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Research Report

An Analysis on Regulatory Innovation of New Industries and Services
  • Issue Date 2021-11-30
  • Page 262
  • Price 10,000
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Ⅰ. Background and Research purpose
○ Behind the introduction of regulatory innovation to foster new industries and services, there are social costs due to friction between relevant stakeholders.
- A common recognition that there is a limit to achieving the purpose of regulatory innovation only through innovative transformation of the regulatory system.
- There is a perception that “institutional matter is important” to enhance national competitiveness, but experience that changes to the legal system alone do not improve the effectiveness of the system.
○ Reforming the institutions that hinder innovative national growth and creating an institutional foundation that can accommodate the development of new industries and services is a key direction of recent regulatory innovation.
○ In the process of regulatory innovation to create new industries and services, various issues arise in the process of introducing the system, such as complex development by connecting various stakeholders.
○ The government establishes and implements a basic plan for regulatory reform in new industries every three years, and is establishing a related basic plan by revising the Framework Act on Administrative Regulations to fundamentally respond to regulatory issues.
- Although government-led regulatory reform is being carried out through the new industry regulatory reform master plan or preemptive regulatory innovation roadmap, there is insufficient discussion on stakeholder participation and cooperation in this process. 
○ Therefore, this research identify key issues by listening to the opinions of major stakeholders(focus group interview) industry and to suggest points of regulatory obstacles and delays. 
Ⅱ. Main Content
▶VR/AR field
○ [Status of Regulatory policy] Virtual reality and augmented reality are understood in various ways, such as the technology itself, realistic content, and the implemented situation, and there is no clear legal definition
- VR/AR service license and permission must be separately obtained for content grade classification (Yeongdeung/Game Board), copyright (Ministry of Culture, sports and tourism), safety inspection (by sector), electromagnetic compatibility assessment (Ministry of Science and ICT), KC certification, medical, game, Depending on the fields such as education and industry, individual laws regulate the subject of permission in a positive way
○ In the roadmap for preemptive regulatory innovation in the VR/AR field (joint with related ministries, Aug. 2020), 10 regulations common to all fields and 25 tasks in 6 fields such as entertainment/ culture/ education/ manufacturing/transportation/medical/public are revised. 
○ [Analysis of Laws] The VR/AR related laws are as follows
- Ministry of Culture, sports and tourism 「Movie and Video Act」→ Video Rating Board Classification of Video 
- Ministry of Culture, sports and tourism 「Game Industry Act」→ Game Management Committee Classification of Game Products
- National Information Service 「Electrical Household Appliances Safety Act」 → Electrical Appliances Safety Certification and Safety Confirmation Report
- Ministry of Science and ICT 「Radio Law」 → Electromagnetic compatibility standards, broadcasting and communication equipment conformity evaluation (conformity certification, conformity registration, provisional certification)
○ [Analysis of Stakeholder Regulatory Innovation Demand Analysis] The analysis of the stakeholder regulatory innovation demand in the VR/AR field analyzed through the focus group interview is as follows.
-[Issue 1] VR/AR regulatory governance: Since VR/AR encompasses C-P-N-D (Contents-Platform-Network-Device), it is necessary to consider the interests of each stage
- [Issue 2] Classification of VR/AR contents/devices: The Game Industry Act defines 'game products' fairly comprehensively, and in practice, interactive content is judged as 'entertainment'. Content is regulated as a game under the current Game Industry Act
- [Issue 3] Data collection in the process of VR/AR content production: It is necessary to discuss management/operational responsibilities of platform operators as illegal acts between individuals may occur in VR/AR platforms
- [Issue 4] VR/AR platform issues: There may be illegal acts between individuals in VR/AR platforms, so it is necessary to discuss management/operational responsibilities of platform operators
- [Issue 5] Conflict of interest in the VR/AR application industry: Medical S/W and digital treatment in the medical field have complicated procedures for approval of medical devices and pharmaceutical items and registration of health insurance benefits
○ [Stakeholder analysis using Q methodology] Conflict points and cooperative alternatives are as follows
- Conflict point: Conflict factors in the VRAR field were analyzed as government-led R&D, content standards, overseas information utilization, relaxation of utilization standards in other fields, and recruitment of safety-related personnel.
- Cooperation alternatives: Communication channels and support bases between the government and companies related to safety should be expanded.
○ [Sector Conclusion] The causes and directions for improvement in the VR/AR field are as follows. 
▶ Digital content field
○ [Status of Regulatory Reorganization] OTT service is subject to additional telecommunications business regulations under the “Telecommunication Business Act” under the jurisdiction of the Ministry of Science and ICT separately from general cable broadcasting, satellite broadcasting, and IPTV operators under the “Broadcasting Act”.
- Recently, the burden of operators has been increased by preparing individual regulatory grounds for each ministry, such as the Ministry of Science and ICT, Ministry of Culture, sports and tourism, the Korea Communications Commission, and the Fair Trade Commission.
- In the Digital Media Ecosystem Development Plan (jointly with related ministries, Feb. 20), 7 ministries including the Ministry of Science and ICT, the Korea Communications Commission, the Ministry of Culture, Sports and Tourism, and the Fair Trade Commission agreed on the minimum regulatory principle and support direction for OTT 
- The Ministry of Science and ICT amended the 「Telecommunication Business Act」 (’21.9) to classify OTT service as a special type of value-added communication service
- Recently, various ministries such as the Ministry of Culture, Sports and Tourism are pushing for regulations on OTT operators, such as the Ministry of Culture, Sports and Tourism, the Audiovisual Media Service Act (draft), and the Fair Trade Commission Online Platform Fairness Act (draft).
