RESTRICTED
GENERAL AGREEMENT S/NGBT/W/3/Add.11
20October 1994
ONTRADE INSERVICES
(94-2128)
Original: English Negotiating Group onBasic Telecommunications
COMMUNICATION FROM THE REPUBLIC OFKOREA
Response toQuestionnaire onBasic Telecommunications
Theattached communication iscirculated attherequest oftheRepublic ofKorea toMembers
oftheNegotiating Group onBasic Telecommunications.S/NGBT/W/3/Add.11
Page2
PART I
Definition andMarket Structure
Definition
1. Classification ofservices
Telecommunication services areclassified intoNetwork Services andValue-Added Services
onthebasis oftheownership oftelecommunications network facilities:
- NetworkServicesisdefinedastelecommunicationsserviceswhichareprovidedthrough
telecommunications network facilities ofNetwork Service Providers ("NSP"), which
ownandoperate theirownnetwork facilities. Network Services isfurther classified
intoGeneral Services andSpecific Services, based ontechnical specificity or
geographical restrictions;
- Value-Added Services means telecommunications services which areprovided through
telecommunication facilities leased formNSPs andwhich storeandforward, process
andforward, thecustomer 'sinformation onanon-real timebasis.
Classification ofservice providers
Telecommunications service providers which ownandoperate theirownnetwork facilities are
definedtobeNetworkServiceProviders("NSPs"),andthosewhichprovidetelecommunicationsservices
using telecommunications network facilities leased formNSPs aredefined tobeValue-Added Service
Providers ("VSPs"). NSPs arefurther classified intoGeneral Service Providers ("GSPs") andSpecific
Service Providers ("SSPs") based upontechnical attributes andgeographical limitations oftheservices
provided.
Thescope andtypes oftelecommunications services tobeprovided byatelecommunications
service provider isdetermined bytheclassification oftheservice provider:
- GSPs areallowed toprovide telephone service, telegraph, telex, leased lineservice,
datacommunications service, facsimile service, andother services designated bythe
Minister ofCommunications ("Minister");
- SSPsprovidetelecommunicationsservicethatarerestrictedtechnicallyorgeographically,
suchascellular telephone service, paging service, trunked radio service, andother
services designated bytheMinister;
- VSPs areallowed toprovide Value-Added Services including on-line databaseand
remote computing services, simple datatransmission services, andother services
designated bytheMinister.
2. Refer toanswer in1.
3. Among telecommunications service sectors listed intheGATS Services Sectoral Classification
list(MTN.GNS/W/120), onlyNSPs areallowed toprovide thefollowing telecommunications services:S/NGBT/W/3/Add.11
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- voice telephone service
- telexservice
- telegraph service
- facsimile service
- private leased circuit service
Market structure
4. PursuanttotheTelecommunicationBusinessLaw,onlytheNSPsareallowedtoprovideNetwork
Services suchastelephone service andcellular phone service. Forfurther details, refer toanswer
in1.
5. Network services canbeprovided onlybyNSPs. Atpresent, NSPs operating inKorea take
oneofthefollowing structures: public corporate entity partly owned bythegovernment, company
partly owned bythepublic corporate entity, andprivately owned company.
6. Noforeign equity participation orownership inGSPs areallowed, pursuant toArticle 6of
theTelecommunication Business Law. Foreign governments orforeigners areallowed toownup
toonethirdofSSP'svoting stock pursuant toArticle 18oftheTelecommunication Business Law.
Current levels ofidentifiable foreign equity participation:
- Korea Mobile Telecom. (cellular andradio-paging service provider): 10%
- Shinsegi Telecomm Inc.(cellular service provider): 22.2%
7. (a) Among services allowed tobeprovided byNSPs, thefollowing services areopento
competition: international telephone service, cellular phone service, radio paging
service, simple datatransmission services, andprivate leased circuit services.
(b) Currently, noforeign supplier participates inthesupply ofNetwork Service, except
fortheequity participation mentioned intheanswer of6.
