade shares, even on their vacations.”  Click on the accompanying graphic to see a full size version.

North Korean Game Hackers Help That Country Earn Hard Currency

The Chosun Ilbo reports that, according to a police investigation,elite North Korean hackers created and distributed programs that stole millions of U.S. dollars from popular South Korean on-line gaming sites, such as Lineage and Dungeon Fighter.
The hackers, who are believed to have graduated from the North's prestigious Kim Il-sung University and Kim Chaek University of Technology, stole gaming items such as weapons, armor and other objects that players collect and store in their on-line games and trade for cash. The Seoul Metropolitan Police Agency said on Thursday it had arrested five South Koreans, including a 43-year-old identified only by his surname Chung. They were apprehended for creating programs, with the aid of hackers that use personal information stolen from servers for on-line games, and distributing them to buyers. Nine others were also arrested for aiding Chung in distributing the software.
"It appears that North Korea has gone beyond the traditional methods of earning foreign currency, such as drug manufacturing and producing counterfeit bills, to creating Internet hacking programs," a police official said.
Chung, who runs an Internet chat room in Daejeon in southwestern Korea, traveled to China's Heilongjiang Province in northern China in early 2009 and was introduced to around 30 North Korean hackers through a broker.

Time to Revamp Korea's National ID System?

I recommend another very interesting article generated by the cyber-attack and leakage of personal information from Nate and Cyworld accounts.  This one, accompanied by a nice graphic (click to see a larger version) was published in The Korea Times.
The article notes that the compromised information included names, passwords, phone numbers, e-mail addresses, and most alarmingly, resident registration numbers, the country’s equivalent to social security numbers.
Government officials insist that the country’s computer security defense is still salvageable as they scramble to apply the patchwork. But critics, unconvinced, claim it’s officially time to blow up the national ID system and start over.
``The resident registration number of virtually every Korean is out there ― the information is so easily available that police announced a while ago that hackers are barely getting 1 won for each code. And we have heard rumors that criminals are passing these numbers around in (Microsoft) Excel files,’’ said Jang Yeo-gyeong, a computer security expert at activist group Jinbo Net.
From a security standpoint, resident registration numbers are flawed from the start. The 13-digit code reveals the birth date, sex and registration site of a person, unlike comparable systems in the United States and Japan based on random numbering.
People here submit their national ID numbers to Korean Web sites due to local laws requiring them to make verifiable real-name registrations for virtually every type of Internet activity, not only for encrypted communications like e-commerce, online banking and e-government services but also casual tasks like e-mail and blogging.

Apple, Google in Violation of Korean Law

As reported in the Joongang Daily, South Korea’s telecommunications regulator announced yesterday that Apple and Google’s location tracking capabilities violate Korean laws, fining Apple Korea and ordering that both companies rectify the issues.The Korea Communications Commission (KCC) has been investigating since April, after two computer engineers argued that the latest version of Apple’s mobile operating system, iOS 4.0, keeps track of users’ locations as far back as June 2010, which was when the operating system was launched. That caused controversy worldwide.
While the Korean government was hardly alone in launching an investigation into location tracking issues, it is the first in the world to actually declare that Apple and Google violated laws and order punitive measures.
According to Location Information Law Article 15, when businesses seek to collect, utilize and offer people’s location data, they should get their consent. Furthermore, Location Information Law Article 16 dictates that businesses take protective technological measures to prevent the data from being exposed, falsified or damaged.
“We haven’t been tracking anyone,” Apple CEO Steve Jobs said earlier this year. “The files they found on these phones were basically files we have built through anonymous, crowd-sourced information that we collect from the tens of millions of iPhones out there.”
Google also explained that “all location sharing on Android is an opt-in by the user.” When a user activates an Android phone, a screen appears saying Google will collect anonymous location data.

More on Cyber Leaks and Cyber Warfare in Korea

Press coverage of the recent cyber attacks on Nate and Cyworld and the resulting leakage of personal information is just beginning. Readers who found my previous post interesting may wish to read today's article in the Joongang Daily. It notes that controversy is heating up over Korean Web portal operators’ collection and storage of private data after the country’s worst cyber hacking case put over two-thirds of its population at risk of identity theft.
It also put a question mark on the effectiveness of the country’s controversial Internet regulations, such as the real-name verification law, which critics argue provide incentives for online companies to hoard personal information.

“While they didn’t have the ability to protect private data, they have been excessively collecting it,” said Lim Jong-in, dean of the Graduate School of Information Security at Korea University, referring to the country’s major Web portals.

Korean Internet users rely heavily on do-it-all, one-stop Web portals. They visit industry leader Naver at least three times for every four Internet uses, according to market research firm Metrix Corp., and the three most-visited Web portals account for more than 90 percent of the country’s Web search traffic.
These Web portals ask for names, resident registration numbers, birth dates, addresses and phone numbers to join their services, which are accumulated, some of them encrypted, in their servers for at least five years and become attractive “booty” for hackers.
“Instead of mere lists of online accounts, [hackers] could steal the full package of real world identities,” said Nakho Kim, a media researcher at the University of Wisconsin-Madison. “Due to government policies and industry laziness, many Korean online services tend to collect a lot of personal identity information.”
Readers following the broader global context of the recent cyber attacks on Nate and Cyworld will want to read The New York Times article entitled "Security Firm Sees Global Cyberspying."

Hackers Compromise Personal Data from Nate and Cyworld Accounts

On July 29 it was reported by the Joongang Daily that hackers had stolen personal data from as many as 35 million Korean netizens with Nate and Cyworld accounts.
According to SK Communications, which runs both Nate and Cyworld, hackers had access to the IDs, names, cellphone numbers, e-mail addresses, encrypted social security numbers and encrypted passwords of an estimated 35 million users.
Cyworld currently has 33 million users and Nate 25 million users, the company said.
SK Communications suspects the hacking was done through malicious code, and the IP address used for the attack was from China.
The company reported the attack to the Korea Communications Commission and asked police yesterday for help investigating.
The Cyber Terrorism Response Center under the National Police Agency said its team will visit SK Communications’ database center in Seongsu-dong, eastern Seoul, to determine the exact details of the attack.
Police believe Tuesday’s hacking attack was Korea’s biggest ever.
On August 3 The Washington Post published an interesting report on widespread cyber-spying. According to the report, a leading computer security firm has used logs produced by a single server to trace the hacking of more than 70 corporations and government organizations over many months, and experts familiar with the analysis say the snooping probably originated in China.Google’s disclosure early last year that hackers in China had broken into its networks and stolen valuable source code was a watershed moment: A major U.S. company volunteered that it had been hacked. Google also said that more than 20 other large companies were similarly targeted.

Traffic Spike Crashes LG U+ Phone Data Network

The data network of LG U+, Korea's smallest mobile network, was out of service yesterday, causing inconvenience to startled subscribers.   As reported in the Joongang Daily, data traffic spiked to about five times the normal traffic, starting around 8:00 A.M.
With the popularity of data-gobbling smartphones and tablet PCs, compounded by mobile carriers spoiling customers with unlimited data usage plans, the nation’s data networks are already handling more data than they should, observers say.
And while the surge in data traffic has caused dropped calls and slow connections, it has never caused a network to blackout for hours.