{"id":2199481,"date":"2022-11-15T09:13:48","date_gmt":"2022-11-15T09:13:48","guid":{"rendered":"https:\/\/www.nknews.org\/koreapro\/?p=2199481"},"modified":"2023-04-05T16:10:59","modified_gmt":"2023-04-05T07:10:59","slug":"the-network-fee-fiasco-that-could-cripple-south-koreas-internet-forever","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2022\/11\/the-network-fee-fiasco-that-could-cripple-south-koreas-internet-forever\/","title":{"rendered":"The network fee fiasco that could cripple South Korea\u2019s internet"},"content":{"rendered":"
Amazon\u2019s livestream service Twitch recently <\/span>announced<\/span><\/a> that it will suspend video-on-demand (VOD) in South Korea and no longer allow users to create new VOD content. And while this decision will only directly affect the platform\u2019s niche audience, it highlights a growing battle over <\/span>network usage fees<\/span><\/a> that could reshape the country\u2019s internet landscape.<\/span><\/p>\n Twitch\u2019s announcement comes on the heels of the company\u2019s <\/span>earlier decision<\/span><\/a> to cap all videos at a max resolution of 720p, which it attributed to costs stemming from ROK regulations and such fees. Both decisions will negatively impact the profitability of a company with <\/span>140 million monthly active users<\/span><\/a> worldwide and a large presence in <\/span>South Korea<\/span><\/a>.<\/span><\/p>\n The network fee issue stems from the 2016 revision of the <\/span>Interconnection Standards for Telecommunication Facilities<\/span><\/a> law, which required the country\u2019s three major internet service providers (ISPs) \u2014 SK Broadband, KT and LG U+ \u2014 to <\/span>pay additional fees<\/span><\/a> to send data to one another. This sort of fee structure does not exist in any other advanced economy.<\/span><\/p>\n During the pandemic, when the number of people watching videos through streaming sites such as Netflix and YouTube <\/span>increased significantly<\/span><\/a>, carriers complained of excessive traffic burden.<\/span><\/p>\n According to South Korea’s technology ministry, Google, Netflix and Facebook accounted for 27.1%, 7.2% and 3.5% of all <\/span>data used in South Korea in 2021<\/span><\/a>, respectively \u2014 accounting for more than a third of the country\u2019s total. And as a result of YouTube and Netflix\u2019s growing popularity in recent years, South Korean ISPs have had to foot the bill for sending and receiving the enormous amounts of data they require.\u00a0<\/span><\/p>\n But while local content providers such as <\/span>Naver and Kakao<\/span><\/a> have had to abide by the 2016 law change and pay network usage fees to help cover these costs, this has not been the case for overseas content providers.\u00a0<\/span><\/p>\n The result was that South Korean ISPs, stoking nationalist sentiment, claimed that overseas content providers were \u201c<\/span>free-riding<\/span><\/a>\u201d while reaping <\/span>massive profits<\/span><\/a> and demanded that the likes of YouTube, Netflix and Twitch pay network usage fees as well. A proposed law currently under consideration would go further and enshrine the principle that content providers must pay usage fees.<\/span><\/p>\n But overseas content providers have balked at paying network usage fees because they do not do so in any other country. And given their popularity, their fees will dwarf those paid by local content providers.<\/span><\/p>\n Netflix even filed a complaint against SK Broadband over the issue, but the Seoul Central District Court <\/span>ruled in favor of SK Broadband<\/span><\/a>, stating that the two parties must negotiate an appropriate fee. Netflix has still <\/span>not paid<\/span><\/a>.<\/span><\/p>\n The popularity of South Korean content worldwide \u2014 from BTS to Squid Game to Baby Shark \u2014 is a direct result of being able to deliver such content over the internet for a minimal cost. But such measures risk suffocating the very thing that has helped boost South Korea\u2019s soft power.<\/span><\/p>\n