"20 Million Won Fine?" Effectiveness Questioned... Controversy Over 'Soft' Punishments in Netflix Law

[Asia Economy Reporter Seulgina Jo] The detailed enforcement decree specifying the application targets of the so-called 'Netflix Free Riding Prevention Act (Amendment to the Telecommunications Business Act)' has been disclosed. Although it imposes obligations on global content providers (CPs) such as Netflix and YouTube (Google), which generate massive traffic but do not properly pay network usage fees domestically, to maintain the quality of domestic communication networks, critics argue that the penalties are too lenient, with fines of only 20 million KRW for violations.

On the 9th, the Ministry of Science and ICT announced on the 8th that it would give public notice of the enforcement decree for the amended Telecommunications Business Act, including these details. The decree defines the application targets as value-added telecommunications service providers with an average daily user count of over 1 million and accounting for more than 1% of domestic total traffic, listing companies such as Google, Netflix, Facebook, Kakao, and Naver. The list of target companies will be updated and announced annually.

These companies must ensure that users receive stable services regardless of their usage environment by ▲multiplying servers, ▲securing essential server capacity, and ▲optimizing content transmission volume. Additionally, they must 'consult' with related operators, including period telecommunications operators, when necessary. For example, in cases like the traffic route change dispute between Facebook and the Korea Communications Commission, if there is a reason that significantly affects service stability, prior notification must be given to the contracted telecommunications company.

The key issue is whether global CPs will comply. In the future, users are expected to be able to receive consultations in Korean and experience reduced connection delays even on platforms like Facebook and YouTube during outages. However, since the obligation is limited to 'consultation,' concerns remain whether Netflix, Google, and Facebook will fulfill their network fee payments and quality maintenance duties like domestic operators.

If overseas operators fail to comply with the enforcement decree, corrective measures will be imposed. Should they violate even these corrective measures, a fine of up to 20 million KRW can be imposed by law. A Ministry of Science and ICT official explained, "Article 27 stipulates that overseas operators must have a domestic representative," adding, "penalties, corrective orders, and administrative orders will be issued through the domestic representative."

However, there are criticisms that the 20 million KRW fine is too low. The Ministry official acknowledged, "It may seem so based on the fine amount alone," but emphasized, "if large operators with massive users face issues and enter into sanction measures, it is expected to have an impact exceeding 20 million KRW on their business." This means that if service quality maintenance measures such as line expansion and capacity increase are not properly implemented and the service is interrupted, sanction measures will be taken.

It is reported that global operators showed particularly high interest during the preparation of this enforcement decree compared to domestic operators.

An industry insider said, "The government must secure regulatory enforcement power to ensure that Google, Facebook, and Netflix comply with the law," adding, "Enforcement must be strengthened in line with the law's purpose of providing stable telecommunications services."

Some voices express concerns that this measure could intensify trade friction with the United States. In response, a Ministry of Science and ICT official stated, "There is no violation of the Korea-US Free Trade Agreement (FTA)," and "we did not mandate server expansion or server localization. This enforcement decree is not targeted at any specific company."

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