Telecommunication Laws and Regulations 2009 Published by Global Legal Group with contributions from: A practical insight to cross-border Telecommunication Laws and Regulations www.ICLG.co.uk The International Comparative Legal Guide to: Allen & Gledhill LLP Amarchand & Mangaldas & Suresh A. Shroff & Co. Arnold & Porter LLP Bello, Gallardo, Bonequi y Garcia, S.C. Bender von Haller Dragsted Boga & Associates Bozzay Law Office Bratschi Wiederkehr & Buob Burnet, Duckworth & Palmer LLP CCdM&A - Cugia Cuomo de Marco & Associati Cechová & Partners Cocalis & Psarras Djingov, Gouginski, Kyutchukov & Velichkov Dr. Norbert Wiesinger, Law Offices Gencs Valters Law Firm Gómez-Acebo & Pombo Abogados Harris Kyriakides LLC Heuking Kühn Lüer Wojtek Jadek & Pensa Jurevicius, Balciunas & Bartkus Kim & Chang Liniya Prava Linklaters Lisa Thornton Inc Lovells LLP Macedo Vitorino & Associados Mamo TCV Advocates MGF Webb Moravcevic Vojnovic Zdravkovic in cooperation with Schoenherr Mori Hamada & Matsumoto Mundie e Advogados NautaDutilh Noble & Scheidecker Norton Rose Olswang Pachiu & Associates Attorneys at Law Roschier, Attorneys Ltd. Salans Sanchez Elia & Asociados Simonsen Advokatfirma DA Sorainen William Fry v v - v v
Transcript
Telecommunication Laws and Regulations 2009
Published by Global Legal Group with contributions from:
A practical insight to cross-border Telecommunication Laws and Regulations
www.ICLG.co.uk
The International Comparative Legal Guide to:
Allen & Gledhill LLP
Amarchand & Mangaldas & Suresh A. Shroff & Co.
Arnold & Porter LLP
Bello, Gallardo, Bonequi y Garcia, S.C.
Bender von Haller Dragsted
Boga & Associates
Bozzay Law Office
Bratschi Wiederkehr & Buob
Burnet, Duckworth & Palmer LLP
CCdM&A - Cugia Cuomo de Marco & Associati
Cechová & Partners
Cocalis & Psarras
Djingov, Gouginski, Kyutchukov & Velichkov
Dr. Norbert Wiesinger, Law Offices
Gencs Valters Law Firm
Gómez-Acebo & Pombo Abogados
Harris Kyriakides LLC
Heuking Kühn Lüer Wojtek
Jadek & Pensa
Jurevicius, Balciunas & Bartkus
Kim & Chang
Liniya Prava
Linklaters
Lisa Thornton Inc
Lovells LLP
Macedo Vitorino & Associados
Mamo TCV Advocates
MGF Webb
Moravcevic Vojnovic Zdravkovic in cooperationwith Schoenherr
1.1 What are the overall policies and objectives for theelectronic communications industry and have these beenpublished in draft or final form?
According to Article 1 of the Telecommunications Business Act(the “TBA”), the basic objective of the electronic communicationsindustry policy is (i) the enhancement of public welfare through thesound development of the industry and (ii) the enhancement ofbenefits to users.
1.2 Is Korea a member of the World Trade Organisation?
Yes, Korea is a member of the World Trade Organisation.
1.3 Has Korea made commitments under the GATS/GATTregarding telecommunications and has Korea adopted theWTO Basic Telecommunications Agreement?
Yes, it has.
1.4 How is the provision of electronic communicationsnetworks or services regulated? Is the provision ofelectronic communications networks or services open tocompetition in Korea?
Provision of electronic communications networks and services isprimarily regulated by the TBA and its subordinate regulations.Subject to the licensing requirements under the TBA, provision ofelectronic communications networks and services is open tocompetition in Korea.
