Public Hearing on Network Free Riding to be Held on the 20th
Seven Amendments to the Telecommunications Business Act Proposed
Network Investment Cost Sharing Between Telecom Operators and Global CPs Becomes a Global Agenda
[Asia Economy Reporter Minyoung Cha] A National Assembly public hearing on the amendment to the Telecommunications Business Act, known as the "Network Free-Riding Prevention Act," which aims to prevent big tech companies like Google and Netflix from free-riding on network usage, will be held tomorrow. As the issue of cost-sharing for network investment between telecommunications operators and content providers (CP) has become a global agenda, attention is focused on whether legislative sanctions will be implemented.
According to industry sources on the 19th, members of the National Assembly's Science, Technology, Information and Broadcasting and Communications Committee will hold a public hearing on the 20th to discuss the Network Free-Riding Prevention Act. Yoon Sangpil, Director of External Cooperation at the Korea Telecommunications Operators Association, will participate as a panelist representing Internet Service Providers (ISP). Although Netflix executives and Park Seongho, Chairman of the Internet Enterprise Association, were mentioned as representatives for CPs such as Netflix, Professor Park Kyungshin of Korea University is expected to appear as the final representative. Additionally, Professor Choi Kyungjin of Gachon University and Choi Seongjin, CEO of the Korea Startup Forum, will attend.
The Network Free-Riding Prevention Act collectively refers to seven similar amendments to the Telecommunications Business Act, including a bill that mandates network usage contracts for value-added telecommunications service providers above a certain scale. The total number of bills has increased to seven, including six previously pending bills and a recently proposed bill by Democratic Party lawmaker Yoon Youngchan. The need for alternative legislation was raised by the Big Tech Abuse Countermeasure Task Force (TF) under the Democratic Party's Livelihood Priority Practice Group, which was launched in July, leading to Yoon's proposal of the amendment.
In the first half of the year, the Science and Technology Information and Broadcasting and Communications Committee's bill review subcommittee deferred the approval of the bill and decided to hold a public hearing. This was due to calls for careful review rather than rushing the legislation. Subsequently, the committee's dysfunction caused by conflicts between ruling and opposition parties delayed progress for over five months. Since the conflict between the two parties remains unresolved, the upcoming public hearing is also expected to be led by opposition party members of the committee.
The domestic telecommunications industry is closely watching the outcome of this public hearing, as the dispute over network usage fees between Netflix and SK Broadband is still ongoing. The first trial effectively ruled in favor of SK Broadband, but Netflix has filed an appeal, prolonging the legal dispute. Although SK Broadband, a subsidiary of SK Telecom, is the direct party in conflict, KT and LG Uplus are also not exempt from this issue. Domestic IT companies such as Naver pay network usage fees in full, raising concerns about reverse discrimination.
Internationally, the Korean case is also drawing attention. The Global System for Mobile Communications Association (GSMA), a group of 750 telecommunications operators worldwide, has entered a preliminary phase this year to establish a cost-sharing plan for network investment by big tech companies. Dr. Roslyn Layton, Senior Vice President of Strand Consulting and Senior Columnist for Forbes, pointed out that "ignoring SK Broadband's request for network usage fee payment is a move by Netflix that only considers its own profits."
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