Tuesday, March 27, 2007

Convergence is Coming


Ten years ago the really hot products to have were a laptop computer hooked up to that new-fangled thing called the Internet, a mobile telephone, and a flat screen television, plus a VCR.

Who wudda thunk that in so short a space of time that the then-new technologies that powered these enchanting gadgets would intertwine and mutate to produce then-unimaginable services and products based upon digitalization of information, a process that seems to open an almost infinite realm of possibilities and whose import is only just becoming apparent.

Now though a spate of new services available in Korea, via Internet Protocol TV (IPTV), it's possible to download the last episode of Desperate Housewives that you missed last night and watch it on a computer screen or television.

Through Korean developed Digital Multimedia Broad- casting technology (DMB, see IK Journal, Cover Story March/April 2005), it's now possible to watch TV programming, via satellite or terrestrial transmissions, on a handheld device even while traveling at speed.

Others on the move can use a phone enabled with high-speed downlink packet access (HSDPA) to download massive amounts of high-quality multimedia including games, movies, music, and yes, the phone can also be used as a phone!

It may have seemed cool to talk on a mobile phone 10 years ago but Voice over Internet Protocol (VoIP) not only allows users to make significant economies in making long-distance or international calls but also permits video connection by personal computers, to the betterment of relations, either personal or commercial.

Logging onto the Internet with your first laptop back in `97 was a thrill, but such was the technology at that time that you had to stay in one place -- indoors at that and close to a telephone jack -- to access the wonders of the information highway. That was then but this is now and through Korean-developed wireless broadband (WiBro), access to the Internet is not only always on (remember dial-up?) but accessible anywhere even (like DMB) in moving vehicles.

Welcome to the new era of digital technology convergence, one that will render obsolescent services that not too long ago were lauded as cutting edge and one where Korea is staking out its leadership, partly on the back of its groundbreaking homegrown technologies, partly through the power of its digital information networks -- wired and wireless -- but most certainly because of the incredible level of broadband access that allows the markets for these new technologies to be driven.

Korea has one the world's highest broadband penetration rates at 25.3 per 100 persons at end-2005. This translates into 12.3 million households or 77 percent of the total among a population of 49 million that are connected to high-speed Broadband service, mostly of the ADSL type (Asymmetric Digital Subscriber Line) although faster and more capable systems are being installed at the time of writing (see below).

Already vested with one of the world's fastest Internet speeds of 1.5 to 2 megabytes per second (Mbps), the government is currently constructing the nationwide Broadband Convergence Network (BcN) that will allow the transmission of data and images at speeds of 50 Mbps to 100 Mbps.

Meanwhile, on the wireless network front WiMax (Worldwide Interoperability for Microwave Access) offers upload/download speeds of 70 Mbps, WiBro offers 50 Mbps and HSDPA 14.4 Mbps (with plans in the works to raise speeds to 28.6 Mbps).

As wireless speeds match those of the wired network, and the differences between them become less apparent, Koreans will have access to a seamless, ubiquitous information platform that can be tapped into by numerous types of devices and appliances.

It is by the five technologies and systems of IPTV, DMB, HSDPA, WiBro and VoIP referred to above that will leverage the capabilities of these networks, drive the trend to convergence and thereby generate new market opportunities.

Certainly the stakes are high. Initially estimating a commercialization date for IPTV in Korea of 2006, the Research on Asia (ROA) Group projected that the service would attract as many as 570,000 subscribers by the end of the year producing revenues of 160 billion won (approximately US$154 million), rising to three million subscribers by end of 2012 who would provide an income flow to service providers of 770 million won (US$827 million at current rates). ROA based its prediction on the likely modes of delivery of the service with its implications for quality and breadth of accessibility: the Broadband Convergence Network and the equally speedy (100 Mbps) Fiber to the Home (FTTH) network. Cognizant that ADSL just doesn't have the capability to handle the traffic content of IPTV, Korea's largest Internet service provider KT (Korea Telecom) has embarked upon an ambitious program to connect every household in the country with FTTH service at a cost of US$1 billion.

