Free Rides
Global internet giants, such as Facebook, Google and Apple which make huge advertising revenues, test their new technologies like virtual reality (VR) and secure user data using South Korea’s high-speed internet network that boasts world's fastest speeds and quality, are refusing to pay fees for data usage.
According to industry sources on May 16, SK Broadband subscribers on both smartphones and desktop computers have reported latency while using Facebook after SK Broadband and Facebook failed to come to an agreement over the fees for data usage. The controversy began when Facebook established a cache server to handle growing data volumes of South Korean users. SK Broadband asked Facebook to pay the fees for data usage of the cache server but Facebook refused SK Broadband’s request.
An official from SK Broadband said, “South Korean internet service providers pay tens of billions of won for data usage every year. However, Facebook is insisting that it cannot pay network usage fees even though it established the cache server to process growing data. We should not allow the usage fee discrimination among internet firms at home and abroad to happen any longer.”
An official from Facebook said, “South Korean internet businesses have a lot more servers and it is embarrassing to pay fees for data usage, though Facebook only runs small servers.”
The biggest issue in the controversy is unfair competition among internet service providers. South Korean companies, including Naver and Kakao, are paying network usage fees to telecommunications companies, while global companies are insisting on the free use of data. In short, South Korean companies are encountering the reverse discrimination at home.
Currently, there is no standard in South Korea for arbitration when global internet service providers refused to pay the fees for data usage. A spokesperson at the Ministry of Science, ICT and Future Planning said, “There is no legal basis to solve the problem right away because it is the issue to be solved through negotiation between business operators. But, we will find out what we can do to mediate after hearing the both sides.”
However, industry watchers say that there will be more similar cases. LG U+ is already in dispute with Facebook, just like SK Broadband. In addition, global internet giants, such as Google and Apple, are planning to test their new technology contents, including VR and augmented reality (AR), using South Korea’s communication networks. Accordingly, they will use a greater volume of data and network carriers are expected to request to share costs.
An official from the industry said, “Global internet service providers which have entered the domestic market like Google and Facebook are continuously growing in terms of number of users and sales every year, but they are trying not to pay the usage fees for networks, which are the requirement for business, as well as taxes. In particular, global internet firms are paying the network usage fees to high-speed internet network carriers in the U.S., while they are trying to get a free ride in regions other than the U.S., showing an ambivalent attitude. So, the government needs to come up with the measures.”
Experts agree that the country needs to have a system that can arrange the difference between global internet companies and domestic network providers in case they clash over such problems in the future.