1.5 Which are the regulatory and competition law authorities?How are their roles differentiated?
The primary government authority responsible for regulating thetelecommunications industry, as well as the broadcasting industry,is the Korea Communications Commission (the “KCC”). Thecompetition authority is the Korea Fair Trade Commission (the“KFTC”). The KCC promulgate regulations that are specific to thetelecommunications industry, grant telecommunication licenses andadjudicate cases involving violations of the telecommunicationsregulations, while the KFTC is responsible for investigating andadjudicating antitrust and fair trade cases, such as cartels, unfairtrade practices and abuse of market-dominant position, in all of theindustries, including telecommunications industry. However, we
also note that Article 37-3 of the TBA stipulates that, if the KCCimposes correction orders or administrative fines, the KFTC maynot impose correction orders or administrative fines on the samegrounds against the same acts of the relevant business operator.
1.6 Are decisions of the national regulatory authority able tobe appealed? To which court or body?
Yes. The decisions may be appealed to the competent court (in caseof appealing the decisions of the KCC, to the Seoul AdministrativeCourt; and in case of appealing the decisions of the KFTC, to theSeoul High Court) or the relevant administrative appealscommission. If the case is appealed to an administrative appealscommission, the commission’s decision can be again appealed tothe court.
2 Licensing
2.1 If a licence or other authorisation is required to install oroperate electronic communications networks or provideservices over them, please briefly describe the process andtimescales.
A Facilities-based Telecommunications Service Provider (“FSP”)license is required to provide “key services” (telephone services,services through radio frequencies, circuit lease services, Internetaccess services, VoIP services, etc.) using one’s owntelecommunications network and related facilities. A SpecificTelecommunications Service Provider (“SSP”) registration isrequired to provide “key services” using an FSP’stelecommunications network facilities or services, or to provide in-premise telecommunications services. A report of Value-addedTelecommunications Service Provider (“VSP”) is required toprovide telecommunications services other than the “key services,”such as data network services, value-added network services, e-mailservices, information-on-demand services and other value-addedtelecommunications services, using the facilities leased from an FSP.The FSP licence application form consists of (i) the cover letter,(ii) the business plan and (iii) the technical development supportplan. Upon receiving the application, the KCC is supposed todecide whether to grant the FSP license within two months, afterthe deliberation by the Information and Communications PolicyDeliberation Commission. The application for the SSPregistration or VSP report may be filed with the RegionalCommunications Office (the “RCO”) at any time, and the reviewperiod is, in principle, 30 days for SSP registration, andimmediately for VSP report.
2.2 What other requirements, permits or approvals must bemet or obtained before networks may be installed oroperated and services provided?
Nothing in general. However, a device certification (e.g., typeapproval, type registration, EMC registration, etc.) is required tomanufacture, sell or import telecommunications equipment. Inaddition, under the Telecommunications Construction Business Law,a party that wishes to engage in the telecommunications constructionbusiness is required to register with the regional government.
2.3 May licences or other authorisations be transferred and ifso under what conditions?
Yes. The FSP license, SSP registration and VSP report may betransferred in case of business transfer or merger. For such transfer,an approval from the KCC (in case of FSPs) or filing of a report tothe RCO (in case of SSPs and VSPs) is required.
2.4 What is the usual or typical stated duration of licences orother authorisations?
The duration of the FSP licence, SSP registration and VSP report isusually not limited, except that the FSP licence for the servicesusing the allocated frequency bands can be viewed as actuallyexpiring upon the lapse of the term of the use of the frequency band.
3 Public and Private Works
3.1 Are there specific legal or administrative provisions dealingwith access to public and private land in order to installtelecommunications infrastructure?
Yes. Under Article 41 of the TBA, an FSP may enter others’premises, when necessary for the measurement, examination, etc.,for the installation and maintenance of its telecommunicationsfacilities. However, if the place intended for such entry is aresidential building, consent from the resident needs to be obtained.
3.2 Do any specific rules exist which assist in securing orenforcing rights of way over public or private land, for theinstallation of network infrastructure?
Yes. Article 39 of the TBA stipulates that an FSP may make use ofothers’ premises, when necessary for the installation of line tracks,aerial lines and the appurtenant facilities to be available for thetelecommunications service. If an agreement cannot be reached forsuch use, the FSP may enforce the right to use the land, pursuant tothe Act on the Acquisition of Land for Public Works andCompensation. Article 40 of the TBA also provides for a relativelyconcise procedure for the “temporary” use of others’ premises.
3.3 Is there a specific planning or zoning regime that appliesto the installation of network infrastructure?
No, there is no such planning or regime in Korea.
