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KCC to Bring Halt to Free Lunches for Global IT Giants
Eliminating Discriminations of Local Firms
KCC to Bring Halt to Free Lunches for Global IT Giants
  • By Michael Herh
  • April 18, 2018, 11:15
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The Korea Communications Commission (KCC) has completed a research project on measures to secure enforcement power to regulate foreign Internet operators.
The Korea Communications Commission (KCC) has completed a research project on measures to secure enforcement power to regulate foreign Internet operators.

The Korea Communications Commission (KCC) is expediting an improvement in law and systems to eliminate discriminations against Korean IT companies and favors for foreign IT giants in Korea by regulating the latter such as Google (YouTube), Facebook and Netflix in accordance with the Korean regulatory system.

According to the National Assembly and related industries on April 17, the KCC completed a research project on measures to secure enforcement power to regulate foreign Internet operators. It is said that based on the results of the research, last month, the commission gave a correction order to Facebook and imposed a penalty on Facebook for its access failure. "Although Google and Facebook are ramping up their influences in the Korean market, there is a lack of related systems," a senior official of the commission said. "We will make more specific measures that are more effective by making good use of the results of the research compared with account overseas cases."

This research report described analyses of cases in which global IT companies violated or eluded domestic regulations and measures to preclude such cases from occurring again including Google's unauthorized collection of hundreds of thousands of people’s personal information in 2011 during production of the digital map service "Street View" in Korea. The official added, "The commission will be able to secure enforcement power only if the National Assembly revises related laws based on the results of the research."

In particular, the KCC and the National Assembly are constantly raising questions about the fact that Google (YouTube) and Facebook among others expand ad sales and trigger heavy mobile traffic with mobile video services but does not pay for the use of internet networks unlike Korean companies such as Naver.

This is the so-called 'free lunch theory.' According to the recently released '2017 National Assembly Inspection Report' published by the National Science, Technology Information and Communication Commission at the National Assembly, global content providers such as Google and Facebook are generating huge profits but do not pay for the use of internet networks in Korea. "It is necessary to actively intervene so that discrimination in favor of foreign contents providers will be expunged and Korean telecom operators can secure fair profit-making bases at the national level," the report said. In addition, a majority opinion at the National Assembly is that it is necessary to build an international cooperation system in order to address global IT companies’ avoidance of tax.

With respect to this matter, "Due to the power of US IT companies who hog the whole show, we need to collaborate internationally with the European Union (EU) among others in order to strike balance between domestic and foreign Internet business companies such as Google and Naver,” said a lawmaker of the Minjoo Party who belongs to the National Science, Technology Information and Communications Commission of the National Assembly. “At the same time, the Korean government should actively participate and let its voices be heard in making international regulations in the digital economy."

Some experts in the industry pointed out that missteps in the harmonization of IT policies by the Ministry of Science and ICT and the Korea Communications Commission should be taken care of. To cite an instance, the commission newly established an offshore regulation. The commission is planning to compel foreign IT companies of a certain size or bigger to have domestic agents by establish the offshore regulation in related laws such as the Public Telecommunication Service Act and the Act on Promotion of Information and Communications Network Utilization and Information Protection.

However, the Ministry of Science and ICT has been quite cautious in introducing the offshore regulation. It is pointed out that domestic agents need an agreement between countries. Ministries are divided about the net neutrality principle which will be inevitably discussed again, coupled with the commercialization of 5G mobile telecommunications.