So how is the ROA projection panning out? Full commercialization of IPTV has been delayed over regulatory issues but KT and Hanaro Telecom have weighed into the market offering non-real-time video on demand (VOD) content as opposed to live broadcasting. With the limited service they are able to provide, Hanaro Telecom's HanaTV attracted 330,000 subscribers paying 10,000 won per month by mid-February since its launch in July, while another 30,000 had signed up for KT's MegapassTV, available to homes equipped with the carrier's 100-Mbps optical local area network (LAN) service, by the end of January. Good news travels fast since NHN, operator of the Naver Internet portal, the country's most popular, has announced that it, too, will enter the IPTV market.

What do IPTV subscribers currently get for their money? Besides retransmission of programming from on-air broadcasters KBS, MBC, SBS and EBS, MegapassTV users can have access to movies, music, and a number of interactive services that concern education, finance and a messaging service. While the DVD player has eclipsed the VCR, the movie downloads now possible through IPTV also call into question the convenience of such devices and threaten that venerable neighborhood institution, the video store. Along with real-time live broadcasting, IPTV is eventually expected to offer a broad range of home networking-type home automation and security services as well as securities dealing, banking and T-commerce, or television commerce, that is, shopping by TV via a suite of systems that includes interactive applications.

In a bid to overcome the regulatory obstacles to its introduction, the Ministry of Information committed itself in February to full commercialization of IPTV this year with enabling legislation promised for April.

As noted by Hanaro Telecom CEO, Park Byung-Moo, commercialized IPTV is the subject of eager anticipation by Korea's telecom players as it represents a broadcasting/telecom convergence business model through which to create new streams of revenue.

More developed as a market is Digital Multimedia Broadcasting. The subscriber-based satellite service (S-DMB) was introduced nationwide in May 2005 by SK Telecom subsidiary TU Media, and in the December of the year became available via terrestrial stations (T-DMB). Although this latter service has the advantage of being gratuitous it has restricted availability. S-DMB service offers 15 video channels, 19 audio channels, and three data channels, while its terrestial counterpart provides 11 TV channels, 25 radio, and eight data channels.

Like WiBro, DBM was developed by the Daejeon-based Electronics and Telecommunications Research Institute (ETRI) and debuted for the first time in Korea. Like IPTV, DMB is a new concept in multimedia transmission that converges telecommunications and broadcasting but with the major difference that reception is via mobile devices. It features crystal-clear reception and FM-quality sound even while traveling in a moving vehicle. Receivers are usually integrated into other systems such as laptop computers, mobile phones, portable media players (PMPs) personal digital assistants (PDAs) or in-car navigation systems.

So more than a year after the introduction of two rival DMB services -- S-DMB and T-DMB -- how have they fared? The fee-based satellite service run by TU Media is the clear winner. After investing heavily to eliminate reception "shadow" areas, the telecom giant watched its subscriber base climb toward the one-million mark in December 2005, and is garnering enough in the way of fees to invest back into quality programming and thereby further boost its popularity. In November, for example, TU Media revealed that it was in negotiations with the English Premier League to broadcast the league's matches on its S-DMB system this year.

Terrestrial DMB, by contrast, has not yet succeeded in generating sufficient revenues through advertising, a situation compounded by the fact that the free service has wide shadow areas where it cannot be accessed. Therefore, the experience of TU Media points to a fee-based business model being that most likely to succeed with this particular technology.

If DMB is a form of convergence that elicits a passive response from its user (TV shows can only be watched), HSDPA might prompt a more interactive approach. Why, you might ask, is that guy with the mobile phone on the corner talking to himself, or more precisely, talking at his phone? Closer inspection will reveal that the telephone is far from conventional, featuring a split video screen with talking heads in each of its three segments. Hmmm.....mobile video conferencing in action!

High-Speed Downlink Packet (or Protocol) Access (HSDPA) is like a type of mobile broadband, but is, in fact, a 3.5G (three-and-a-half generation) mobile telephony protocol currently used by some 64 networks in 64 countries.

