I OVERVIEW

In Korea, the TMT business is recognised as a major industry, and the government has nurtured its growth. Recent government policies regarding the TMT industry have focused mainly on the following areas: convergence, market-friendly regulatory reform and personal data protection. The specific contents of such policies are discussed in detail below.

As part of such policies, the Korea Communications Commission (KCC) was established on 29 February 2008 by merging the Ministry of Information and Communication (in charge of regulations concerning telecommunications, internet, security and spectrum policy) and the Korean Broadcasting Commission (in charge of regulations concerning television, radio and data broadcasting). In 2013, with the inauguration of the Geun-Hye Park administration, the new Ministry of Science, ICT and Future Planning (MSIP) was established. The MSIP took over some of the KCC’s responsibilities, such as the convergence and promotion of broadcasting and telecommunications as well as the management of radio waves. Accordingly, the government is currently managing the TMT industry under the twin-control system.

The 2016 MSIP Action Plan, which was released on 27 January 2016, states that the MSIP’s main policy goal in 2016 is ‘accelerating growth through the creative economy based on science, technology and ICT’. The KCC’s main tasks in 2016 include:

  • a strengthening public accountability of broadcast media and media literacy;
  • b promoting user protection and fair competition in the broadcasting and communications sectors;
  • c enhancing content competitiveness and enabling new broadcasting and communications services; and
  • d establishing a legal framework for the convergence between broadcasting and communications.

II REGULATION

i The regulators

The agencies in charge of TMT in Korea are the MSIP and the KCC.

The main duties of the MSIP are as follows:

  • a establishment of combined policies for broadcasting or and telecommunications;,
  • b promotion of combined services and technological development;
  • c establishment of policies for telecommunications (including the internet);
  • d establishment of policies for radio waves and management of such resources; and
  • e establishment of policies for network.

The main duties of the KCC are as follows:

  • a establishment and enforcement of broadcasting policies;
  • b promotion of competition in the broadcasting market;
  • c establishment of policies to protect broadcasting and telecommunications consumers, investigate unfair trade practices of broadcasting and telecommunications companies and perform dispute resolutions; and
  • d prevention of distribution of illegal or harmful information.

As noted above, the convergence of broadcasting and telecommunications, and the policies regarding telecommunications, radio waves and networks that were previously under the authority of the KCC, have been transferred to the MSIP. Under the new regime, the KCC will be in charge of policies for broadcasting regulations, investigating and sanctioning violations and policies for user protection.

The KCC was responsible for crucial activities concerning the TMT market, such as making legislative proposals in Korea, establishing and enforcing policies and making quasi-judicial decisions if there are disputes or objections. In particular, the KCC had the authority to approve applications by broadcasting operators and telecommunications service providers (both new companies and renewals), and it had considerable influence in the relevant markets based on the regulations for relevant acts.

Since the TMT market in Korea is an oligopolistic market, the Korea Fair Trade Commission (KFTC), which is the competition authority in Korea that regulates oligopolies, and oversees regulations concerning abuse of market dominance, cartels and business combinations, regulates such aspects of TMT. However, since the KCC sometimes has taken into consideration other policy matters besides promotion of competition, there have been times where the policies or regulations of the two agencies conflicted. However, due to the duties shared with the MSIP, it is anticipated that the KCC’s role and influence, such as the aforementioned matters, will likely change.

In addition, with respect to areas involving personal data protection, the Ministry of Interior (MOI) has become the main regulator.

ii Main sources of law

The following areas are regulated by the following laws:

  • a telecommunications (including internet and IP-based services): the Telecommunications Business Act, the Framework Act on Telecommunications, the Act on the Promotion of Information and Communications Network Utilisation and Information Protection, etc. (Network Act), the Framework Act on Broadcasting Communications Development and the Internet Address Resources Act;
  • b spectrum policy: the Radio Waves Act;
  • c media (broadcasting): the Broadcasting Act; and
  • d security: the Personal Information Protection Act (PIPA), the Network Act and the Act on the Protection, Use, etc. of Location Information and the Protection of Communications Secrets Act.
iii Main regulatory issues
Ownership and market access restrictions in the TMT area
Ownership and market access restrictions in broadcasting under the Broadcasting Act

