'Do It or Not, It's the Same'
Value-Added Telecom Business Registration
Lacks Effectiveness and Has Ambiguous Concepts
1 Billion Won Capital Exemption Condition
Creates a 'Loophole' Instead
[Asia Economy Reporter Koo Chae-eun] "If it doesn't exceed 100 million won, there's no need to report..."
Voices demanding fundamental improvements regarding the value-added telecommunications service provider system, triggered by the 'non-reporting controversy' involving KakaoPay and KakaoBank, are growing louder. The legal status is ambiguous and the concept unclear, leading to a "do it or not, either way" attitude. There are also criticisms that global companies entering the domestic market are deliberately 'passing over' this system.
The value-added telecommunications service provider concept was born in the 1990s with the introduction of the 'network' concept. At that time, it referred to providers who leased telecommunications line facilities from the incumbent telecommunications operator Korea Telecom (now KT) to offer additional communication services. It broadly means businesses that use Korea Telecom's communication lines to send and receive data.
The problem is that the spectrum of the 'value-added telecommunications service provider' concept is too broad. As the era came where even individuals have and operate websites, the status and definition of value-added telecommunications service providers as "businesses using communication lines to send and receive data" became increasingly ambiguous. Not only internet service companies like Naver, Kakao, and YouTube, but also media companies, banks, and game companies with their own websites all fall under value-added telecommunications service providers. Because of this, Article 30-1 and 2 of the Telecommunications Business Act, revised in 2015, included an 'exemption condition' excluding companies with capital of 100 million won or less from the obligation to report as value-added telecommunications service providers.
However, another problem arose. Overseas content companies using domestic communication networks found a 'loophole' to avoid reporting as value-added telecommunications service providers. Currently, Twitter Korea LLC and Facebook Korea LLC, whose Korean branches have capital of only 100 million won, are exempt from the reporting obligation. There are also claims that "a significant number of companies deliberately keep their capital below 100 million won to avoid reporting."
This is why there are calls to redefine the value-added telecommunications service provider concept, which originated in the early days of the internet. An industry insider said, "Currently, the value-added telecommunications service provider concept is used for platform companies that generate traffic on telecom operators' (incumbent telecommunications operators) networks and earn revenue, but it is necessary to subdivide the concept according to the type of service," adding, "We need to separate those who truly need to report and operate from those who do not, to ensure effectiveness."
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