Like many high-technologies, HSDPA comes with a pedigree and one in which Korea has played a significant role. HSDPA is an advance on its predecessor, the 3G Wideband Code Division Multiple Access (W-CDMA), a CDMA channel, but one that is four times as broad as predecessor, CDMA proper. Second-generation CDMA, in turn, is a technology devised by Qualcomm of the United States, but one that was first commercialized in Korea by ETRI in 1996. The big improvement compared to WCDMA is download speed; HSDPA is as much as 10 times quicker than its predecessor. As such, downloading crisp-image movies, sophisticated multiplayer games and other massive files from the `Net is a cinch. As in the case of IPTV, the availability of such content via downloads brings into question the future of separate devices in the home on which to play them.

Given its history with the technology, Korea understandably became a leader in the building and operation of W-CDMA systems but this is now falling out of favor with carriers given the superior capabilities of HSDPA and its inherent potential for convergence and hence the provision of value added services. Korea Telecom and SK Telecom are building HSDPA networks across the country, with this latter carrier hoping to have the bulk of the population covered by installing service in 84 cities. In May last year, SK Telecom pipped KT to be the first to bring a commercial network into operation with Samsung simultaneously launching the world's first HSDPA handset, the W200. Major features of the phone that exemplify HSDPA's capability are video calls, Internet telephony (voice over Internet protocol, see below), ultra-high speed data transfer allowing the downloading of DVD-quality movies, a high-resolution (320x240 pixel) screen on which to view them, and an upload link allowing users to put their user-created contents (UCC) up on the Web. Did I mention global roaming? It is now possible to roam with the W200 in WCDMA-serviceed areas of Europe and Asia.

Offering a download speed of 14.4 Mbps, KT launched its own HSDPA network the following July in 50 cities including Seoul with plans for a further 34 by year-end. Primary network supplier Korean/Canadian joint venture LG-Nortel supplied a 5.8-Mbps uplink packet while access to the network was provided initially by LG's SH-100 phone, with the promise of five more models to come.

The full effect of HSDPA, a form of wireless Internet that closely conveys the Web experience, will become fully apparent later this year when the two carriers complete their networks and full range of handheld terminals comes on the market. Telecom industry observers expected it to promote convergence through the greater availability of virtual communities such as Cyworld, on which 90 percent of Koreans in their twenties have a page, and music portals such as Jukeon.

SK Telecom CEO Kim Shin-Bae has pointed out that the convergence potential of HSDPA between digital cameras and mobile terminals such as laptops and PMPs is heightened by the use of a USB modem that can actually boost accessibility to the network. Moreover, he maintained the use of a Universal Subscriber Identity Module (USIM) would promote convergence in mobile banking and credit card services since a smart card bearing a single chip would allow transactions with numerous financial institutions.

If HSDPA comes close to replicating mobile Internet, WiBro is mobile Internet, offering flawless connection at speeds of up to 120 kilometers per hour. The two have different operating platforms and both can offer voice and videophone calls making them natural competitors, although WiBro has yet to offer these services.

WiBro was developed by ETRI in collaboration with Samsung as a Korean version of WiMax (Worldwide Interoperability for Microwave Access) to provide a broader range of function than represented by the mobile phone and a mobile version of broadband Internet. The Internet connectivity of WiBro depends on base stations operating at speeds of up to 50Mbps. Through a network of such stations covering parts of Seoul and surrounding cities, Korea Telecom and SK Telecom launched commercial WiBro services in mid-2006.

It may be early days for WiBro but subscriptions have failed to meet expectations and KT has halted its program of network expansion. It is deemed a superior 4G technology to the more popular 3.5G HSDPA as it offers speeds three times faster, but perhaps it is a question of it finding its niche. Premier telecom provider SK Telecom maintains that WiBro is meant to complement HSDPA rather than compete with it. For this reason, the company intends to make WiBro available only in densely populated university areas or business districts, while deeming HSDPA more suitable for national coverage.