Broadcasting

Classification

Quota for
single person

Daily newspapers/news broadcasting

Large enterprises

Foreign nationals

Terrestrial broadcasting (approval required)

40%

10%

10%

Prohibited

Cable broadcasting (approval required)

None

49%

None

49%

Satellite broadcasting (approval required)

None

49%

None

49%

Comprehensive service programme provider (approval required)

40%

30%

30%

20%

News programme provider (approval required)

40%

30%

30%

10%

Other programme provider (registration required)

None

None

None

49%

In an effort to ease the restrictions on foreign indirect investment in registered programme providers, the Broadcasting Act provides that domestic companies in which more than half of the stocks or shares are owned by foreign nationals, organisations or governments of free trade agreement partner countries as prescribed by the MSIP may own stocks or shares of registered programme providers (other than comprehensive service programme providers, news programme providers and shopping programme providers) without restrictions.

Ownership and market access restrictions in telecommunications under the Telecommunications Business Act

Telecommunications

Classification

Domestic resident

Foreign ownership

Major common carriers (e.g., SKT, KT and LGU+) (approval required)

The MSIP’s public interest review is required if the shareholder of the common carrier owns over 15% of the outstanding shares; there is a change in the majority shareholder; or there is a change in the de facto majority shareholder

49% (including ownership of all foreign nationals and foreign governments). A company in which more than 15% of the issued shares are owned by foreign governments or foreign nationals as the largest shareholders will be considered as a ‘foreign national’.

With respect to market access restrictions in the area of TMT, there are regulations concerning, inter alia, approval, completion of registration and a report to the MSIP or the KCC. In the case of supplementary communications businesses (which includes businesses that provide content on the internet), the only requirement is that a report be made to the MSIP. On the other hand, amendments to the Broadcasting Act on 22 June 2015 have introduced a provision that restricts specific platform operators’ monopoly on the pay broadcasting business by prohibiting specific cable operators and satellite broadcasters from providing services to more than one-third of the total pay TV subscribers.

From 15 October 2011, in order to promote competition and create an environment for fair competition in the broadcasting market, the Broadcasting Market Competition Status Evaluation Committee was established and evaluates the state of competition in the broadcasting market.

iv Transfers of control and assignments

Broadcasting businesses, network operators, music broadcasting operators and electronic display operators must obtain approval from the MSIP if a transfer of control includes a merger or split-off. A company must also obtain the MSIP’s approval if it wants to:

  • a take over a portion or all of the business of a common carrier;
  • b merge with a common carrier;
  • c sell telecommunications circuit equipment that is necessary as an approved common carrier;
  • d own over 15 per cent of the outstanding shares of a common carrier;
  • e become the majority shareholder for a common carrier; or
  • f be a key telecommunications business operator that establishes an entity to provide portions of key telecommunications business services that were previously approved and provided.

In the above-mentioned situations, the filing and approval process may take place at the KFTC. Overall circumstances such as concerns regarding a monopoly in the relevant market, impedance of competition, protection of consumers’ right to choose and profitability, and securing the competitiveness of broadcasting and telecommunications operators, are taken into consideration.

The MSIP also has regulations that prohibit broadcasting operators and telecommunications service operators from discriminating among users of services.

In principle, the assignment or licence transfer of business rights is not permitted.

Requirements and procedures for obtaining licences

In the case of broadcasters or common carriers, with respect to available radio wave spectrum, facilities and workforce, a strict examination by the MSIP or the KCC is required. However, in the case of other businesses besides the above (i.e., cases where only registration or a report is required to obtain a licence), the examination is relaxed.

If a company that wants to engage in a broadcasting business submits an application for approval to the MSIP (in the case of terrestrial broadcasting, to the KCC), the MSIP (in the case of territorial broadcasting, the KCC) will make its determination within 90 days (in the case of comprehensive service programme providers and news programme providers, within 60 days) of the date of the submission of such application, and, in the event that such application is approved, a licence is granted to the applicant company.

