'Revisions to the Reporting System for Value-Added Telecommunications Service Providers Amid "Uselessness and Passing" Controversy'

Specification of Reporting Targets
Promotion of Amendment to the Telecommunications Business Act
'Do It or Not, It's Up to You'
Revision of the Value-Added Telecommunications Business Operator System

[Asia Economy Reporter Koo Chae-eun] The value-added telecommunications service provider system, which faced criticism as being 'ineffective,' is set for a complete overhaul. Although triggered by the failure to report by KakaoPay and KakaoBank, there have been continuous criticisms that the system's design itself is flawed. The government has begun reviewing improvements to the system by specifying the business areas that require reporting and exempting companies such as financial institutions that have already obtained licenses or permits from the reporting requirement.

Amendment to the Telecommunications Business Act to be pursued early next year

According to industry sources on the 18th, the Ministry of Science and ICT plans to push for an amendment to the Telecommunications Business Act early next year, focusing on reforming the reporting system for value-added telecommunications service providers. A Ministry of Science and ICT official stated, "We are reviewing ways to improve the reporting system to ensure the system operates effectively," adding, "We will also pursue legal amendments starting next year." The Ministry plans to present a reform plan for the value-added telecommunications service provider reporting system as early as next month after conducting policy demand surveys, feasibility studies, and gathering opinions.

Specifically, it is likely that only platform companies with massive traffic usage, such as Google and Naver, as content providers (CP), will maintain the 'mandatory reporting system,' while other industries will have their reporting relaxed to voluntary registration or be exempted. The official explained, "Since the status of value-added telecommunications service provider is necessary when user damage occurs, we are carefully reviewing the reform plan."

The 'failure to report' controversy regarding value-added telecommunications service providers arose last month when KakaoBank and KakaoPay omitted the reporting procedure due to a simple oversight. Following this, it was revealed that many companies, including Lotte Card, K Bank, Danggeun Market, and Market Kurly, were classified as value-added telecommunications service providers but missed the reporting process. However, criticism arose that the scope of value-added telecommunications service providers is excessively broad without clear industry distinctions and is handled in a haphazard manner, making it difficult to determine whether reporting is required.

Legal concept fails to reflect the times... Originated in the early internet era

There was also criticism that the legal definition is too broad, as it was created in the early internet era of the 1990s. A value-added telecommunications service provider is defined as a business that leases telecommunications line facilities from a "period telecommunications business operator (telecommunications company)" and provides telecommunications services other than period telecommunications services, but there are almost no exceptions. According to the Ministry of Science and ICT and the office of Kim Sang-hee of the Democratic Party, as of November, there are a total of 15,744 value-added telecommunications service providers. Most companies with corporate websites, including financial institutions, retailers, securities firms, and media companies, fall under this category. As internet and mobile services have become common, in effect, the majority of companies except telecommunications companies are defined as 'value-added telecommunications service providers.'

Professor Kim Yong-hee of Soongsil University pointed out, "Since the concept of value-added telecommunications service providers is an old one, there are clearly parts that do not fit the current situation where big tech companies are increasing," adding, "It is necessary to include large-scale platform operators under the concept of value-added telecommunications service providers and clarify their legal status more distinctly."

The Ministry of Science and ICT also plans to review whether the exemption clause for reporting for value-added telecommunications service providers with "capital of 100 million won or less" needs to be revised. Articles 30-1 and 30-2 of the Telecommunications Business Act, amended in 2015, set exemption conditions excluding companies with capital of 100 million won or less from the reporting obligation. However, there is criticism that this exemption clause has effectively created a loophole allowing overseas content companies to avoid reporting. Currently, Twitter Korea LLC and Facebook Korea LLC, whose Korean branches have capital of only 100 million won, are exempt from the reporting obligation as value-added telecommunications service providers. A Ministry of Science and ICT official explained, "We will comprehensively review the overall system, including the reporting exemption clause, to determine the direction for improvement."

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