The Korean Information Strategy Development Institute (KISDI), a government sponsored think tank, has recognized the potential for competition between HSDPA and WiBro but stresses that they are essentially suited to different markets. KISDI has argued that because WiBro is directly connected to the Internet provider (IP) backbone, it is better suited to handling large data transfers such video (and music)-on-demand, network gaming, game downloading, and e-mail. HSDPA, on the other hand is a more appropriate technology for the transfer of data of a more limited scale such as short messaging services (SMS), video telephony, and banking and securities transactions.

One impressive success of WiBro to date is its adoption by telephony operators Sprint of the United States and KDDI of Japan as their mobile Internet platform of choice in their respective countries. Perhaps success overseas for this stellar Korean technology will encourage its broader use at home.

VoIP (voice over Internet protocol) has the power to effect huge savings and directly create new markets to support the service. In all, it is big business, and domestic Korean companies have not been slow to recognize the potential offered by foreign providers. Kookmin Bank, Korea's largest, selected Nortel of Canada in 2002 to provide a single next-generation network (NGN) voice over IP (Internet protocol) and multimedia solution for its call centers in Seoul and Daejeon. The following year, Nortel found itself selected once more, this time by telephony and data communications company Dacom Corp. to provide a similar solution in a deal that included products from Nortel Networks Multimedia Communications.

The year 2006 was marked by renewed interest by overseas VoIP solutions providers in the Korean market.

U.S.-based Skype, the world's most popular VoIP provider and now acquired by eBay, launched services in Korea in February 2006 after being attracted by the potential of what the company described as the world's leading broadband infrastructure. In keeping with its usual practice, Skype makes no charge for PC-to-PC calls, but charges a small fee for international PC-to-phone calls.

The Korean market attracted another major player in the VoIP field when Broadsoft of the United States launched its mobile VoIP software platform Nov. 1st, claiming high-profile corporates Korea Telecom, Samsung Networks, SK Telink and Hanaro among its clientele.

"Korea leads the world in next-generation mobile communications services, such HSDPA, making it an ideal market for our Broadworks mobile PBX, mixed/mobile convergence solutions," said Ken Rokoff, vice president of business development and Asia/Pacific sales. (A PBX is a private branch exchange, a private telephone network used within an enterprise).

Meanwhile, the newly established Korea Cable Telecom -- a nationwide consortium of seven cable operators -- began VoIP services last August. The launch followed government approval of the consortium the previous March in order to create synergy between the broadcasting and telecom sectors, and to further the success of cable-based convergence services.

IDC Korea projects that the Korean VoIP service market will grow 54 percent annually, from US$250 million in 2006 to US$1 billion in 2009, and that IP convergence products will drive the VoIP device market to US$263.5 million by 2009.

The Internet Society (ISOC), a think tank comprised of professionals worldwide, observed the massive efficiencies of VoIP compared to traditional telephony systems in a 2006 paper. The society highlighted its relatively low cost of deployment in system terms, and stated that a country would be at a disadvantage if it did not embrace the protocol while warning of the impending obsolescence of circuit-switched networks.

Doubtless, Korea is in the process of embracing VoIP in a manner that may eventually result in a radical alteration in the nature of the telecommunications industry. Indeed, the impact of VoIP may well be taken as an example as to how technological convergence is bringing subtle but immense change for the Korean economy and society. Convergence is coming, and with it, new industries and lifestyles that are guaranteed to fuel the dynamism that is the essence of Korea. ◦

Wednesday, March 21, 2007

Digital South Korea's Wireless World

March 12, 2007

A next-gen wireless broadband network will allow Koreans to use high-speed apps on their mobile handsets. And it's sure to power big growth

by Moon Ihlwan

South Korea, with its blisteringly fast broadband networks and tech-happy consumer base, is one of the most wired societies in Asia, if not the world. And if a new next-generation wireless broadband network under development here lives up to the hype, South Korean consumers could soon be enjoying such high-speed data applications as video conferencing, file swapping, or catching TV entertainment on their mobile phones anytime, anyplace.

That is the hope of engineers at South Korea's flagship telecom operator KT (KTC), who are trying to work out any potential kinks in the company's new wireless broadband network. In April, the company will roll out a new high-speed network based on a technology called Mobile WiMAX (as in worldwide interoperability for microwave access) in Seoul.

