[Open Forum] Reckless OTT Regulation Could Poison Competitiveness

South Korea’s online video service (OTT) industry is grappling with serious concerns. The industry worries that the flood of proposed bills could undermine the momentum of its growth. In its haste to close regulatory blind spots, the government has been pushing ahead too quickly, producing measures that are at times simplistic and unrealistic. On top of that, each ministry is putting forward its own policies and competing for the lead, heightening concerns over “overlapping regulations.”

The global OTT market is currently valued at $110 billion, up 20% from the previous year. With the COVID-19 pandemic becoming prolonged, the outlook remains bright. The domestic situation is similar. Market leader Netflix has surpassed 10 million monthly users. In other words, one in five Koreans uses the service. Given these conditions, South Korea’s OTT industry is also pursuing aggressive business expansion. Wavve, the joint platform of SKT and the terrestrial broadcasters, plans to invest trillions of won in the coming years, while Watcha, which focuses on film content, has successfully secured Series D investment.

As OTT’s influence as a media platform has grown, various legislative proposals have emerged. The problem is that many of these policies do not adequately reflect reality. Last February, a revision to the collection rules proposed by the Ministry of Culture, Sports and Tourism—which would require OTT platforms to pay music copyright fees at around 2% of revenue—became embroiled in controversy. Considering that terrestrial broadcasters and IPTV providers in the same industry remain in the 0% range, this is relatively high. OTT companies immediately pushed back, arguing that the ministry had effectively sided with music copyright organizations. In the end, OTT providers filed an administrative lawsuit against the Minister of Culture, Sports and Tourism over the revised collection rules.

Critics have also argued that government ministries are merely engaged in turf wars over jurisdiction. The government proclaimed a principle of “minimum regulation” to promote industrial growth and established an “inter-ministerial OTT consultative body.” In reality, however, the relevant ministries have each responded separately. With too many helmsmen, the ship is headed for the mountains. A representative example is that each ministry has created its own dedicated team under its authority. Their names vary as well: “Policy Cooperation Team,” “Activation Support Team,” “Content Team,” and so on. This strongly suggests that each ministry is seeking to exercise regulatory jurisdiction for itself.

Efforts to define OTT’s legal status are also being pursued in a piecemeal manner. At present, OTT providers are classified as “special type value-added telecommunications business operators.” However, the Ministry of Culture, Sports and Tourism and the Korea Communications Commission are preparing measures to grant OTT yet another new legal status. Under such circumstances, the related industry can hardly avoid feeling a heavy burden.

As a newly emerging industry, the OTT sector could see its competitiveness deteriorate if regulations are imposed indiscriminately. It must be remembered that it is OTT providers who bear the brunt of the fragmented actions of government ministries. Rather than brandishing the blade of regulation indiscriminately, the government needs to take a cautious approach that considers the overall environment.

Original title: [자유발언대] OTT 무분별한 규제가 경쟁력 약화의 독이 될수도

Author: Hong-ju Lee

Date: 2021-05-02

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=11&idx=23676