An amendment to the Korean Telecommunications Business Act (the “TBA”), which requires value-added telecommunications service providers (“VSPs”) that exceed a certain size threshold to secure means for stability of service, was promulgated on June 9, 2020, and will become effective on December 10, 2020 (the “Amended TBA”).

Because of complaints about the “reverse discrimination” against local content providers (“CPs”) as a result of local CPs having to pay “network usage fees” while global CPs do not, various bills have been proposed to impose regulations on global CPs.  The Amended TBA requires VSPs exceeding a certain size threshold to secure means for stability of service. 

The Amended TBA provides that VSPs meeting certain thresholds prescribed by the Presidential Decree to the TBA (in terms of the number of users and traffic volume) will implement certain measures to secure means for stability of service and process user requests as set forth in the Presidential Decree.

Pursuant to the proposed amendment to the Enforcement Decree of the TBA (September 9, 2020) (the “Proposed Enforcement Decree”), VSPs subject to such measures will be required to meet all of the following:

• The number of its daily domestic users shall be one million or more on average for the three months immediately preceding the end of the previous year; and
• The amount of its daily domestic traffic shall account for 1% or more on average of the total traffic in Korea for the three months immediately preceding the end of the previous year.

Pursuant to the Proposed Enforcement Decree, “necessary measures” to be undertaken by the aforementioned VSPs to secure means of stability of service will mean all of the following measures that are within the scope of their authority and responsibility: 

• Implement technical measures for the prevention of excessive traffic concentration and technical errors (e.g., redundancy of servers and optimization of content transmission volume);
• Secure measures for stability regarding server capacity, uninterrupted internet connection, and traffic route, among others, taking into account traffic volume fluctuation trends;
• In implementing the measures described in Subparagraph 2, consult with the relevant service provider, including the facility-based telecommunication service providers (“FSPs”), if necessary, and notify the service provider in advance in case of a reason that may substantially impact the provision of stable service, such as a change in traffic route; and
• Establish its own guidelines on the provision of stable telecommunications service.

In addition, the “necessary measures” to be undertaken by the aforementioned VSPs to process user requests will mean all of the following measures: 

• Secure an online or automated response (ARS) telephone channel to receive user requests in the Korean language during business hours;
• In case of a substantial change in securing service stabilization measures, notify users of such change, its cause and contact information for any queries in relation thereto;
• If a user requests transmission of data generated under the Framework Act on Intelligence Informatization, establish a procedure for the user to receive such data;
• For users of paid service, provide multiple methods of service fee payment and authentication.

The Ministry of Science and ICT will be collecting comments from stakeholders during the pre-announcement period that will end on October 19, 2020.  After a review by the Regulatory Reform Committee and the Ministry of Government Legislation, the Proposed Enforcement Decree will likely be finalized around November 2020.  We advise monitoring the legislative process and actively presenting opinions as necessary.

On July 30, 2020, a bill to amend the TBA was proposed during the National Assembly meeting, which intends to prohibit global VSPs that run app market business from (i) leveraging their position to execute unfair agreements with mobile content developers, and (ii) registering mobile content with unlawful information.  As we expect there to be continuous efforts to push for legislations and policies to enhance the obligations and responsibilities of global CPs, we advise the relevant companies to continuously monitor this development as well.