This will be the first time that Mobile WiMAX—by far the fastest wireless broadband standard available today—will be made available in such a large metropolitan market. It could be a powerful source of revenue for KT—whose fixed-line business is facing slower growth—and a big step forward for South Korea in its quest to stay at the forefront of information technology innovation.

"Turbocharge" Growth
This wireless network, which is called WiBro—short for wireless broadband—in Korea, boasts peak data download speeds of 16 megabits per second. (The upload speed is about seven megabits per second). It is based somewhat on the WiMAX technology developed and heavily promoted by Intel (INTC) as the next big thing in mobile communication. However, Korean engineers in the private sector and working at the state-run Electronics & Telecommunications Research Institute have made significant engineering changes to adapt Mobile WiMAX for handling high-speed data transmissions.

A successful commercial launch would spur innovation, create new consumer markets, and boost South Korea's digital credentials internationally, the government hopes. "The IT sector has been the engine of our economic growth," says Lee Sang Jin, director at Korea's Ministry of Information and Communication. "We must try to create leading-edge environments to turbocharge this engine."

South Korea has already made some significant strides. One can point to the widespread use of the Internet and digital gadgets at home—or the rise of Samsung Electronics and LG Electronics as world-class competitors in consumer electronics, mobile phones, and high-end memory chips over the last decade.

Trade Powerhouse
Nearly 90% of the nation's 15.9 million households enjoy broadband Internet access and virtually all adults and teenagers carry mobile phones, the bulk of them capable of surfing the Net and handling multimedia services. And policymakers are determined to turn the country into testing ground for all things digital (see BusinessWeek.com, 1/29/07, "The Mobile Internet's Future is East").

That's important for local companies that want to try out new gadgets or digital applications at home before exporting them abroad. Shipments of IT products and parts last year totaled $113.4 billion and accounted for 35% of the country's total exports abroad. The sector also racked up a trade surplus of $54.5 billion in 2006 against a deficit of $38.1 billion in trade of non-IT products. In the past four years, South Korean IT industries represented nearly half of the expansion in Korea's overall economy, according to government statistics.

For instance, Samsung is rolling out a new line of multitasking mobile gadgets with the new KT wireless broadband network in mind. One product is a smartphone and an all-purpose portable device called the Deluxe MITs, short for mobile intelligent terminal by Samsung. The MITs, whose prototype was first unveiled during an industry conference on Mobile WiMAX last November, functions like an ultra-mobile personal computer, in addition to being a high-end mobile phone and camera (see BusinessWeek.com, 11/8/06, "Samsung's Next-Gen Wireless Vision").

Export Potential
In close cooperation with KT, Samsung engineers have made sure its WiBro gadgets meet both consumer and business needs. The mobile intelligent terminals allow a consumer moving in a vehicle at a speed of 60 mph to download games and transmit photos. A business traveler could hold a video conference with clients showing changes in an Excel spread sheet called up on the screen.

There is also considerable export potential if overseas telecoms adopt this network technology. Samsung has either signed agreements or is in talks with more than 30 overseas carriers, including British Telecom (BT), France Telecom (FTE), KDDI of Japan, and Sprint Nextel (S) to supply Mobile WiMAX equipment or handhelds.

Much hinges, though, on how well KT commercializes the service at home. "A success story in a test bed here will serve as a springboard for our marketing push abroad," says Kim Song Shin, senior manager at Samsung's telecom division.

Betting on User-Created Content
With consumer demand for high-speed connectivity strong in rich world markets, the Koreans could be at the forefront of a lucrative segment. Researcher Yankee Group projects the global Mobile WiMAX infrastructure market will amount to nearly $4 billion in three years and device sales of the technology will hit 32 million units globally by 2011.

Korean companies are also exploring rival wireless technologies. KTF, a subsidiary of telecom giant KT and Korea's second largest wireless carrier, this month became the world's first company to launch a nationwide wireless broadband network using a competing technology called HSDPA, or High-Speed Downlink Packet Access, promoted by wireless chipmaker Qualcomm (QCOM). Both Samsung and its crosstown rival LG make HSDPA handsets, too.