In the case of common carriers, if an application for approval and a business plan are submitted to the MSIP, the MSIP will notify the applicant carrier of the results of the application and conditions for implementation within 60 days (in the case of providing services after receiving a spectrum assignment, 90 days) of the date of submitting the application and, if the applicant carrier abides by the conditions for implementation, the MSIP will provide the licence.

III TELECOMMUNICATIONS AND INTERNET ACCESS

i Internet and internet protocol regulation
 

Previous

Current

Common carrier services

Telephone services

Transmission services

Telex services

Internet access services

Internet telephone services

Other services

Mobile services

Mobile services

Telecommunication circuit equipment rental services

Telecommunication circuit equipment rental services

Supplementary services

Services that do not constitute services by common carriers

Services that do not constitute services by common carriers and online service provider’s copyright-related services and services that transmit data between users using computers

Under the Telecommunications Business Act, on 20 July 2004 internet and IP-based services were changed to internet access services and included as common carrier services, and after including internet telephone services as common carrier services on 21 October 2005, on 15 December 2007, telegraphic and telephone services were combined into transmission services.

While, historically, internet and IP-based services (unlike traditional telephony) were divided into supplementary services, from 20 July 2004, they have been categorised as common carriers and, from 15 December 2007, as was the case with telegraphic and telephone services, they are categorised as transmission services.

ii Universal broadband service

Pursuant to the Framework Act on National Informatisation, the government is promoting the establishment of an integrated broadband communications network. In order to promote this network, which is a high-speed, large-capacity communications network where multimedia services converging telecommunications, broadcasting and the internet are available at any time, the MSIP and the Ministry of the Interior (MOI) may form, regulate and operate an integrated broadband research network (i.e., a communications network for testing and verifying technologies and services related to the integrated broadband communications network and for supporting related research and development) by designating an agency that will dedicate itself to such tasks.

When the MSIP and the MOI designate an exclusive agency to form, regulate and operate an advanced research network, the government may provide funding to such agency for costs associated with the research and development of an integrated broadband communications network.

iii Restrictions on the provision of service

The cost for the use of telecommunications and internet services is paid by the end-user. However, in the case of the disabled and lower-income brackets, reductions in the cost would be allowed. The MSIP is the competent government authority that regulates the terms and conditions of such services agreed between the end-user and the service provider. The Telecommunications Business Act, as amended on 27 January 2016, prohibits telecommunications service providers from falsely notifying or describing, or failing to notify or describe, material terms and conditions of the services such as charges and discounts. Non-compliance with corrective orders issued by the MSIP is subject to enforcement fines.

Currently, network operators treat all traffic that is transmitted on their network equally without considering the content, type, service, type of terminal, or sender or recipient of such traffic. However, there are arguments that a ‘network usage fee’ should be imposed upon internet content providers that cause heavy traffic, such as through mobile messenger services or internet phone services. While common carrier service providers are of the position that a network usage fee should be imposed, internet content providers take the opposite position. Generally, with respect to the contents that are transmitted through the network of a network operator, in principle, such operator does not interfere, monitor or control such contents. However, as an exception, with respect to obscene and harmful contents to minors, the relevant law is interpreted as requiring the ISP to monitor such content.

iv Security

The Framework Act on Telecommunications provides for sanctions for persons who have publicly made a false communication over telecommunication equipment.

A new personal information protection law, the PIPA, took effect on 30 September 2011 (but was not fully implemented until 1 April 2012). Previously, the government enforced personal data protection mainly under the Act on Protection of Personal Information by Public Institutions, the Use and Protection of Credit Information Act or the Network Act. These Acts provided certain standards and principles relating to the processing and use of personal data, but they only applied to public entities or certain business sectors, such as ISPs or credit information companies. In contrast, the PIPA proposes comprehensive data protection principles that will apply to all data processors, including public entities, businesses, organisations and individuals handling personal data in their databases. Unless otherwise provided for in any other law, including the Network Act, all matters relating to personal data are now governed by the PIPA.

