Korea passes telecom law amendment that will require major content
providers (CPs) to take measures for maintaining “stable” services, and, if
offshore, to appoint local representative
Amendment of Telecommunications Business Act, set to take effect in late
2020, will require value added telecom service providers (VSPs, including CPs),
of certain thresholds of scale, to take measures to supply “convenient and
stable” service to users.
Offshore VSPs, satisfying thresholds, will be required to
appoint local representatives to handle user protection matters.
Specifics, including thresholds and required measures, are
left to be defined by regulations that will follow in 4Q 2020.
New requirements are widely seen as targeting major
offshore CPs such as Facebook, YouTube and Netflix – legislation stems partly from
ongoing Facebook dispute with regulator over server re-routing and slowdown in
2017, and gained transaction from other recent offshore CP friction with
domestic ISPs.
The Korean National Assembly has
passed a set of amendments of a main telecom statute that will require some
scope of measures to better assure quality of service, on the part of major content
providers (CPs). Under the amendments to the Telecommunications Business Act (TBA) passed on May 20, 2020 (see e.g. this news
article in Korean), and likely to take effect in December 2020, “value
added telecom service” providers (or VSPs, a term generally
encompassing CPs) that meet certain thresholds of scale will be required, in
broad language, to take measures
necessary in order to “supply convenient and stable” services to their users. At this stage the new requirement is of unclear
application and scope. The thresholds, to define the scope of affected CPs, are
not specified in the amended TBA itself (apart from an indication that this
should be in terms of “user numbers, traffic volumes, etc.”); nor does the
amendment usefully spell out any of the service maintenance/enhancement
measures to be required. Rather, these are left to be defined in subsequent regulations,
mainly to be drafted
by the Ministry of Science & ICT, the principal
regulation being a Presidential Decree (TBA-PD) that will be issued prior to the late 2020 effective date of the
amended statute.
Also under the amended TBA, VSPs meeting
those thresholds (to be determined), but lacking a local address or business presence, must
appoint a local representative, to handle tasks associated with protecting users’ interests, including by
responding to user complaints, and meeting the
regulator’s requests for information relating to the role. This requirement as
well[1] must for now await specifics of applicable thresholds, which are to follow in
the TBA-PD. Aside from the thresholds, a potential question is how this all is
to mesh with a pre-existing VSP registration requirement, which never saw uniform,
rigorous application to offshore enterprises.
The TBA amendment, having moved
through the National Assembly in brisk fashion, lacks the extended legislative
history that might furnish guidance on the forthcoming regulations. Probably some general surmises
may be drawn from the fact that impetus for the legislation included the
dispute between Facebook and the Korea Communications Commission stemming from Facebook’s
2017 re-routing of service and the resulting, highly noticeable slowdown in use
of the social network (see our prior report from the primary stage of the
dispute),
a dispute that is now in the appellate litigation stage (following a Facebook
win in the first court – see e.g. our August 2019 bulletin and this news report in English). A more recent flash
point has been a high-profile Netflix dispute with SK Broadband over network
fees. (See e.g. this
news report on the TBA amendment in
English, which echoed such sentiments.) More generally, the TBA amendment gained traction from continuing, vocal
discontent, in various quarters, over a perceived imbalance in favor of major foreign-based
online service providers, including Google (YouTube) – the perception being
that they account for vast traffic volumes yet assume less than a fair share of
network costs. Previous fallout has included regulatory scrutiny for suspected
“reverse discrimination” by the main ISPs in Korea, as noted in our August 2019 bulletin.
Assessment of the fuller impact will have to await the TBA-PD (the prime
implementing regulation), of which a draft may come in 4 to 5 months. The
amended statute itself will take force 6 months from the formal promulgation
date, which looks to be around the start of June, so that the effective date
will likely be early December 2020. Pending questions include the nature and
scope of the new requirements, and especially the extent to which these might
rise to an obligation to bear added costs.
[1] This requirement, in the
way it is couched, appears to mirror an existing requirement, likewise to
appoint a local representative, which applies to large-scale online service
providers lacking a local presence, under the separate Act on Promotion of Information and Communications Network
Utilization and Data Protection, Etc. (For context and details of that
requirement, see e.g. our April 2019 bulletin.)