[Under the Long Road of Internet Policy] "Use Only Approved Services" - In Knowledge Industry Centers, In-House Telecom Providers Hold the Upper Hand

Contract Between Developer and On-site Telecom Operator
Legal Dispute Between On-site Telecom Operator and Residents
Residents Unable to Find Responsible Authority, Going in Circles
Broadcasting Commission Only Reviewing Plans for System Improvement

[Asia Economy Reporter Minyoung Cha] "They charge 36,300 KRW per month for office internet service at 100Mbps. Other telecom companies offered prices in the low 20,000 KRW range, but residents are being asked to pay more than 10,000 KRW extra."

Since September last year, a legal dispute has been ongoing for over a year between the on-premises telecom operator and the residents' management committee at ‘Misa House D Smart Valley,’ a knowledge industry center (apartment-style factory) with 750 units completed in June 2019 in Hanam-si, Gyeonggi-do. The Suwon District Court Seongnam Branch, which handled the first trial, ruled in favor of the residents, but the on-premises telecom operator D Telecom appealed, and the appellate trial is currently underway at the Suwon High Court. The residents' management committee was even prosecuted by the prosecution for cutting off electricity after entering the ‘telecom room (MDF room).’

According to industry sources on the 1st, similar types of legal disputes between on-premises telecom operators and residents are sporadically occurring at domestic knowledge industry centers. These disputes revolve around telecom contracts between on-premises telecom operators contracted by developers and residents' management committees at knowledge industry centers that have rapidly emerged since 2019. On-premises telecom operators claim that residents must use the telecom services they have selected, while management committees mostly resist, requesting the option to use other telecom providers as well.

According to Article 9-3, Paragraph 1 of the Act on Ownership and Management of Collective Buildings, the developer temporarily manages the building until the management committee begins management. In the first trial ruling related to Misa House D Smart Valley, the Suwon District Court stated, "It is difficult to view that the debtor (management committee) has succeeded in the obligation not to designate a third party other than the creditor (D Information & Telecom) as the on-premises telecom operator."

Contracts between knowledge industry center developers and on-premises telecom operators are frequent. Searching ‘knowledge industry center on-premises telecom’ on online portal sites easily reveals announcements recruiting investors for exclusive rights bidding. A real estate company representative promoted it as a ‘prime business right’ and indicated that the exclusive contract rights are ‘valid until the building is demolished.’ D Telecom also claims, "We were guaranteed exclusive status for six years by the S developer."

Due to the ambiguity of the issue, the responsible government department handling related matters is unclear. A user of a large online community expressed dissatisfaction, saying, "I filed a complaint about the knowledge industry center internet exclusive contract issue on the National Petition System, but it keeps being passed around from the Fair Trade Commission → local government → Korea Communications Commission → Ministry of Science and ICT → back to the Korea Communications Commission." In fact, on-premises telecom issues are operated under the Building Act, making it structurally difficult to address them within the framework of the Telecommunications Business Act.

A Korea Communications Commission official explained, "After improving the exclusive contract issues for collective buildings this year, we plan to separately review the on-premises telecom operator cases. Since most on-premises telecom operators are small businesses, we need time to notify and promote in advance, so we have only set a rough plan so far."

Attorney Youngsoo Lee of Baekil Law Firm said, "Improving the on-premises telecom system for collective buildings is urgent, but realistically, it is also important for courts to make swift judgments. Since damages claims arise from infringement of choice due to exclusivity, trials should proceed quickly to enable accurate calculation of damage amounts."