New Korean Legislation for Stability of Digital Services

On January 30, 2024, a Korean legislator introduced a bill titled “the Bill on Management and Support for Stability of Digital Services” (the “Bill”) to the National Assembly for deliberation.

The Bill aims to integrate the various obligations for stable digital services that are currently scattered across different Korean statutes, namely, the Broadcasting Development Act, Network Act, and Telecommunications Business Act (“TBA”). In addition, the Bill strengthens the sanctions against violations and imposes new obligations. For example, under the Bill:

A penalty surcharge will be imposed for failure to submit a “disaster management plan” (“Management Plan”) or comply with an order to supplement it;
“Major digital service providers” (“Major Service Providers”) must prepare and release an annual service stability report; and
Measures to prevent and respond to disasters or service failures will be required.

Below is a key summary of the Bill.

Definition of Major Service Providers

Under the Bill, Major Service Providers include facilities-based telecommunications service providers (“FSPs”), data center operators, and value-added telecommunications service providers (“VSPs”) exceeding a certain size. More specific criteria will be set forth in the Presidential Decree, which will supplement the Bill if passed. Therefore, the range of Major Service Providers regulated under the Bill could expand.

Obligations of Major Service Providers

Establish a Management Plan and Implementation Plan

Major Service Providers must establish and implement a Management Plan for the stability of their services annually. The Ministry of Science and ICT (“MSIT”) is authorized to require Major Service Providers to submit documents and materials, conduct on-site investigations or inspections, and order corrective actions to ensure the implementation of Management Plans.

The procedures for establishing and implementing a Management Plan under the Bill are similar to the existing procedures under the Broadcasting Development Act, Network Act, and TBA, with the following differences:

(i) The Bill specifies the items to be included in a Management Plan (e.g., matters related to processing user requests and user protection measures).

(ii) The Bill requires reports on the status and related information regarding the implementation of the Management Plan.
(iii) The MSIT may impose a penalty surcharge against a Major Service Provider that fails to submit a Management Plan, comply with any order to supplement it, or comply with any corrective order following an inspection on the implementation status.
(iv) To minimize redundant enforcement, the MSIT may waive inspection of certain items in the Management Plan that have already been inspected or evaluated and confirmed.

Designate a Domestic Agent

A VSP that qualifies as a Major Service Provider but has no domicile or place of business in Korea must designate a domestic agent who will be responsible for submitting the Management Plan on its behalf. If there is a Korean entity controlled by the VSP (e.g., a Korean subsidiary), that entity must be designated as the domestic agent.

Prepare and Release Service Stability Reports

FSPs and VSPs that qualify as Major Service Providers meeting certain additional criteria must prepare and release a “service stability report” annually. The report must include information concerning investment, human resources, certifications, internal training and education, and other efforts to secure the stability of the company’s services.

Measures to Prevent and Respond to Disasters or Service Failures

Major Service Providers must (i) conduct simulation trainings in preparation for disasters or service failures and cooperate with any joint simulation trainings conducted by the MSIT, and (ii) maintain a record of access to and operation of their information systems to efficiently and promptly respond to any disasters/service failures and identify the cause.

Major Service Providers must report any disaster/service failure to the MSIT without delay. Reportable disasters/service failures will be set forth in the Presidential Decree. Further, Major Service Providers must report the progress of recovery from any disaster/service failure to the “Digital Crisis Management Headquarters” to be established by the MSIT.

The MSIT may investigate the reported disaster/service failure and the Major Service Provider’s response thereto. In that regard, the MSIT may order the Major Service Provider to preserve and submit relevant materials and/or conduct an on-site investigation.

5.	Other Obligations

FSPs and data center operators that qualify as Major Service Providers must self-rate their facilities based on potential impact on public interest in the event of a disaster/service failure: After reviewing the self-ratings, the MSIT will assign its own rating to the facilities considering the facilities’ importance to public interest.

Designate a stability control manager: Major Service Providers must designate a stability control manager and if their sales exceed a certain threshold (to be set in the Presidential Decree), operate a team dedicated to managing the stability of digital services.

Additional Obligation of Data Center Tenants

Similar to the Network Act, the Bill imposes obligations on certain data center tenants. Specifically, if a data center tenant possesses exclusive control and operation of the leased facilities, the tenant bears the obligations of implementing the data center operator’s Management Plan and reporting of any disaster/service failure that may occur at the facilities. Also, the Bill allows the MSIT to request materials from and inspect the data center tenant’s premises to check the Management Plan implementation status.

Outlook

Since early 2023, the MSIT had announced plans to integrate the various statutory obligations for stable digital services. As the Bill mainly consolidates existing obligations and regulations, it is possible that the National Assembly will consider and pass it relatively quickly. We recommend close monitoring, and as necessary, prompt legislative advocacy.

[Korean Version]

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