Fair Trade Commission Requests 'Data Correction' from Global CP... Accelerating Investigation into Online Unfair Practices

Final Document Correction Procedure Between Parties
Submission of Materials After Global CP and Trade Secret Legal Review
Last April, KCRC Reported 'Unfair Network Access Fee Practices' Investigation Nearing Completion

[Asia Economy Reporter Koo Chae-eun] The Fair Trade Commission has recently requested final document corrections from global content providers (CPs) regarding the issue of discriminatory network usage fees between domestic and foreign businesses.

Accordingly, the judgment on unfairness concerning the network free-riding problem by so-called "traffic hippos" such as YouTube and Netflix, as well as the price discrimination issue between domestic and foreign CPs, is expected to accelerate.

Network Access Fee Investigation in Final Stages... Global CP Document Correction Procedure

According to the industry on the 2nd, the main investigation into the "unfair acts of network access fees (network usage fees)" reported by the Citizens' Coalition for Economic Justice in April last year is gaining momentum. A source familiar with the Fair Trade Commission's situation said, "We have received almost all necessary documents from the global CPs under investigation as witnesses, and currently, they are in the process of mutual document correction," adding, "Since this is a complicated matter to judge, there is no set time for the decision, but the investigation itself is in its final stages."

It has been confirmed that global CPs such as Google are submitting materials after legal review concerning sensitive trade secrets related to network usage fees, which are "contracts between private parties." The global CPs plan to cooperate with the Fair Trade Commission's data analysis and additional data requests. The Fair Trade Commission began the main investigation last year regarding unfair transactions between domestic and foreign CPs and has been conducting meticulous legal reviews while receiving data related to "network usage fee disputes" from the Korea Communications Commission, the regulatory authority for telecommunications and broadcasting after-the-fact regulation.

Telecommunication companies such as KT, SK Broadband, and LG Uplus have also cooperated with this investigation by submitting network usage contracts and other documents. An industry official said, "The investigation targeting telecom companies ended early last year, but the document submission process by global CPs was insufficient, causing a lengthy delay," adding, "We expect a direction to be announced within this year."

'Network Free-Riding' Should Expand Beyond the Telecommunications Business Act to the Fair Trade Act

The industry is speculating that the issue of "network free-riding" by global CPs like Netflix and YouTube could expand beyond the Telecommunications Business Act to general law (Fair Trade Act) following the Fair Trade Commission's investigation. The Monopoly Regulation and Fair Trade Act (Fair Trade Act), which serves as the basis for the Fair Trade Commission's investigation, defines unfair acts as those that unjustly refuse transactions or discriminate against trading partners. If the Fair Trade Commission deems the telecom companies' discriminatory network usage fees illegal, telecom companies will be able to secure grounds to receive network usage fees from global CPs.

Currently, domestic content providers such as Naver pay about 70 billion KRW (as of 2016) in network usage fees to telecom companies, but YouTube, Netflix, and others use their dominant position to pay zero KRW in network usage fees to telecom companies.