3.4 Are there any rules requiring established operators toshare their infrastructure, e.g. masts, sites, ducts orcables?
Yes. Under Article 34-3 of the TBA, an FSP may allow an access to,or allow a joint use of, the telecommunications equipment or facilities,
such as ducts, cables, poles or stations of the FSP, by concluding anagreement, upon receipt of a request from other telecommunicationsbusiness operators for an access to, or a joint use of, thetelecommunications equipment or facilities. As an exception, KTCorporation (“KT”) (for its local telephone service and Internet accessservice) and SK Telecom Co., Ltd. (“SKT”) (for its 2G mobileservices), who are deemed to own essential facilities (KT being thelargest local telephone and Internet access service provider, and SKTbeing the largest mobile telephone service provider), are obliged toprovide such equipment or facilities upon request from other FSPs.
4 Access and Interconnection
4.1 Is network-to-network interconnection and accessmandated, and what are the criteria for qualifying for thebenefits of interconnection?
Yes. Under Article 34 of the TBA, telecommunications serviceproviders may not, without a justifiable reason, refuse to enter intointerconnection agreements with other telecommunications serviceproviders who request such interconnection. In addition, KT, for itslocal telephone service and Internet access service, and SKT, for its2G mobile services, are designated as FSPs who are obliged toprovide interconnection.
4.2 How are interconnection or access disputes resolved? Doesthe national regulatory have jurisdiction to adjudicate andimpose a legally binding solution?
If the requested telecommunications service providers do notexecute the interconnection agreement within 90 days, therequesting telecommunications service providers may file anapplication for arbitration with the KCC. The KCC’s arbitrationaward is legally binding unless appealed to the court or theadministrative appeals commission.
4.3 Are charges for interconnection and/or network accesssubject to price or cost regulation and, if so, how?
Yes. The KCC has published the Standards for Interconnection ofTelecommunications Facilities. The terms and conditions of theinterconnection agreements entered into between telecommunicationsservice providers must comply with the standards set forth in theabove document. Since 2005, the interconnection fees have beendetermined based upon the LRIC (Long-Run Incremental Cost).
4.4 In the local loop are existing owners of accessinfrastructure required to unbundle their facilities and ifso, on what terms or regulatory controls?
Yes. Under Article 33-6 of the TBA, a certain FSP must allow aLocal Loop Utilisation (“LLU”) of certain other FSPs. TheNotification of Local Loop Utilisation, promulgated by the KCC,provides for the detailed terms to be included in the agreement foran LLU. LLUs are categorised into full unbundling, line sharingand broadband Internet open access. In case of a dispute, thedisputing FSP may file a request for arbitration with the KCC.
4.5 How are existing interconnection and access regulatoryconditions to be applied to new network technologies such asso-called next generation networks or IP-based networks?
Interconnection fees are not determined comprehensively, but are
146ICLG TO: TELECOMMUNICATION LAWS AND REGULATIONS 2009WWW.ICLG.CO.UK
determined by each category of service, as new networktechnologies become available in the market. In case of VoIP, forexample, the KCC determined the monthly interconnection rate tobe paid by the VoIPs to the Internet service providers at 1,500Korean Won per subscriber.
5 Price and Consumer Regulation
5.1 Are (i) retail or (ii) wholesale price controls imposed onany operator in relation to fixed, mobile, or other services?
Yes. Under Article 29 of the TBA, FSPs are required to establish aStandard Terms of Use (“STU”), including the terms for pricing, foreach type of retail and wholesale service. The STU and anyamendments to the STU must be reported to the KCC. However,the market dominant players (KT for its local telephone service andthe Internet access service, and SKT for its 2G mobile services) aredesignated as FSPs that must have the establishment of, oramendment to, their STUs approved by the KCC.
5.2 Is the provision of electronic communications services toconsumers subject to any special rules and if so, in whatprincipal respects?
The service provider must comply with various regulations, such asequal treatment, non-infringement of consumer benefit andcompensation for damages.
5.3 Are there any rules governing use and retention ofcustomer call information?
Yes. Under the Communications Secrecy Protection Act, customercall information is deemed to be “materials that can verify theexistence of communication” which cannot be disclosed to thirdparties, with narrow exceptions (e.g., with the customer’s consent,under a court order, or upon a law enforcement agency’s request).Under the Communications Secrecy Protection Act,telecommunications service providers must retain customer callinformation for 12 months (in case of local or long-distancetelephone service, 6 months).
