KLRI : KOREA LEGISLATION RESEARCH INSTITUTE

I. Background and Purpose of Research

▶ The rapid spread of OTT services has dramatically changed the market structure and competitive situation of the media business at home and abroad, and the issue of reorganizing the regulatory system of OTT services to create a fair and competitive market environment has emerged as a policy issue.

○OTT services have a significant impact on the broadcasting and media market as a whole, but they are legally classified as additional telecommunication service providers rather than broadcasters, which makes it difficult to create a fair competitive market for both broadcasting and film.

-For the growth and development of domestic OTT platforms, it is important to promote market competition by clearly establishing the legal status of OTT services and establishing technology-neutral regulations, in addition to government policy support.

-Discussion on the overall media market regulatory system, including the issue of regulatory fairness between broadcasting and OTT media platforms, and between domestic and global OTT media platforms, and deriving measures to improve the system is needed.

-Transforming the current vertical classification system into a horizontal regulatory system that focuses on content services, in order to resolve regulatory overlaps and gaps and actively respond to the changing platform-oriented media market, is one of the objectives of this research.

-Addressing issues of regulatory gaps and overreach, and promoting fair competition and equity are goals of this research as well.

 

Ⅱ. Contents

▶ Concepts and characteristics of broadcasting and OTT

○Broadcasting under the Constitution may include new media services, but the Broadcasting Act does not cover OTT media services.

-Broadcasting is subject to regulation because of the public interest and the scarcity and public nature of the airwaves.

○The services provided by OTT media platforms are comparable to broadcasting in that they provide the same or similar content to the public as broadcasting, and the substitutability of the services is generally recognised, but OTT media services are regulated as additional communication services under the Telecommunications Business Act.

-Online video services provided by OTT media platforms do not have the characteristics of spectrum scarcity, which is the reason for regulating broadcasting.

-OTT media platforms that provide online video services cannot be included in the concept of existing broadcasters, nor can they be considered as “additional communication services” as they are now, and it is recommended that a separate concept be established as a new media based on the Internet that has some characteristics of broadcasting.

▶ Competition and regulation in the broadcasting market

○The broadcasting and communications market is a market where competition is governed by competition law within the limits of regulatory law.

-The premise of the sectoral regulatory system is that products or services that are essentially the same in nature should be regulated at the same level and to the same extent within one system.

-The issue of establishing an appropriate regulatory regime for OTT media platforms also boils down to the question of whether online video services provided by OTT media platforms are broadcasting or telecommunications in nature.

○OTT media platforms are very different in terms of the type of content they carry, the types of services they offer and their revenue models, but they can be seen as substitutes and complements to TV services.

-By 2022, the number of users of OTT media platform services worldwide will exceed the number of pay-TV subscribers for the first time, and the proliferation of OTT media services in the pay-TV market is expected to intensify competitive pressures.

○Redefining the concept of broadcasting to include new media services and changing the classification system of broadcasting and media services from the current vertical division to a horizontal system is necessary for fair competition in the broadcasting media market.

-Given the “similarity” of content provided by broadcasting and OTT media platforms and the “substitutability” of OTT media services for broadcasting, it can be argued that broadcasting and OTT media services are in direct competition and that regulatory fairness should be ensured.

-In cases where the “similarity” or “substitutability” between broadcasting and OTT media services cannot be clearly demonstrated, imposing the same level of regulation on OTT media platforms as is applied to broadcasting in the pursuit of regulatory fairness may actually hinder the development of the OTT media platform sector.

-While it is not possible to clearly distinguish which media are in direct competition and substitution with other media and which are not, it is not appropriate to continue to categorize them as broadcasting or telecommunications based on the means of transmission, as new forms of media are introduced due to technological advances.

○Korea's OTT media platform industry policies and legal framework do not ensure fair competition with global OTT media platforms.

-Protectionist legislation is difficult due to FTAs, and content revenues are not linked to the development of the domestic content industry, making it difficult to strengthen the comparative advantage of domestic content and narrow the domestic market.