For each step of collection, use, provision, entrustment and destruction of personal data, comprehensive and specific regulations (including obtaining consents from users) regarding the handling or processing of such personal data have been established.

In the event that a data processor becomes aware that personal data has leaked, it should notify:

  • a the relevant data subject of the items of personal data leaked;
  • b when and how the leak occurred;
  • c information such as the means available to the subject of the data to minimise damage that could be inflicted due to the leak;
  • d the data processor’s actions and damage limitation procedures; and
  • e the department in charge of the matter.

In cases where the personal data of 10,000 or more data subjects are leaked, a report must be made to the MOI or Korea Internet and Security Agency (KISA) without delay.

Regarding the protection of personal data of children under 14, the consent of a legal guardian (usually a parent) is required in order to obtain their collection, use or provision. Regarding the protection of juveniles, telecommunications operators are required to appoint a person to be in charge of juvenile matters and immediately remove any improper media that does not comply with the requirements, or improper advertisements that do not have appropriate measures in place to prevent access by juveniles from their communications network.

In order to respond appropriately to certain acts, such as distributing malicious programs, causing problems in the communications network or hacking into a communications network without authority, the MSIP may commission the KISA to carry out certain tasks regarding collection of information on infringements, such as issuance of warnings, emergency measures and countermeasures. If any infringement occurs, telecommunications service providers should also analyse the cause, prevent the damage from spreading and immediately report such infringement to the MSIP or the KISA. Upon receiving such report or becoming aware of such incident, the MSIP or the KISA should take necessary measures, and as for material infringements, it may organise a civil–public joint investigation group to analyse the cause of such incident.

IV SPECTRUM POLICY

i Development

In the wake of the expanded commercial use of spectrum, spectrum policy has shifted from control and regulation to becoming more focused on the supply and reasonable distribution of spectrum resources so as to improve the effective use of spectrum. To this end, an allocation-for-price system and a system that enables the withdrawal and redistribution of spectrum have been adopted.

ii Flexible spectrum use

The government intends to secure spectrum for mobile use in order to balance the supply and demand between services and to contribute to the creation of economic value. In addition, with respect to methods to utilise the 700MHz frequency band following the termination of analogue broadcasting, there have been differences in views regarding whether such frequency band should be assigned for ultra-high definition (UHD) terrestrial broadcasting or assigned for mobile communication bands. On 19 August 2015, a task force that was set up by the KCC and the MSIP to establish Korea’s UHD terrestrial broadcasting policy held its first meeting to discuss the government’s plan to distribute the 700MHz frequency band for UHD broadcasting among terrestrial broadcasters. As the 700MHz frequency band allocated for mobile services failed to sell at the auction organised by the MSIP on 2 May 2016, it is expected that the MSIP will further present how to take advantage of the frequency band when it announces the ‘K-ICT Spectrum Policy’ in the second half of 2016.

iii Broadband and next-generation mobile spectrum use

The MSIP plans to establish and implement medium and long-term development plans for the broadcast communication network. Specifically, the MSIP is promoting the enhancement of the broadcast communications infrastructure by aggressively supporting the development and use of 4G mobile communications, LTE and LTE-A, which is an improved mobile communication with over twice the transmission speed of LTE. As a result of the above, subscribers to LTE, a type of 4G service, exceeded 44 million as of June 2016.

In April 2016, in response to the growing mobile media traffic, the MSIP announced the ‘K-ICT Grand Spectrum Auction 2016’, which would additionally allocate for mobile services (1) 40MHz bandwidth in the 700MHz band (A block); (2) 20MHz bandwidth in the 1.8GHz band (B block); (3) 20 MHz bandwidth in the 2.1GHz band (C Block); (4) 40MHz bandwidth in the 2.6GHz band (D block); and (5) 20MHz bandwidth in the 2.6GHz band (MHz) (E block). At the auction organised by the MSIP on 2 May 2016, all these blocks except for A block were allocated to three mobile network operators. The MSIP views that the allocation of frequency bands will solve mobile traffic by 2020, and create a mobile environment that entails ICT-related investments.

