The amended Telecommunications Business Act (“TBA”) took effect on June 25, 2019 after it was promulgated on December 24, 2018.  The amendment overhauled the existing telecommunications regulation based on the type of service providers and introduced obligations for service providers to notify users of any suspension of telecommunications services and compensate them for damages arising therefrom.

The Enforcement Decree of the TBA (the “Enforcement Decree”), which stipulates detailed obligations on notification to users of the suspension of services and standards/procedures for compensation, took effect on the same day.  The Enforcement Decree also requires service providers to notify users when value-added services of a certain size are suspended, further protecting users against service suspension.

Details of the Amended TBA and the Enforcement Decree:

1.   Reorganization of telecommunications regulation

The regime on facilities-based service providers (“FSP”s) was relaxed from requiring approval from relevant regulators to merely requiring registration or reporting, and specific service providers (“SSP”s), which were previously distinguished from FSPs, were consolidated with FSPs into a single category (i.e., all of them are now FSPs) under the TBA.

In particular, following the amendment, non-telecommunications businesses (including automobile and consumer electronics industries) seeking to sell supplemental telecommunications goods or services will only need to report as a FSP and be exempt from the requirement to obtain approval from the Minister of Science and ICT for cross-border supply agreements.  The amended Enforcement Decree specifies cases subject to requirements to register, and obligation to report, as facilities-based services, and also requires “still being able to provide goods or services even when removing the function to provide supplemental facilities-based services.”

2.   Obligation to notify users of suspension of telecommunications services 

Telecommunications service providers should notify their users of any suspension of services and the cause thereof, as well as the standards/procedures for possible compensation for damages arising from such service suspension.  Such notification should be made via email, mobile text message, or notification on the front page of websites.  Any telecommunications service provider that fails to notify its users as above may be subject to an administrative fine of up to KRW 10 million.

This requirement applies to both FSPs and SSPs; provided, however, that the suspension of the following shall be exempt from such notification requirement: (i) telecommunications services with less than KRW 10 billion in annual sales; (ii) value-added services with less than 1 million daily users on average; or (iii) telecommunications services provided to users without charging regular usage fees.

3.   Extraterritorial application

Any overseas action “affecting the Korean market or Korean users” is subject to domestic laws.

Implications:

As the amended TBA not only reorganized telecommunications regulation but also relaxed entry barriers for service providers selling goods or services including ancillary telecommunications services, connected car or IoT service providers will be more easily able to release supplemental telecommunications services.

Meanwhile, the amended TBA also broadly imposed obligations to notify users of any suspension of services and provide compensation, and because such obligations may also apply to overseas service providers together with the extraterritorial application provision, it will be prudent to examine internal notification procedures for any service suspension in advance.