8. Sofar,Korea hasbilateral international VAN agreements withUnited States, Japan, and
Australia, respectively, which allow theprovision ofdatatransmission services byVSPs. Korea also
made commitment ofallowing theprovision ofdatatransmission services byVSPs initsNational
Schedule ofSpecific Commitments, andintegral partoftheUruguay Round General Agreement on
Trade inServices.S/NGBT/W/3/Add.11
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PART II
Competition
Subsector Overview on
CompetitionLimitations onMarket
AccessLimitations on
National
Treatment
Voice telephone
services*International
service: Duopoly
Others: MonopolyNoforeign investment
allowedNot-applicable
(NA)
Packet-switched
datatransmission
services***Competition None None
Circuit-switched
datatransmission
services***Competition None None
Telex service* Monopoly Noforeign investment
allowedNA
Telegraph service* Monopoly Noforeign investment
allowedNA
Facsimile service* International
service: Duopoly
Others: MonopolyNoforeign investment
allowedNA
Private leased
circuit service*Duopoly Noforeign investment
allowedNA
Cellular phone
service**Duopoly Foreign investment upto
onethirdallowed ****NA
Paging service** Oligopoly/Duopoly Foreign investment upto
onethirdallowed****NA
Mobile data
service**Undecided Foreign investment upto
onethirdallowed****NA
Note: Keys fordomestic licensing requirement are:
* designation asaGSP
** licence asanSSP
*** registration asaVSP
**** ownership/equity participation restrictions inanSSP, pursuant toArticle 18ofthe
Telecommunications Business Law:
- Corporations whose representative isaforeigner ormore thanonethird ofwhose
executives areforeigners arenotallowed tobegranted anSSPlicence.S/NGBT/W/3/Add.11
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- Thefollowing entities arenotallowed tobecome thelargest shareholder ofanSSP
ortoownmore thanone-third oftheSSP'svoting stock:
-foreign governments;
-foreigners; and
-corporations which are50percentormore owned byforeign governments or
foreigners.
- Domestic orforeign manufacturers oftelecommunications facilities suchasswitching
equipment, communications cables, andtransmission facilities arenotallowed toown
more than10percentofanSSP'svoting stock.
Generic licensing criteria foranSSPare,pursuant toArticle 17oftheTelecommunications
BusinessLaw:satisfactionofconsumerdemand,adequacyoffacilities,possessionoffinancialresources
andtechnology, conformity with thelong-term telecommunications plan oftheMinistry of
Communications.
Registration criteria foraVSPare,pursuant toArticle 23oftheTelecommunications Business
Law: financial capacity, possession offacilities, andtechnical capability.
Local/long distance/international
1. Based onthestandardized contract oftheKorea Telecom, thewhole nation isdivided to146
calling zones. Anycallwithin theidentical calling zoneisdefined asalocalcall,andcallsbetween
calling zones aredomestic longdistance calls.
2. When telecommunications service providers want tosign, change orrepeal agreements or
contractsoninternationaltelecommunicationsagreements,theyshouldobtainapprovalformtheMinister,
pursuant toArticle 59oftheTelecommunications Business Law.
Resale basis
3. Internationalresaleofprivateleasedcircuitfordatacommunicationsispermitted.Interconnection
ofbothendsofprivate leased circuit fordatacommunications withthepublic network isallowed on
thebasis ofthereciprocity between Korea andthecountry concerned.
International resale ofprivate leased circuit forvoice communications isnotallowed.
Interconnections ofinternational private leased circuit forvoice communications withthepublic network
isprohibited.
4. Resale ofprivate leased circuit excess capacity fordomestic datacommunications ispermitted.
Simple resale ofprivate leased circuit excess capacity forvoice communications ispermitted
onlyunder theconditions thatnoswitching equipment beattached andinterconnections bepermitted
tothepublic network within thesame calling zoneonly.
Facilities-based
5. ServiceproviderswhogetdesignatedorlicensedasNSPsundertheTelecommunicationBusiness
Lawareallowed toconstruct oroperate theirownnetwork facilities.S/NGBT/W/3/Add.11
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Public/non-public supply
6. The current regulatory regime does notrecognize thestatus ofnon-public basic
telecommunications service providers.
7. AlltelecommunicationsservicesexclusivelyprovidedbyNSPsarerequiredtobemadeavailable
tothepublic ingeneral.