-Broadcasting is divided into the Broadcasting Act and the IPTV Act, while telecommunications is regulated by the Telecommunications Business Act, and OTT media platforms are defined as additional telecommunications service providers under the Telecommunications Business Act. Each law has clearly different regulatory goals and objectives, and there is no legal basis for promoting the OTT media platform industry.

-The lack of a body that can lead the regulation and promotion of OTT media platforms requires a governance organization that is responsible for the integrated regulation and promotion of the OTT media platform industry, content, infrastructure, etc..

○Regulatory differences between OTT media platforms and traditional broadcasting

-Different levels of regulation across the board, including entry, ownership and control, market share, content, programming, advertising, etc..

-Unwarranted discrimination against the same service.

-There is no legal mechanism for disputes between broadcasters and OTT media platform operators due to different governing laws, and there are also differences in user protection, which ultimately harms users.

-As the definition of broadcasting focuses on traditional terrestrial broadcasting, it is difficult to include newly emerging media services, and as the scope of broadcasting has expanded due to the introduction of new media and services, the proliferation of OTT media services is bound to dismantle the traditional broadcasting sphere.

-The same regulation can have a differential effect on domestic and global OTT media platforms, but there are limits to differential support.

▶ Domestic and international legal trends related to OTT media platforms

○Current Domestic Legislation and Legislative Discussions

-According to the mode of transmission, broadcasting is divided into broadcasting under the Broadcasting Act and additional communication services under the Telecommunications Business Act, but it is difficult to define additional communication services as online video services provided by OTT media platforms.

-Rep. Lee Kwang-jae introduced a bill to amend the Basic Video Promotion Act to establish a cross-government promotion system for the video media content industry and various administrative and financial support bases, and to introduce its own classification system, but it was abandoned.

-Rep. Byun Jae-il attempted to include content provided by OTT media platforms in the category of broadcasting in the ‘Partial Amendment Bill to the Broadcasting Act’, and Rep. Kim Sung-soo attempted to consolidate and revise broadcasting laws with the ‘Full Amendment Bill to the Broadcasting Act’. In addition, content transmitted to the public without limiting the means of transmission to ‘telecommunication facilities’ was defined as ‘broadcasting programmes’. ‘Broadcasting programme’ is ‘broadcasting content that becomes a unit of broadcasting arrangement’, and ‘broadcasting arrangement’ is ‘determining the type, content, volume, time, arrangement and placement on the screen of matters to be broadcast’, so that broadcasting programmes will eventually become a factor in determining whether or not to broadcast, and services of OTT media platforms will also be included in broadcasting if they transmit broadcasting programmes, but this was abandoned.

-The Committee's alternative bill, the ‘Partial Amendment to the Telecommunications Business Act’, clarifies that online video services provided by OTT media platforms fall under the additional telecommunications obligations of the Telecommunications Business Act.

-The Audiovisual Media Services Bill seeks to include services provided by OTT media platforms in the Broadcasting Act by defining them as ‘audiovisual media services’, while the Digital Video Media Bill seeks to establish a dual legal system of ‘public media law’ and ‘digital video media law.’

○In the case of Canada, which has a strong regulatory policy for OTT media platforms, the Online Streaming Act, enacted last year, laid the groundwork for regulation by bringing OTT media platforms and services under broadcasting legislation and imposing Canadian content quotas and contribution obligations on OTT media platforms to support local culturally-based content. France imposed financial contribution obligations on foreign OTT media platforms and introduced a content quota system to protect its audiovisual industry; Germany replaced the concept of broadcasting with media and enacted the Interstate Media Convention to include all forms of media in the legal system; and Japan kept OTT media platforms separate from broadcasting law, as is currently the case in Korea, pointing to the imbalance between the existing broadcasting business and regulation.