For Mobile WiMAX, KT is pinning its hopes on the explosive growth in user-created content, and increasing demand for swapping photos, music, and video data at ever-faster speeds. "We believe WiBro will become a significant contributor to our revenues and profits by 2010, when we expect to have a subscriber base of four to five million," says Cho Sung Kil, director at KT's mobile Internet business group.

Government-Led Effort
Nevertheless telecom analysts expect WiBro and HSDPA to complement each other, given the faster speed of the former and the latter's wider area coverage. To accommodate such needs, the Seoul government has recently allowed telcos to offer services in a mix of various networks based on different technologies. KT is offering a USB-based modem with connectivity for both HSDPA and WiBro for PC users.

Whatever the outcome, Seoul isn't letting up in its drive to keep the country in the vanguard of telecom infrastructure. In the past three years, the government spent $563 million on research and pilot projects, thereby prompting private companies to invest $20.9 billion in building a so-called broadband convergence network (BCN) designed to integrate wired and wireless systems and the telecom and broadcasting sectors. The country plans to invest many more billions to increase the number of BCN-latched households from 5.5 million at the end of 2006 to 8.2 million in 2007—and virtually all urban households by 2010.

The BCN systems will allow companies and consumers to send voice, text, photos, and video all through the same pipe. KT says the company alone has earmarked some $10 billion for BCN over a five-year period until 2010, when most Koreans will be able to send data at ultra-fast speeds—between 50 megabits and 100 megabits per second.

"A Trigger Unleashing Innovation"
Information and Communication Ministry officials say the government also wants to lead the way to foster two new IT areas for future growth. One is the ubiquitous sensor network, or USN, aimed at letting smart machines and products communicate with each other. That network will use radio-frequency identification technology for industries and government to manage logistics and distribution.

Another IT segment policymakers are pushing hard to develop is software and digital content. To help create a cluster of related companies, the government is due to launch "Nuritkum Square" comprising four buildings in Seoul, in November, at the cost of $386 million. For the USN and radio chip project, the government last December began building a $334 million research and development and manufacturing site in the Songdo special economic zone, west of Seoul. "The government wants to be a trigger unleashing innovation by Korea's IT companies," says Lee of the Korean information ministry.


Korea and Japan: New Technology, Old Habits

Despite world-class IT networks, Japanese and Korean workers are still chained to their desks
by Moon Ihlwan and Kenji Hall

Masanori Goto was in for a culture shock when he returned to Japan after a seven-year stint in New York. The 42-year-old public relations officer at cellular giant NTT DoCoMo (DCM) logged many a late night at his Manhattan apartment, using his company laptop to communicate with colleagues 14 time zones away. Now back in Tokyo, Goto has a cell phone he can use to send quick e-mails after hours, but he must hole up at the office late into the night if he needs to do any serious work. The reason: His bosses haven't outfitted him with a portable computer. "I didn't realize that our people in Japan weren't using laptops," he says. "That was a surprise."

A few hundred miles to the west, in Seoul, Lee Seung Hwa also knows what it's like to spend long hours chained to her desk. The 33-year-old recently quit her job as an executive assistant at a carmaker because, among other complaints, her company didn't let lower-level employees log on from outside the office. "I could have done all the work from home, but managers thought I was working hard only if I stayed late," says Lee.

These days, information technology could easily free the likes of Goto and Lee. Korea and Japan are world leaders in broadband access, with connection speeds that put the U.S. to shame. And their wireless networks are state of the art, allowing supercharged Web surfing from mobile phones and other handhelds, whether at a café, in the subway, or on the highway. But when it comes to taking advantage of connectivity for business, Americans are way ahead.

For a study in contrasts, consider the daily commute. American trains are packed with business people furiously tapping their BlackBerrys or Treos, squeezing a few extra minutes into their work days. In Tokyo or Seoul, commuters stare intently at their cell phone screens, but they're usually playing games, watching video clips, or sending Hello Kitty icons to friends. And while advertising for U.S. cellular companies emphasizes how data services can make users more productive at work, Asian carriers tend to stress the fun factor.