8. Refer toanswer in7.
9. NSPs dulydesignated orlicensed pursuant totheTelecommunications Business Lawaresubject
tothefollowing obligations:
- investment forresearch anddevelopment onadvanced telecommunications technology;
- financial contribution toinstitutions andassociations intheresearches of
telecommunications;
- submission ofprocurement planfortelecommunications equipments;
- operation andmaintenance oftelecommunications facilities;
- public notice ofstandardized contracts;
- interconnection andshared-use oftelecommunications facilities;
- faircompetition;
- public notice ofopennetwork service provision;
- submission ofaccounting dataandbusiness operation report; and
- preparation andreport ofstatistics ontelecommunications business.
10. Theexact meaning ofquestion isnotclear.
11. Theoperation ofpublic pay-phone isancillary service oftelephone service andcellular phone
service. Hence, itisreserved forNSPs designated orlicensed fortheprovision oftelephone service
andcellular phone service.
PART III
Regulatory Issues
Relationship between regulatory andoperational functions
1. Pursuant totheTelecommunications Basic Law, allinterested parties areinvited toexpress
theiropinions inthemaking ofimportant policy measures oftheMinistry ofCommunications ("MOC").
Inthelegislation ofanewlaworrevision ofanexisting law,itsdraftispublished intheofficial gazette
forapredetermined period oftime.S/NGBT/W/3/Add.11
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TheTelecommunications Technology Association ("TTA"), established pursuant tothe
TelecommunicationsBasicLaw,setsstandardsanddisseminatethem.Anyinterestedpartycanparticipate
inthestandardization process oftheTTA.
2. TheTTA isresponsible forsetting standards onavoluntary basis, pursuant tothe
Telecommunications Basic Law.
TheMinister may settechnical specifications andmake apublic notice asregards
telecommunications facilities inthefollowing cases:
- tosecure safety ofpersonnel andfacilities;
- toensure anefficient operation anddiverse provision oftelecommunications services;
and
- formain items commonly related tousers, manufacturers, andtelecommunications
suppliers.
3. TheMOC isresponsible foralltheregulations related withtelecommunications.
TheKorean Communications Commission ("KCC") isestablished bytheTelecommunications
Basic Law with aview tosecuring fairandeffective competition, protecting users'right and
review/deciding major telecommunications policy. TheKCCmakes itsdecision bythemajority voting.
Aparty canchallenge theKCC'sdecision through general dispute resolution mechanism oftheKorean
juridical system.
Frequency allotment orassignment
4. Onthebasis ofradio frequency allocation recommended bytheRadio Regulations ofthe
International Telecommunications Union, technology trends andforecasting offuture demands, the
MOC allots radio frequency tospecific categories ofservices.
Considering technology trends, competition policy andmarket structure, theMOC licence
radio-based telecommunications services foranappropriate number ofservice providers subject to
theavailability ofallotted radio frequency. Service providers licensed asSSPs canrequest theMOC
fortheassignment ofradio frequency fortheprovision ofitslicensed service within therageofallotted
frequency.
5. Foreigner orforeign service provider, asdefined inArticle 5ofRadio Law, cannot establish
radio stations inKorea. However, forsome limited landmobile radio stations establishment ofsuch
radio stations areallowed toforeigners onthebasis ofreciprocity.
Numbering andidentification codes
6. TheRegulation ontheManagement ofTelecommunications Numbering, established pursuant
toArticle 36oftheTelecommunications Business Lawandalsobased ontheCCIITT Recommendation,
governs theprocedures, requirements, andcriteria usedinassigning numbers andidentification codes.
Telecommunications service providers arerequired tosubmit documents ontheirservice network
configuration andnumber usage plan, when theyapply fortheassignment ofnumbers totheMOC.
7. Nationaltreatmentisgrantedtoforeigntelecommunicationsserviceproviderswhichhavegained
market access intotelecommunications services inKorea.S/NGBT/W/3/Add.11
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Standards, typeapproval andequipment attachment
8. Three types ofmandatory standards areinplace:
- Type-approval forwireline telecommunications equipment;
- type-approval forwireless telecommunications equipment; and
- electromagnetic interference ("EMI") testing forequipments emitting electromagnetic
radiation.