6 Numbering
6.1 How are telephone numbers and network identifying codesallocated and by whom?
The telephone numbers, data network codes and telex codes areallocated by the KCC, upon request from the telecommunicationsservice providers or public agencies.
6.2 Are there any special rules which govern the use oftelephone numbers?
Yes. The Detailed Rule on Administration of TelecommunicationsNumbers, promulgated by the KCC, governs the use of thetelecommunications numbers, such as telephone numbers, datanetwork codes and telex codes.
6.3 How are telephone numbers made available for network useand how are such numbers activated for use by customers?
Once the KCC allocates telephone numbers, a telephone serviceprovider may use them and activate for use by customers at itsdiscretion.
6.4 What are the basic rules applicable to the ‘porting’ (i.e.transfer) of telephone numbers (fixed and mobile).
The KCC’s Notification on the Enforcement of Mobile NumberPortability and Notification on the Operation of Local NumberPortability mandate the local telephone and mobile phone serviceproviders to allow the users to transfer their local and mobiletelephone numbers without restriction by the telephone codeadministrated by their service providers.
7 Fees
7.1 What fees and levies are payable and to whom withrespect to the grant of a licence or other authorisation forthe installation or use of network infrastructure or theprovision of communication services?
The KCC has the authority to require the FSPs, as a condition to thelicense, to make a contribution to the Informatisation PromotionFund, which is a KCC-managed fund for national research anddevelopment of the telecommunications technology and otherrelated projects. As for the SSPs, the KCC has been imposingannual contributions since 2003, and the contribution rate is 0.5%of the sales of the previous year, except that the annual contributionis applicable only to those SSPs whose sales of the previous yearwas greater than 30 billion Korean Won and who recorded a netprofit for the relevant period. In addition, annual licence taxes arelevied by the city district office or the county office havingjurisdiction over the FSPs, SSPs and VSPs.
8 Submarine Cables
8.1 What are the main rules governing the bringing intoKorea’s territorial waters, and the landing, of submarinecables? Are there any special authorisations required orfees to be paid with respect to submarine cables?
The submarine cable service providers wishing to provide servicesby using its own facilities within the Korean territory, or wishing tohave direct access to the landing stations within the Koreanterritory, must set up a Korean entity and obtain an FSP licensethrough the Korean entity before the actual service or landing, orexecute an Agreement on the Cross-Border Supply ofTelecommunication Services with the existing Korean FSPs.
9 Radio Frequency Spectrum
9.1 Is the use of radio frequency spectrum specificallyregulated and if so, by which authority?
Based on the Radio Frequency Allocation by the ITU, the KCCallocates the radio frequencies and announces the FrequencyAllocation Table. Under the Radio Wave Act, the KCC also has thediscretion to assign the frequency bands to the telecommunicationservice providers.
9.2 In the grant of spectrum rights are distinctions madebetween mobile, fixed and satellite usage?
Yes. A frequency band is assigned only for a specific service use(cellular, PCS, IMT-2000, WiBro, pager, etc.), pursuant to theFrequency Allocation Table.
9.3 How is the installation of satellite earth stations and theiruse for up-linking and down-linking regulated?
A satellite service provider must either (i) obtain the necessary FSPlicense for the installation, or (ii) execute an Agreement on the Cross-Border Supply of Telecommunication Services with the existing FSPswho are licensed to provide the facilities-based services related to therelevant satellite service (e.g., GMPCS) in Korea under the WTOAgreement on Basic Telecommunication Services, and obtain anapproval of the Agreement on the Cross-Border Supply ofTelecommunication Services from the KCC. The frequency band forthe relevant satellite service is assigned by the KCC to the serviceprovider. If the satellite earth station is to be used for broadcastingservices (e.g., satellite broadcasting), different rules will apply.
9.4 How is the use of radio frequency spectrum authorised inKorea? Do the procedures available include spectrumauctions and comparative selection of candidates?
The Radio Wave Act provides for two basic categories of frequencyassignment - assignment for a fee and assignment for free. At present,the Radio Wave Act adopts the “command and control” regime, andthus, spectrum auctions and comparative selection of candidates are notyet introduced. However, a fundamental reform of the “command andcontrol” regime is currently scheduled to take place in the near future.