-A legal system that redefines the concept of broadcasting as a medium and leaves room to include not only OTT media platforms but also new media that will emerge could serve as a model of flexible response to technological developments that could be used as a reference for revising our legal system.

-Efforts to protect and promote Korean content and cultural industries should be incorporated into the legal system, including financial contributions and domestic content production, which should be considered in light of Korea's current trade agreements with the United States.

▶ Reform the legal system to ensure fair competition among OTT media platforms

○It is necessary to adopt a (provisional) unified media law based on the concept of new media.

○Given the convergence of broadcasting and telecommunications through technological development and the emergence of new media that play the same role as broadcasting, it is not appropriate to continue to legislate separately while leaving the old Broadcasting Act as it is, or to try to incorporate new media services into the existing Broadcasting Act through amendments to the Broadcasting Act.

-It is more forward-looking to consider new concepts of broadcasting than to cram into the Broadcasting Act convergent media that emerge with technological advances.

○In a horizontal regulatory system within the new unified law that applies levels of regulation based on the nature and content of the service, the question of defining levels that are subject to the same level of regulation is key.

-It would be easier to regulate content (production) and distribution (platform). Of course, even at the content level, depending on the role of the service provider (editorial control), the nature of the content (degree of similarity to existing TV programmes) and the different mode of service delivery (one-way or two-way), it would be appropriate to classify some services as audiovisual media services and others as more appropriately excluded from the framework of media integration regulation.

○The establishment of integrated governance for policy promotion is necessary to solve the problem of inefficiency in policy governance.

-Since the (tentative) Integrated Media Act is based on expanding and conceptualizing the concept of “broadcasting” in the current “Broadcasting Act” to include new media, it would be impossible to enforce the new legislation that includes the concept of new media services in the existing system of the Korea Communications Commission, which regulates broadcasting, the Ministry of Science and ICT, which is in charge of online video services, and the Ministry of Culture, Tourism and Sports, which is in charge of content.

-It would be impractical and unrealistic to expect a single authority to regulate and enforce what is currently divided between three administrative agencies, and would be inconsistent with the intention of the Unified Law to completely reorganize the service system based on the new media concept. As a result, it is recommended that the administration and enforcement of the Unified Law be organised under a new administrative agency and that a (provisional) Ministry of Media be established.

○Proposal for a unified legal system

-Proposed to repeal the current Broadcasting Act and enact an integrated media law to regulate new types of media services, such as services provided by OTT media platforms, under the same law as the existing Broadcasting Act

-Proposed to define the concept of media services subject to the law and to define key concepts such as media programmes, channels and programmes that are components of the concept of media services

-Proposed to define “public media services” separately from “media services” and to regulate them differently

○Measures to create a level playing field for the development of the industry

-Under current international agreements, there is no basis for differential treatment of global OTT media platforms in a dominant market position without a specific offence, so it is more realistic to focus on strengthening the competitiveness of the domestic content industry rather than trying to differentiate levels of regulation.

-There have been attempts to legislate an ‘additional claim right’ to ensure ‘just compensation’ for content creators to compensate for the transfer of all copyrights to production companies under the special provisions of the Korean Copyright Act, but there is no indicator of the accrual of the right or the level of compensation, so even if it is introduced, it will need to be agreed through discussion.

-Currently, the best solution is to form an organisation through the Creative Nature Association and negotiate with OTT media platforms to obtain fair compensation.

 

Ⅲ. Expected Effects

▶ It can be used as an academic basis for legal research on fair competition and regulation of the OTT market, and for future discussions on the introduction of regulation as a platform.

○Propose a revision of the legal system that integrates and systematizes the regulations that are distributed according to the way in which digital media-related content is delivered

-By seeking to integrate services previously divided between broadcasting and telecommunications, it removes the market uncertainty caused by the current system of division.

-By moving from a vertical to a horizontal classification system, it is possible to actively respond to new services and changing market conditions.

-It also promotes competition in the media industries and contributes to the health of the content ecosystems.