○ [Analysis of laws] The laws related to digital contents are as follows
-Ministry of Science and ICT 「Telecommunication Business Act」→ Technical measures of special type value-added telecommunication service providers, etc.
- Fair Trade Commission 「Online Platform Fairness Act (draft)」 → The Fair Trade Commission investigates and handles unfair trade practices of platform brokers, dispute resolution between business operators, violations, liability for damages of online platform brokers, etc.
- Ministry of Culture, Sports and Tourism 「Video Media Contents Act」 → New concept of ‘Video Media Contents’, etc.
- Korea Music Copyright Association 「Regulations on the collection of royalties for musical works」 → Establishment of the fee rate for 'video transmission service'
○ [Analysis of Stakeholder Regulatory Innovation Demand] The analysis of the stakeholder regulatory innovation demand in the digital content field analyzed through the focus group interview is as follows.
- [Issue 1] OTT Regulatory Governance: Currently, each department is preparing and reviewing separate OTT-related laws, which conflicts with the minimum regulatory principle, the basic principle of the 「Digital Media Ecosystem Development Plan」 announced in cooperation with related ministries in 2020
- [Issue 2] Differentiation between broadcasters and OTT operators: For broadcasters, prohibited acts between operators and users are stipulated in the 「Broadcasting Act」 and 「Internet Multimedia Broadcasting Business Act」. Absence of regulation on refusal of supply and unfair profit sharing
- [Issue 3] Content copyright fees: OTT operators point out that there is a problem of double collection by requiring users to pay royalties again when they are serviced on the OTT platform, even though most of the cases where music works are rights-processed in the production stage for video content.
○ [Stakeholder analysis using Q methodology] Conflict points and cooperative alternatives are as follows
- Conflict point: Conflict factors in digital content (OTT field) are analyzed as financial investment method, regulatory application method, zero rating, guideline presentation, scientific evidence provision, tax benefits, and government investment reinforcement, etc.
- Cooperation alternatives: As a cooperative alternative, the domestic company protection system and improvement of the method of settlement of copyright fees were analyzed first.
○ [Sector Conclusion] The causes of problems in the digital content field and directions for improvement are as follows 
▶ Distance education
○ [Status of Regulatory Maintenance] With the creation of an environment where classes can be conducted anywhere through terminals and the Internet, the number of cases where the collection and use of personal information of students, the data subjects, is processed has rapidly increased, and issues related to the use and management of educational data have emerged. 
- With the revision of the 「Elementary and Secondary Education Act」 and 「Higher Education Act」 (October 20, 2020), the ground for “distance classes using broadcasting and information and communication media, etc.” was laid.
- In the 「Basic Act on the Vitalization of Digital-Based Distance Education (Enacted on Feb. 24, scheduled to be implemented on Feb. 25)」, basic matters regarding distance education, grounds for supporting distance education, and the role of educational institutions operating distance education are stipulated
- Includes digital textbooks in the form of electronic works in textbooks for textbooks in the 「Regulations on textbooks」 revision (2001) while the Ministry of Education is operating NEIS
- In the revision of the 「Copyright Act」 ('20.8), if it is necessary for educational purposes, a provision to restrict the exclusive right of copyright is newly established.
○ [Law Analysis] The laws related to distance education are as follows
- Ministry of Education 「Elementary and Secondary Education Act」 → Restriction on the provision of student-related data, guidance and supervision of business processing using information systems
- Ministry of Education 「Ministry of Education Personal Information Protection Guidelines」 → Registration and change of personal information files
- Ministry of Education 「Guidelines for handling pseudonymous and anonymous information in education field」 → Detailed procedures for pseudonymization and anonymization
- Ministry of Culture, Sports and Tourism 「Copyright Act」 → Public transmission of published works
○ [Analysis of Stakeholder Regulatory Innovation Demand] The analysis of the remote sector stakeholder regulatory innovation demand through the focus group is as follows.
- [Issue 1] Establishment of education data collection and management system: Although various educational data are accumulated in the Ministry of Education, provincial and provincial education offices, and education-related institutions, most of them contain a lot of data related to the current state of school facilities and budget, and detailed data for learners’ academic level and problem questions are insufficient construction.
- [Issue 2] Difficulty in using educational data: Educational data opening is limited to educational institutions/public institutions/researchers under the current law, and closed to private companies. difficult to develop edutech services
○ [Stakeholder analysis using Q methodology] Conflict points and cooperative alternatives are as follows
- Conflict point: Conflict factors in the field of distance education were analyzed as the use of education data industry, the use of educational data for edutech companies, the opening of the public cloud, the development of edutech companies, data-related policies, and the direction of government regulation of edutech companies.
- Cooperation alternatives: support for the use of unstructured data, providing specialized institutions, guidelines, and exchanges for educational data
○ [Sector Conclusion] The causes of problems in distance education and improvement directions are as follows 
Ⅲ. Expected Effects
▶ A Reference of Better Regulation Agenda
○ This study on regulatory policy and issues of new industries and services is expected to function as a reference in the fields of VR·AR, Digital Contents and Distance Education.
- The outcomes of this report could be used in the forthcoming studies on law and policy of new industries and services.