9.5 Can the use of spectrum be made licence-exempt? If so,under what conditions?
Yes, but only as an exceptional matter. Certain bands are allocatedfor use by the government, military, for scientific, medical andeducational purpose and for such common use frequencies asBluetooth or HAM.
9.6 If licence or other authorisation fees are payable for theuse of radio frequency spectrum, how are these appliedand calculated?
Following the submission of an application for a frequency band,the KCC may elect to receive fees for the assignment of radiofrequency, in any of the following circumstances: (i) the radiofrequency has a great economic value and technological effect; (ii)there are competitive demands for such radio frequency; or (iii) theKCC deems it necessary to receive fees for the development ofnational radio frequency policy. In practice, the fees for theassignment of radio frequencies are determined based on variousmethods, including benchmarking method, opportunity costevaluation method and economic utility evaluation method.In addition, the KCC may impose the radio wave use fee from thosewho established the radio stations. The fee is determined inconsideration of various costs, such as the administrative expensesof the competent authorities.
9.7 Are spectrum licences able to be traded or sub-licensedand if so on what conditions?
Under Article 13 of the Radio Wave Act, with regard to the radio
frequencies for a fee, the right to use a frequency band may betransferred or leased to a third party three years after the date ofallocation, with the approval of the KCC. As an exception, in caseof bankruptcy or drastic change in the economic environment, thefrequency use right may be transferred or leased even before theforegoing three-year period.
10 Interception
10.1 What are the essential rules applicable to the interceptionof messages, traffic data and other call records? Whichrules apply to the retention of such call data, and overwhich period(s)?
Under the Communications Secrecy Protection Act, the interceptionof messages, traffic and other call records, without consent from aparty to such communications, may fall under the illegal“interception,” which may trigger criminal sanction. As for theobligation to retain call data, please see question 5.3 above.
11 The Internet
11.1 Are services over the Internet regulated in any differentway to other electronic communications services? Whichrules, if any, govern access to the Internet at a wholesaleand/or retail level?
Not in general. At present, the Internet access service, VoIP serviceand data transmission services are regulated as facilities-basedservices, requiring either an FSP license (if one’s own facilities areused) or an SSP registration (if utilising an FSP’s facilities). OtherInternet information services are regulated as value-added services.The access to the Internet at a wholesale or retail level is regulatedby the general provisions of the TBA, such as prohibition of unjustrefusal of access and prohibition of discrimination between users.
11.2 Are there any rules to prevent, restrict or otherwise governInternet or email communications, in particular, marketingand advertising communications?
Yes. The Telecommunications Network Utilisation Promotion andInformation Protection Act (the “IPA”) regulates the “transmissionof advertisement information for profit,” such as: (i) telemarketing;(ii) transmission of mobile phone text messages or fax; and (iii)transmission of e-mails for marketing purpose. For instance, withrespect to telemarketing, mobile phone text messages and fax, theIPA adopts the “opt-in” method, under which a person is required toobtain prior consent from the potential addressees before sendingadvertisements. As for e-mails, the IPA adopts the “opt-out”method, under which a person is prohibited from transmittingadvertisements for the purpose of profit against the addressee’sexplicit rejection of such information. In addition, any person whotransmits advertisements by means of e-mail must comply withcertain statutory requirements regarding form and content.
12 USO
12.1 Is there a concept of universal service obligation; if so howis this defined, regulated and funded?
Yes. Article 3-2 of the TBA mandates payment of compensation foruniversal service obligation. FSPs are obliged to provide universal
148ICLG TO: TELECOMMUNICATION LAWS AND REGULATIONS 2009WWW.ICLG.CO.UK
services or compensate the losses incurred by a service providerthat actually provides universal services. This system is similar tothe universal service fund in other jurisdictions. At present, KTprovides universal services, such as (i) local telephone services(including services to island regions), (ii) local public payphoneservices and (iii) maritime wireless telephone services, while othermajor FSPs must compensate the losses incurred by KT inconnection with its universal services, in proportion to their salesrevenues. In addition, various FSPs are designated as universalservice providers for special number telephone service or discountservice for the disabled. The Standards for Universal ServiceObligation Compensation Payment Calculation Method,promulgated by the KCC, sets forth very detailed methods for thecalculation and allocation of the compensation payment.
