WASHINGTON-The United States and South Korea appear headed for a showdown over Bush administration allegations that Seoul is violating global trade law by trying to impose wireless standards that would benefit huge homegrown vendors like Samsung Corp. and block U.S. suppliers from the potentially lucrative wireless Internet business in a booming Asian market.
The escalating wireless trade dispute comes at a time when the two countries are uneasily reassessing their half-century-old security pact and overall relationship.
The White House has identified three flash points involving the South Korean-developed Wireless Internet Platform for Interoperability and government input in crafting standards for 2.3 GHz portable wireless Internet and location-based services. To date, there has been no resolution to the festering wireless trade issues, and time is nearing for key decisions by Seoul.
“The United States remains strongly opposed to mandatory standards in the telecom sector and, within the context of our WTO services negotiations, we are urging governments to remain `technology neutral’ with respect to telecom standards. Regrettably, Korea appears to be moving in the opposite direction by seeking to mandate Korea-specific standards,” said U.S. Trade Representative Robert Zoellick in a Dec. 5 letter to South Korean Trade Minister Hwang Doo-yun.
The Embassy of South Korea did not respond to requests for comment.
Sources said administration officials and U.S. wireless industry representatives met with South Korean counterparts here last October in hopes of hashing out trade differences, but little was accomplished. More talks are scheduled next month in Seoul, though the Telecommunications Technology Association-Korea’s standards body-may decide later this month whether to move forward with a single standard for the 2.3 GHz band. The government delayed issuing licenses in the band, but plans to grant permits by June.
Some in the United States question TTA’s objectivity and suspect it is taking its cue from the South Korean government.
Korean wireless operators SK Telecom, KTF and LG Telecom are said to be eager to secure 2.3 GHz portable Internet licenses. But there are indications they may not necessarily agree with their government’s approach to wireless standards.
“These are technologies in which U.S. industry has great expertise and interest. I am alarmed that, if it proceeds on its stated path, Korea will be preventing a growing number of U.S. companies from competing in the Korean market, and we will be on a collision course in the telecom sector,” said Zoellick.
There is much at stake in terms of trade and future U.S.-South Korea relations. South Korea is making the most of the digital revolution, having 80-percent broadband Internet penetration and nearly 35 million mobile-phone subscribers. It is a key proving ground for third-generation mobile-phone service.
U.S. industry insists the Bush administration cannot walk away from a problem described as a blatant trade barrier. In addition to the wireless standards problem, the United States is upset with South Korea over intellectual property piracy.
But trade is only part of the equation. The White House also has sensitive security issues it needs to work through with Seoul. South Korean officials are re-examining the country’s historical relationship with America and their geopolitical options in a new age where dealings with China-with its unparalleled business opportunities and military might-have taken on greater priority.
Amy Jackson, deputy assistant U.S. trade representative for Korea, has been a key point person in U.S.-South Korean talks on the wireless standards dispute. USTR declined several requests for comment on the situation.
While Qualcomm Inc.’s CDMA2000 1x and 1x EV-DO technologies have proven spectacularly popular in South Korea, the San Diego company finds itself battling WIPI-based in part on Sun Microsystem’s Java software-because the government’s wireless Internet platform would effectively cut off Qualcomm’s BREW downloading software from the market.
Meanwhile, other U.S. firms such as ArrayComm Inc. and Flarion Technologies Inc. stand to lose big if the South Korean government adopts its own 2.3 GHz portable Internet standard.
“The TTA process has basically been used to allow domestic industry to have its own standard pushed through and accredited by the [South Korean] government as the only technology that is permitted to be deployed,” said Mark Klerer, executive director of standards at Flarion. “It is a serious issue,” said Klerer.
Last week, Flarion withdrew its membership from Korea’s TTA over frustration with the standards body. Klerer said Flarion notified the U.S. Embassy in South Korea of the action.
Flarion’s FLASH technology (based on Orthogonal Frequency Division Multiplexing) has been tested by top South Korean wireless carriers. Nextel Communications Inc., which is said to be interested in South Korea’s 2.3 GHz market, is experimenting with OFDM for use in wireless local area networks. Sprint PCS reportedly also has shown interest in breaking into South Korea’s portable Internet market.
Nextel and Sprint PCS did not return calls regarding business prospects in South Korea.
The wireless standards controversy could lead to the United States filing a complaint against South Korea at the World Trade Organization, but such a time-consuming exercise could hurt U.S. firms in a highly competitive environment where time to market is key.
“The WTO would be a really unfortunate scenario because the market would be gone,” said Joanne Wilson, vice president of standards at ArrayComm. “It looks like this [South Korean-directed wireless standards] is a general issue that is coming up again and again.”