9. Theprivate sector, theKorean national/firm andforeigners/foreign firmcanparticipate inthe
standard-setting procedures through theTTA, including comment prior totheadoption ofstandards.
10. Forequipment subject totype-approval, refertoanswer in8.
Self-certification isnotallowed.
Bilateral consultations areinprogress withaviewtoachieving mutual recognition agreements
fortelecommunications equipments certification withthefollowing countries: Australia, Canada, the
European Union andtheUnited States.
Type approvals arerequired forforeign produced equipment.
11. Forwirelinetelecommunicationsequipments,theyshouldcomplywiththeprovisionsonterminal
equipment,theTechnicalRegulationsonTelecommunicationsFacilities.Forwirelesstelecommunications
equipments, theyshould comply withtheTechnical Regulations onRadio Equipments.
12. Themeaning ofthequestion isnotclear.
13. Customers canattach itsownchoice ofterminal equipment tothenetwork.
Interconnection
14. Interconnection isregulated pursuant toArticle 34and35oftheTelecommunications Business
LawandtheNotice onCriteria ofInterconnection between Networks. TheNotice specifies, among
other things, system ofinterconnection, calculation ofaccess charge andsettlement.
15. When atelecommunications service provider isrequested byother telecommunications service
provider forinterconnection, aninterconnection agreement should bemade within threemonths from
thetimeoftherequest, unless special situations prevail. Suchanagreement should comply withthe
NoticeonCriteriaofInterconnectionbetweenNetworks,andshouldbeapprovedbytheMinisterpursuant
toArticle 34oftheTelecommunications Business Law. Theapproval isalsorequired formodification
orrepeal ofinterconnection agreement.
TheMinister canorder interconnection agreement totelecommunications service providers,
incasewhen interconnection agreement isnotorcannot bereached within three-month time-frame
afterrequest, ortheMinister decides thatinterconnection isnecessary topromote public interests.
16. Interconnection between leased circuits andpublic datanetworks ispermitted pursuant tothe
standardized contracts onleased circuits ofNSPs.S/NGBT/W/3/Add.11
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17. InterconnectionagreementshouldcomplywiththeNoticeonCriteriaofInterconnectionbetween
Networks, established onthebasis ofArticle 35oftheTelecommunications Business Law. Access
charge isdetermined bythecriteria asspecified intheNotice, andtheNotice isapplied toall
telecommunicationsserviceproviders.Inprinciple,accesschargeisbasedonthecostofinterconnection.
Inorder toobtain approval ofaninterconnection agreement, modification orrepeal thereof,
telecommunications service providers must submit thefollowing documents totheMinister:
- acopyoftheinterconnection agreement;
- adocument onsettlement feeandsettlement methods; and
- aplancarrying summary information ofinterconnection.
Competitive safeguards
18. Regarding anti-competitive practices under thecircumstances where telecommunications service
providers provide identical orsimilar services competitively, theMinister cantakecorrective measure
pursuant toArticle 37oftheTelecommunications Business LawandtheDirective onFairCompetition
inTelecommunications Services, established inJuly1993.
When NSPs arefound tohaveengaged inunfair oranti-competitive practices, theMinister
canrequire theNSPs toimplement specific measures afterareview bytheKorean Communications
Commission ("KCC"), suchas:
- structural separation ofNSPs;
- prohibition ofcross-subsidization;
- disclosure ofinformation regarding thetelecommunications services indisputes;
- changes inagreements between NSPs andVSPs forinterconnection;
- changes instandardized contracts orarticles ofincorporation ofNSPs;
- prohibition ofpractices byNSPs which unfairly restrict thebusiness operation ofnew
telecommunications service providers; and
- prohibition ontheprovision oftelecommunications service, installation of
telecommunications facilities oranyotherpractices ofNSPs which restrict competition
among telecommunications service providers orharm users'interests.
19. Telecommunications-related lawdoesnotdistinguish between dominant andnon-dominant
suppliers.
Accounting separation andopen network service provision areinplace intheDirective on
FairCompetition inTelecommunications Services. (Also refertoanswer in18.)