13 Foreign Ownership Rules
13.1 Are there any rules restricting direct or indirect foreignownership interests in electronic communicationscompanies whether in fixed, mobile, satellite or otherwireless operations?
Yes. At present, the aggregate foreign investment in an FSP byforeigners (including foreign entities and foreign governments) and“deemed foreigners” may not exceed 49% of the total issued andoutstanding voting shares (including share equivalents, such asdepositary receipts) of the FSP. For the purposes of the TBA, theterm, “deemed foreigner” means a Korean company in which aforeigner is the largest shareholder, and foreigners hold 15% ormore of the shares in the aggregate; provided, however, that a“deemed foreigner” holding less than 1% of the total issued andoutstanding voting shares of the FSP is excluded from determiningwhether the 49% ceiling is exceeded.
SSPs and VSPs are not subject to any foreign shareholdingrestriction, but only a Korean entity (including a Korean subsidiaryof a foreign company) can register as an SSP or file the VSP report.Please note that a more specific and strict foreign ownershipregulation is applied to KT.According to the Korea-US Free Trade Agreement (the “FTA”),reached on April 2, 2007 (which has not yet been ratified by eithercountry), the current ceiling of 49% on direct foreign shareholdingin domestic telecommunications service providers will bemaintained, but with the exception of KT and SK Telecom,restrictions on indirect foreign ownership (i.e., “deemed foreigners”)will be eliminated within two years from the effective date of theFTA. Thus, two years after the effective date of the FTA, foreignersmay invest in the FSPs through its subsidiaries or joint ventures inKorea without being subject to the foreign ownership restriction.
14 Future Plans
14.1 Are there any imminent and significant changes to thelegal and regulatory regime for electronic communications?
Yes. In order to lower the telecommunication charges, the KCC isdriving deregulation of bundling by significant market players andis strongly recommending discount of charges for bundled services.The recent acquisition of Hanarotelecom by SK Telecom illustratesreformation of the market structure in preparation for the bundlingof services in that the carriers are trying to launch TPS (Triple PlayServices) and QPS (Quadruple Play Services). In addition, theKCC has recently been enforcing the privacy regulation veryactively and strictly, especially over the FSPs. Also, please see ouranswer to question 12.1 for the effect of the FTA on thetelecommunications industry.
Dong-Shik Choi
Kim & ChangSeyang Building223 Naeja-dong, Jongro-guSeoul 110-720, Korea
Dong Shik Choi is the head of the Broadcasting and TelecommunicationsPractice Group at Kim & Chang. He is admitted to bar in Korea (1982)as well as in New York (1991). He graduated from the College of Law,Seoul National University in 1980 and completed Judicial Research andTraining Institute of the Supreme Court of Korea in 1982. He also hasan LL.M. degree from University of Michigan Law School (1991). Heacts as outside counsel to the Korea Communications Commission.
Tae-Hyun Chung
Kim & ChangSeyang Building223 Naeja-dong, Jongro-guSeoul 110-720, Korea
Tae-Hyun Chung is a senior foreign legal consultant in the CorporateDepartment at Kim & Chang. His primary areas of practice includetelecommunication, broadcasting, anti-trust and M&A. He received hisB.A. from Cornell University (1993) and J.D. from Columbia Law School(1996). Tae-Hyun Chung served as a First Lieutenant, Judge AdvocateGeneral’s Corps in the Republic of Korea Army from 1998 to 2001. Heis admitted to bar in New York (1997).
Kim & Chang is the largest full-service law firm in Korea with a very successful track record of assisting clients, both domesticand international, to accomplish their objectives in Korea. Our first-class professionals, who have degrees from top schoolsaround the world and have worked for many leading international firms, pay the utmost attention to the specific needs of ourclients and use the firm’s vast expertise and experience to design and develop creative and custom-tailored solutions. Followingthe philosophy that our clients are the most important part of the business, we make it a priority to fully understand the clients’businesses and the industries in which they work, and such efforts are recognised by our ever growing list of clients. Our clientsinclude the key players in the domestic and international markets, such as multinational corporations, financial institutions,private equity funds, start up companies, public and private organisations and individuals.
