A bill to amend the Korean Telecommunications Business Act (the “TBA”) was passed at the National Assembly’s plenary session on May 20, 2020.  The amendment, which sought to synthesize various proposals to regulate global content providers (“CPs”), requires value-added telecommunications service providers (“VSPs”) that exceed a certain size threshold to “secure means for stability of service.”  The amendment will be codified as the new Article 22-7 of the TBA and will become effective six months after it is promulgated by the President.  

Leading up to the passage of the amendment, many raised the possibility that the amendment would provide a legal basis for ISPs to charge “network use fees” to CPs.  The amendment does not, however, explicitly require CPs to pay network use fees or take responsibility for network quality.  Instead, it provides that the specific measures that CPs must implement to “secure means for stability of service” and “process user demands” will be set forth in the Presidential Decree to the TBA. Accordingly, the specific requirements for CPs under the amended TBA will remain undecided until the Presidential Decree to the TBA is amended.

The Ministry of Science and ICT (the “MSIT”), which has primary enforcement authority over the relevant provisions of the TBA, will prepare the proposed amendments to the Presidential Decree to set forth the specific requirements to be imposed on CPs.  During the earlier legislative process, the MSIT acknowledged the controversy over whether CPs should be responsible for network quality, indicating the MSIT may not fully support imposing such obligation on CPs.  However, the MSIT will face pressure to strengthen the regulation to tackle the problem of “reverse discrimination” against local CPs and in favor of global CPs, including by explicitly requiring global CPs to pay “network use fees.”  

Under the new Article 22-7, the scope of VSPs subject to the “stability of service” requirement will also be set by the to-be-amended Presidential Decree, based on factors such as the number of users and traffic volume.  As the amendment is intended to target CPs that generate large amounts of traffic, we can expect that only VSPs with fairly sizeable operations will be included.  VSPs meeting the threshold for the “stability of service” requirement will also be required under the new Article 22-8 to designate “domestic agents.”   

Given the importance of the Presidential Decree, it will be critical to monitor the progress of the MSIT’s work in amending it.  As the TBA amendment is expected to take effect at the end of November or early December this year, the MSIT will begin that work very soon.