Controversy over 'Gongjjamang' Netflix, Will It Pay Usage Fees... Related Law Passed

Amendment to the Telecommunications Business Act Passes National Assembly
Service Stability and Mandatory Designation of Domestic Agents

[Asia Economy Reporter Kim Heung-soon] The amendment to the Telecommunications Business Act, commonly known as the Netflix Act, passed the National Assembly plenary session on the 20th. The main point is that content providers (CPs) offering services based on the internet must bear certain obligations to improve quality issues caused by traffic overload.

With the passage of this amendment, overseas CPs such as Netflix and YouTube must secure network stability measures and designate agents who can protect domestic users. Specific criteria will be established by presidential decree based on the number of users or traffic.

As the number of Netflix users in Korea increased, controversies arose over network quality degradation due to the surge in traffic. The wired telecommunications operator SK Broadband argued that overseas CPs like Netflix should pay a certain level of network usage fees to improve this. Until now, overseas CPs have never paid costs to domestic Internet Service Providers (ISPs) under the name of network usage fees.

The positions of SK Broadband, which insists on paying network usage fees, and Netflix, which denies such obligations, have clashed and escalated into litigation. Until now, due to the lack of related laws or regulatory grounds, conflicts between CPs and ISPs in Korea have been repeated, but the passage of the amendment provides justification to resolve some disputes.

However, domestic CPs such as Naver and Kakao, which have paid certain fees to ISPs under the pretext of improving service quality, are concerned that this amendment could serve as a basis for mandatory network usage fees and increase the burden on domestic operators compared to overseas businesses.

The Korea Internet Corporations Association, to which these companies belong, along with the Venture Business Association and Korea Startup Forum, issued a joint statement on the day, saying, "The ambiguous term 'securing service stability' could affect the sharply contested related market and the principle of net neutrality," and added, "We will verify whether enforcement ordinances and other measures are being prepared according to the government's statements during the legislative process, express our opinions, and carefully analyze the impact of the amendment on the internet industry and users to ensure that neither companies nor users suffer damage, and will continue to make efforts."

This content was produced with the assistance of AI translation services.