Korean government has named tentative group of six online content providers – Google, Facebook, Netflix, Naver, Kakao, Wavve – as required to implement measures for ensuring “convenient and stable service”, pursuant to amended Telecommunications Business Act.
The companies, together said to represent 38% of average daily traffic in Korea, are seen as meeting volume threshold for applicability of requirements, including measures to secure service stability, handle user grievances and provide “reasonable” payment methods.
The tentative designations are to be finalized in early February 2021, after hearing input from the companies.
Further specifics of required measures await guidelines to be forthcoming in 2021 – timetable unclear at present.
The Korean government announced on January 18, 2021 that it has included six major online content providers (CPs) – Google, Facebook and Netflix, and leading Korean services Naver, Kakao and Wavve – on the near-final list of CPs required to adopt measures in order to maintain a “stable” supply of services for their users. As announced by the Ministry of Science & ICT (MSIT), it is these six CPs that have been found to satisfy usage/volume thresholds for value added telecom service providers (VSPs, including CPs) to which the requirements apply. The designations, which are pursuant to the Telecommunications Business Act (TBA) as amended in mid 2020 and the ensuing Presidential Decree (TBA-PD), are set to be finalized in early February 2021, following a last stage of review. There remains, meanwhile, much uncertainty regarding the actual measures that will be required, but the MSIT has indicated these will be elucidated by further guidelines, to follow in 2021.
As reported in our Legal Update at the time, the TBA as amended in May 2020 – popularly referred to as the “Netflix Law” and driven largely by a perception that foreign CPs enjoyed traffic out of proportion to their share of network costs – requires CPs and other VSPs meeting certain thresholds of scale to implement measures to better ensure “convenient and stable provision of services” to users. These are to include measures to secure stability, handle user grievances and provide reasonable payment methods for users, and to prepare corresponding internal guidelines. Itself lacking in a lot of details, the amended TBA came into effect on December 10, 2020, but the TBA-PD unveiled just before then, on December 8, 2020, stipulated the thresholds at least: The requirements apply to those VSPs that, during the last three months of the preceding calendar year, both (a) had 1 million or more average daily local users and (b) accounted for 1 percent or more of Korea’s average daily traffic volume.
Each of the six short-listed companies evidently satisfied those thresholds, according to the MSIT, in the October to December 2020 period, ranging from Google (over 82 million average daily users and 25.9% of average daily traffic volume) down to Wavve (some 1 million average daily users, 1.18% of average daily traffic volume). (The full announcement in Korean is accessible at this MSIT page.) The designation of subject companies will be finalized in early February, according to the MSIT, after viewing input from each short-listed company.
Interestingly, MSIT included Facebook (14.3 million users, 3.2%) in the short list notwithstanding the fact that Facebook, unlike the other companies, is not registered with the MSIT as a VSP. Evidently for these purposes the MSIT does not see that official registration as a necessary factor, but construes VSPs in terms of the nature of the service.
In addition to the requirement of taking “stabilizing” measures, an offshore company deemed subject to the “Netflix Law” will be obligated – if it does not already have a local business presence – to appoint a local representative for intake of user complaints and response to regulatory inquiries. (This mirrors an already existing requirement for online service providers under Korea’s Personal Information Protection Act.) Among the six companies on the short list, apparently this would apply to Google and Facebook.
As for the required “stabilizing” measures, what exactly this will entail on the part of the final designated companies remains a matter of doubt in any case. The TBA-PD elaborated the requirements in some respects, such as by clarifying that suitable measures to secure stability of the service can include: advance inspection by the VSP of its relevant telecom facilities (along with other measures, directly taken by the VSP, “to avoid technical problems”); measures to prevent overload of one set of telecom facilities, such as use of multiple servers, or “optimization of content transmission volume”; precautions against increases in traffic volume impacting on stability, such as expansion of server capacity, securing of faster internet connection and optimization of routing; and so forth. (The TBA-PD mentioned some methods to better handle user grievances as well.)
These would seem, however, only general indications of what could be suitable measures. Clarity for compliance purposes will have to await further guidelines, which the MSIT says it will draw up at some point in 2021, after taking in opinions from industry stakeholders. No specific timetable has been outlined beyond this.