20. TheMonopoly Regulation andFairCompetition Actisinplace asanindustry-wide regulations
onmonopoly. Itregulates thefollowing activities ofcompanies oraffiliated companies belonging to
thebusiness group ofwhich paid-in capital exceed won5billion ortotalassetexceeds won20billion:S/NGBT/W/3/Add.11
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- acquisition orownership ofequites ofother companies;
- merger withother companies; and
- having itsexecutives orworkers holdanadditional position ofexecutive orworkers
inother companies atthesame time.
TheMonopoly Regulation andFairCompetition Actdefines themarket-dominant company
andregulates itsabuse ofmarket position. Acompany isdeemed tobemarket-dominant, ifitsmarket
share isabove 50percentoritsmarket share isabove 10percentofthemarket andatthesame time
itsmarket share combined withmarket shares ofother oneortwocompanies exceeds 75percent.
Merger andacquisition oftelecommunications business issubject totheapproval oftheMinister
pursuant toArticle 13oftheTelecommunications Business Law.
21. IfNSPswishtoengageinbusinessotherthantelecommunicationsbusinessdesignatedorlicensed
pursuant totheTelecommunications Business Law, theapproval oftheMinister isrequired. With a
viewtopreventingproblemsassociatedwithverticalintegration,themanufacturingoftelecommunications
equipment byNSPs isnotallowed.
Pricing-related measures
22. TheMOC approves prices ofNSPs pursuant toArticle 29oftheTelecommunications Business
Law. Monthly rental, local callcharge anddomestic long-distance callcharge areapproved after
consultation withtheEconomic Planning Board pursuant toArticle 4oftheMonopoly Regulation and
FairTrade Act.
23. Intheprocess ofapproving tariff ofanNSP, with aview toensuring objectivity and
transparency, costdataprepared pursuant totheRegulations onTelecommunications Service Cost
Accounting andReporting areaccepted asdulysubmitted.
24. Tariff ofNSPs should notdiscriminate against aparticular person, asstipulated byArticle 29
oftheTelecommunicationsBusinessLaw.Nonetheless,pursuanttoArticle32oftheTelecommunications
BusinessLaw,speciallydesignedtariffschememaybeappliedforlow-incomeclassusersorhandicapped
persons. Forsome services, traffic-dependent discount isallowed totheextent thatitpromotes
competition anddoesnotimpair faircompetition.
Accounting rates between countries aredetermined byvoluntary agreement between
telecommunications service providers subject totheapproval oftheMinister, pursuant toArticle 59
oftheTelecommunications Business Law.
25. No.
26. Refer toanswers in22and23.
27. TheMinister mayapprove tariffofanewservice forthepurpose ofpilottesting onatemporary
basis pursuant toArticle 29oftheTelecommunications Business Law.S/NGBT/W/3/Add.11
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Rights ofwayfortheconstruction ofinfrastructure
28. AnNSPdesignated orlicensed bytheMOC ispermitted tobuild itsownfacilities subject to
theapproval oftheMinister. Such anNSPisallowed tohaveright ofwayfortheconstruction of
infrastructure orfacilities pursuant toArticle 39oftheTelecommunications Business Law.
29. National treatment willbegranted toforeign telecommunications suppliers ofwhich market
access intothenetwork telecommunications service inKorea isallowed.
Newtelecommunications services
30. Ifanewtelecommunications service isdetermined tobeacategory ofancillary service of
Network Services ofanNSPinoperation, itcanbeprovided tousers aftertheapproval ofmajor
telecommunications facilities andofstandardized contract ontheservice bytheMinister.
Ifanewtelecommunications service isdetermined tobeacategory ofNetwork Services, an
eligible service provider ofsuchaservice willbeselected through designation/licensing procedure.
Then, thedesignated/licence service provider cansupply theservice aftertheapproval forinstallation
ofmajor telecommunications facilities andofstandardized contract ontheservice bytheMinister.
31. TheMOC decides thestatus ofnewservice pursuant totheTelecommunications Business Law
whether itbelongs tothecategory ofNetwork Service ofValue-Added Service. Inthisdecision-making
process, opinions ofinterested parties willbedulytaken intoaccount.