The MSIP has also established a 5G development plan aiming to commence 5G trial services in 2018 and 5G commercial services in 2020. In that regard, in May 2016, the MSIP held the ‘Fourth 5G Strategy Promotion Committee Meeting’ to share the current status and future plans for 5G services with experts in private sectors including domestic mobile carriers and manufacturers. The Committee, in particular, agreed to hold the world’s first 5G Olympics during the 2018 Pyeongchang Olympics by designating Pyeongchang as ‘Free 5G Zone’ and offering 5G trial services. The Committee also published technical specifications for 5G trial services as developed by KT, Samsung Electronics and other global mobile manufacturers. The MSIP plans to accelerate the development and deployment of 5G trial networks and new 5G services by expanding support for the ‘Smart Grid Demonstration Project’, which has been pursued by three private consortia.

iv Spectrum auctions and fees

While in the past spectrum was distributed in Korea through an allocation system based on a determination of the technical and financial abilities of a common carrier or CATV system operator, following amendments to the Radio Waves Act (effective 24 January 2011), in the case of spectrum with high competitive demand, the distribution system was adopted based on price competitiveness. In addition to the MSIP holding auctions to assign 2.6GHz and 1.8GHz spectrum bands to mobile communication companies in 2013, it has announced the ‘Mobile Gwanggaeto Plan 2.0’ for additionally supplying 1.190GHz bandwidth in four phases starting in 2015. In phase 1, the MSIP will secure at least 60MHz bandwidth, including 20MHz bandwidth in the 2.6GHz band and 40MHz bandwidth in the 2.5GHz band, by the end of 2015 on top of the already secured 110MHz bandwidth, which includes 40MHz bandwidth in the 700MHz band, 30MHz bandwidth in the 1.8GHz band and 40MHz bandwidth in the 2.6GHz band. In phase 2, 290MHz bandwidth will be additionally secured by 2018. In phase 3, a total of 220MHz bandwidth will be added by 2021. In phase 4, at least 510MHz bandwidth will be additionally secured by 2023.

Pursuant to the Radio Waves Act, which authorises the MSIP to establish annual public frequency supply plans, the MSIP is expected to announce a ‘K-ICT Spectrum Plan’ in October 2016. While the existing ‘Mobile Gwanggaeto Plan 2.0’ is a frequency plan only for mobile communications, the K-ICT Spectrum Plan will be a long-term plan to effectively cope with public frequency demands (e.g., intelligent traffic systems), encompassing other sectors in addition to mobile communications. The MSIP plans to allocate 100MHz bandwidth for the internet of things, 160MHz bandwidth for drones, and 70MHz bandwidth for autonomous vehicles.

V MEDIA

i Restrictions on the provision of service

Broadcasters must ensure that their programmes meet the criteria of impartiality, public nature, variety, balance, veracity, etc., and the percentage of the schedule allocated to a private broadcasting business operator (referring to the viewing hours for specific programmes compared with the total viewing hours) must not exceed 30 per cent; this does not apply to state-financed programming.

Broadcasting business operators must clearly separate commercials from programmes broadcast so as to avoid any confusion during programmes aimed primarily at children, and captions must be used to signify commercials under conditions prescribed by presidential decree so that children may distinguish broadcast programmes from commercials.

Where broadcasting business operators supply broadcast programmes to other broadcasting business operators, they must supply them at fair and reasonable market prices and without any discrimination.

ii Internet-delivered video content

Since video content has started to be distributed on the internet, consumers now have a more convenient method of accessing videos. Korea is one of the leading countries with a well-equipped internet infrastructure. However, since broadcasting has been maintained at the same level as in the past, there have been no particular negative effects for those who cannot afford internet access to watch video content.

Meanwhile, as videos and other works are distributed on the internet, ISPs are required to take technological and other necessary measures to block illegal transmissions of works upon request of the copyright holders of such works.

