Posted on koreatimes.co.kr
Making mobile calls was a privilege of the very rich in 1988 when there were only 784 subscribers who dared to pay 4 million for a bulky handset heavy as a dumbbell. Now after two decades, phones have become as light as a cigarette lighter and the industry has become one of Korea’s most lucrative businesses with more than 44 million regular customers.
The mobile service industry today celebrates its 20th anniversary here. While the number of subscribers has grown more than 56,000 times, the average phone price has dropped from 4 million to virtually zero when including subsidies, making it an every-day, every-hour item for modern Koreans.
“It is the coming-of-age day for the mobile phone. It is not just a means of communications anymore. It is the center of communication,” said Kim Shin-bae, CEO of SK Telecom. “It is not exaggerating to say that Korea’s IT industry, which accounts for 29 percent of its gross domestic product, started from the spread of mobile phones.”
Korea’s mobile phone service took off as a car-mounted system in 1984, known as “car phones.” Korea Mobile Telecom, which was a subsidiary of Korea’s public telephone company, was its lone operator.
It was July 1, 1988 when Korea Mobile Telecom launched a full-swing mobile phone service that used handheld phones made by Motorola and other foreign firms in Seoul and the metropolitan area, in time for the Seoul Olympic Games that fall.
The critical moment came in 1996 when the government adopted a new technology platform called CDMA (code division multiple access) for the first time in the world, while many other countries opted for the GSM (global system for mobile communication) type. The decision has helped local electronics firms such as Samsung and LG use Korea as a test bed for CDMA phones before they export them to the United States and other nations.
Samsung and LG are now the world’s second and fourth largest mobile phone sellers. Exports of mobile phones grew from a mere $470,000 in 1996 to $18.6 billion last year.
The network service industry too has seen remarkable growth. Korea Mobile Telecom was privatized in 1994 when SK Group purchased its controlling share. KTF and LG Telecom later joined the race, while others like Shinsegi and Hansol were merged into SK Telecom and KTF, respectively.
Technological advancement and competition among the three firms have continuously lowered the call rate. In 1988, users were charged 1,286 won for a three-minute call from Seoul to Busan. This is now 324 won on average for the same call, which is about 3 percent of the 1988 price when considering inflation.
One victim of mobile phone’s rapid success is the pager. It was the dominant communication device in mid and late 1990s, with some 15 million users in its heydays. Now about 40,000 people are using them, many of them medical workers.