AOL To Enter Korea’s ISP Market Next Year

America Online
will make its debut in the Korean market next year by joining forces with
Samsung Corp., posing a
threat to local online networks which have been enjoying energetic growth
in recent years.

AOL, the world’s largest online service provider, has reached an agreement
with the Korean conglomerate to form a strategic alliance to launch AOL
service in Korea starting early next year, according to a Samsung spokesman.

He said that the American giant would establish AOL Korea in a joint venture
with Samsung Corp. and that the two companies will iron out details about
when their representatives meet in Washington, D.C. later this month.

The collaboration between AOL and Samsung will cover a wide range of fields,
including online information services, group e-mail service, Internet
shopping
mall and contents. AOL will offer online service, Internet marketing and
various Internet-based technologies for the projected venture, the official
said.

AOL Vice President Neil Davis told reporters in Seoul that Asia has the
greatest potential for Internet businesses, noting that it is vital for AOL
to
enter the Asian market to maintain its leadership in global online service
business. Korea will be AOL’s third partner country in Asia after Japan and
Hong Kong.

“If America Online launches its operation in Korea next year, the
already crowded local online service market will probably be overheated,” said
an industry analyst. “However, consumers would benefit from AOL’s entry into
the market wide wider choice.”

Currently, there are six major online information services in Korea. They
include Chollian, Unitel, Netsgo and Hitel.

And competition between
them are heating up as they cut rates in a desperate bid to attract more
subscribers. Industry observers say that such competition will result in
slimmer profits for them.

Most local online service providers are spending more money on attracting
subscribers through advertisement and other marketing activities, rather than
on expanding facilities to provide users with better service.

Last year, Korean’s online communications service providers enjoyed a rapid
growth in both sales and the number of subscribers. They posted a sales
increase of 30 percent on an average during 1998.

The number of their subscribers
totaled around 5 million, showing a 40 percent increase from a year earlier,
according to statistics from the Ministry of Information and Communication.

Chollian, an online service of Dacom,
the market leader, has 1.43 million subscribers. Hitel of Korea PC Telecom
and Unitel of Samsung Data
System
(SDS)
have 1.18 million and 1.12 million, respectively.

However, some analysts point out that such a growth is not more than an
outward growth, still there are many things to be improved in terms of
service quality and user environment.

Most of their subscribers access the online service through modem and have to
pay expensive local call charges, which is not a flat monthly rate. For this
reason, users can hardly enjoy online information services and the Internet as
much time as they want.

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