VI THE YEAR IN REVIEW

i Key decisions and cases

On 1 June 2016, the Supreme Court of Korea ruled on one of the cases associated with the KCC’s regulations on comprehensive programming channel operators. In January 2014, the KCC imposed fines on four comprehensive programming channel operators for their failure to abide by the business plans for content investment and rebroadcasting that they had submitted to the KCC back in 2012 as a condition of approval as comprehensive programming channel operators. In an action filed by the operators against the fines, the Seoul Administrative Court ruled for the operators, accepting their argument that the business plans were no longer viable in the face of an unanticipated level of competition in the TV broadcasting market which entailed decline in their earnings. On appeal, the decision was reversed by the Seoul High Court, which found that compliance with the business plans was a condition of approval as comprehensive programming channel operators under the Broadcasting Act, and the operators are obligated to fully abide by the business plans. The Supreme Court of Korea upheld the decision of the Seoul High Court.

Some recent cases on personal data protection in electronic communications have also drawn public attention. On 10 March 2016, the Supreme Court of Korea ruled that a telecommunications operator that provided a user’s communications data to law enforcement agencies in compliance with procedural requirements as prescribed by law should not be deemed to unlawfully infringe the user’s informational self-determination or freedom of expression, which may be restricted if necessary in the public interest. In another case associated personal data protection, the Supreme Court of Korea viewed that personal data that has already been disclosed may be provided to a third party for a fee even without a separate consent of the data subject.

ii Legislation
Amendments to the Network Act

In response to massive data leaks involving mobile carriers and banks, the Network Act has been recently amended to provide for reliable network security and to introduce punitive damages for data leaks. The key aspects of the amendments include:

  • a the privacy officer is required to immediately take corrective actions when he or she becomes aware of violation of personal data protection under the Network Act or any relevant laws;
  • b punitive damages may be awarded against communications service providers for personal data leaks, thefts and counterfeits, and profits derived as a result of personal data breach may be confiscated;
  • c if smartphone application developers require access to the user’s smartphone to run applications, they must provide the user with detailed information about selective access and necessary access, and obtain consent from the user;
  • d unless otherwise provided in other laws or requested by the user, personal data shall be destroyed after one year; and
  • e if communications service providers provide personal data to a third party for the third party’s processing the personal data on their behalf, they must give training to the third party.
Amendments to the Act on the Protection, Use, etc. of Location Information

Amendments to the Act on the Protection, Use, etc. of Location Information took effect on 2 June 2016. The amendments aim to cope with the issues of unauthorised use of individuals’ location information by further limiting access to such information. Under the amendments, not only officers or directors, but also any employees, of location-based service providers cannot be authorised to access the user’s location information.

iii Key mergers or takeovers

On 18 July 2016, the KFTC rejected the proposed acquisition of a cable operator CJ HelloVision by SK Telecom (SKT), the nation’s largest mobile company by subscribers, and subsequent merger between CJ HelloVision and SK Broadband, an IPT unit of SKT. The proposed merger drew great public attention as it would have given birth to a mega giant in the cable and telecommunications industries. With the KFTC’s rejection, however, SKT terminated the merger plan, and withdrew approval applications for the proposed acquisition and merger that it had filed with the KFTC and the MSIP.

iv Policies

On 27 January 2016, the MSIP announced the Ministry’s 2016 tasks and policy plans which focused on joining the top seven countries for start-ups, securing core technologies, and ensuring competitiveness in the ICT and new industries.

VII CONCLUSIONS AND OUTLOOK

As personal data leaks both on small and large scales continued to occur during the past year, personal data protection has come to be recognised as a serious social issue. In an effort to address the issues associated with personal data protection, the PIPA has been amended, and guidelines on personal data protection for Big Data and smartphone applications have been published. In addition to ensuring effective protection of personal data, the government is also expected to improve legal frameworks for emerging new industries, convergence of broadcasting and telecommunications services, and other rapid changes in the TMT sectors.

Footnotes

1 Wonil Kim and Kwang-Wook Lee are partners at Yoon & Yang LLC.