|
|
|
|
|
Newsletter | May 2014, Issue 2 |
|
|
|
|
|
|
Technology, Media & Telecommunications |
|
|
|
Recent Developments in Broadcasting Regulations |
|
|
|
Recent regulatory developments in the ever-changing broadcasting environment are summarized below. |
|
|
|
Amendment to the Enforcement Decree of the Broadcasting Act Promulgated |
|
|
|
On February 5, 2014, the Korean government promulgated an amendment to the Enforcement Decree of the Broadcasting Act ("Amendment") in an effort to relax restrictions on the ownership and management of system operators ("SOs", i.e., CATV broadcasting business operators). |
|
|
|
The key aspects of the Amendment are as follows: |
|
|
|
Abolishment of the Territorial Restriction: Previously, one SO, including its affiliates, could only operate its SO business in up to 1/3 of all SO territories. (Since there are currently 77 SO territories, this restriction essentially limited one company from owning SOs in more than 25 territories.) However, the Amendment has removed this territorial restriction. |
|
|
|
Easing of the Subscriber Restriction: Previously, one SO (including its affiliates) could only have up to 1/3 of the total number of CATV subscribing households as its subscribers. However, the Amendment has relaxed this restriction so that one SO (including its affiliates) can now have up to 1/3 of the total number of CATV, satellite broadcasting and IPTV subscribing households as its subscribers. |
|
|
|
As a result, a SO is now permitted to operate its business in more than 25 territories, and mergers and acquisitions between large MSOs (multi-SOs) may be permitted. |
|
|
|
Foreign Shareholding Limitation in Korean Program Providers to be Abolished for Indirect Investments Made by American Companies |
|
|
|
Pursuant to the Korea-US Free Trade Agreement ("KORUS FTA"), the current 49% foreign shareholding limitation in Korean program providers ("PPs", i.e., channel operators) will be abolished for indirect investments made by American companies by March 15, 2015. The KORUS FTA allows the Korean government to continue the same shareholding limitation on direct investments in PPs, but requires the Korean government to abolish the shareholding limitation on indirect investments in PPs within three years after the KORUS FTA comes into force. Since the KORUS FTA became effective on March 15, 2012, this means that the Broadcasting Act must be amended by March 15, 2015 to allow the Korean subsidiaries of American companies to own up to 100% of Korean PPs. It should be noted that the relaxation on foreign indirect investment does not apply to general service channels, news channels and home shopping channels. |
|
|
|
Joint Study Group Established to Revise Two-Track Regulatory Scheme |
|
|
|
Criticism of the two-track regulatory regime has increased due to the recent expansion of the paid-for television market and growing competition between different broadcast media. In response, the Ministry of Science, ICT and Future Planning and the Korea Communications Commission began to revise the regulatory scheme by creating a joint study group (“Joint Study Group”) for establishing a combined Broadcast and Internet Protocol Television (IPTV) Act. |
|
|
|
Currently, the Broadcasting Act regulates cable television and satellite television, while the IPTV Act regulates IPTV. The Joint Study Group plans to enhance regulatory fairness by comprehensively reviewing the existing regulatory regime - including the existing business classification scheme, ownership-entry rules and conduct regulation regime - to transform the present vertical regulatory system that is classified by the equipment used, to a horizontal regulatory regime that is classified by the type of service provided. |
|
|
|
A proposal for the integrated Broadcast IPTV Act is expected to be submitted to the National Assembly during the first half of 2015. In this regard, relevant business stakeholders should carefully monitor this and other changes in the regulatory landscape. |
|
|
|
Back to Main Page |
|
|
|
|
|
If you have any questions regarding this article, please contact below: |
|
|
|
|
|
|
|
For more information, please visit our website: |
|
|
|
|
|
|
|