Why? Corporate culture in the Far East remains deeply conservative, and most businesses have been slow to mine the opportunities offered by newfangled communications technologies. One big reason is the premium placed on face time at the office. Junior employees are reluctant to leave work before the boss does for fear of looking like slackers. Also, Confucianism places greater stock on group effort and consensus-building than on individual initiative. So members of a team all feel they must stick around if there is a task to complete. "To reap full benefits from IT investment, companies must change the way they do business," says Lee Inn Chan, vice-president at SK Research Institute, a Seoul management think tank funded by cellular carrier SK Telecom (SKM). "What's most needed in Korea and Japan is an overhaul in business processes and practices."

TIME, NOT TASK.in these countries, if you're not in the office, your boss simply assumes you're not working. It doesn't help that a lack of clear job definitions and performance metrics makes it difficult for managers to assess the productivity of employees working off site. "Performance reviews and judgments are still largely time-oriented here, rather than task-oriented as in the West," says Cho Bum Coo, a Seoul-based executive partner at business consulting firm Accenture Ltd. (ACN)

Even tech companies in the region often refuse to untether workers from the office. Camera-maker Canon Inc. (CAJ) for instance, dispensed with flextime four years ago after employees said it interfered with communications, while Samsung stresses that person-to-person contact is far more effective than e-mail. In Japan, many companies say they are reluctant to send workers home with their laptops for fear that proprietary information might go astray. Canon publishes a 33-page code of conduct that includes a cautionary tale of a worker who loses a notebook computer loaded with sensitive customer data on his commute. At Korean companies SK Telecom, Samsung Electronics, and lg Electronics, employees must obtain permission before they can carry their laptops out of the office. Even then, they often are barred from full access to files from work. And while just about everyone has a cell phone that can display Web pages or send e-mails, getting into corporate networks is complicated and unwieldy.

The result: Korean and Japanese white-collar workers clock long days at the office, often toiling till midnight and coming in on weekends. "In my dictionary there's no such thing as work/life balance as far as weekdays are concerned," says a Samsung Electronics senior manager who declined to be named. Tom Coyner, a consultant and author of Mastering Business in Korea: A Practical Guide, says: "Even your wife would think you were not regarded as an important player in the office if you came home at five or six."

These factors may be preventing Japan and Korea from wringing more productivity out of their massive IT investments. Both countries place high on lists of global innovators. For instance, Japan and Korea rank No. 2 and No. 6, respectively, out of 30 nations in terms of spending on research and development, according to the Organization for Economic Cooperation and Development. And the Geneva-based World Intellectual property Organization says Japan was second and Korea fourth in international patent filings. But when it comes to the productivity of IT users, both countries badly lag the U.S., says Kazuyuki Motohashi, a University of Tokyo professor who is an expert on technological innovation. "Companies in Japan and Korea haven't made the structural changes to get the most out of new technologies," he says.

Still, a new generation of managers rising through the ranks may speed the transformation. These workers are tech-savvy and often more individualistic, having come from smaller families. Already, some companies are tinkering with changes to meet their needs. SK Telecom abolished titles for all midlevel managers in the hopes that this would spur workers to take greater initiative. Japan's NEC Corp. (NIPNY) is experimenting with telecommuting for 2,000 of its 148,000 employees. And in Korea, CJ 39 Shopping, a cable-TV shopping channel, is letting 10% of its call-center employees work from home.

Foreign companies are doing their bit to shake things up. In Korea, ibm has outfitted all of its 2,600 employees with laptops and actively encourages them to work off site. The system, which was first introduced in 1995, has allowed the company to cut back on office space and reap savings of $2.3 million a year. One beneficiary is Kim Yoon Hee. The procurement specialist reports to the office only on Tuesdays and Thursdays. On other days, calls to her office phone are automatically routed to her laptop, so she can work from home. "It would have been difficult for me to remain employed had it not been for the telecommuting system," says Kim, 35, who quit a job at a big Korean company seven years ago because late nights at the office kept her away from her infant daughter. "This certainly makes me more loyal to my company."