A Typical Free Rider
Calls are growing to force foreign content providers (CPs) such as YouTube, Facebook and Netflix to pay fees for the use of internet networks in Korea as data traffic caused by them has been on a sharp rise.
Officials of Korean telecommunication companies also assert that foreign CPs should not be allowed to use domestic mobile telecom networks free of charge while generating huge profits in Korea.
According to the industry on October 22, YouTube earns hundreds of billions of won in ad revenues via its video service in Korea, but its pays virtually nothing for the use of telecom networks in Korea. YouTube receives videos from abroad and provides its video service in Korea. In order to speed up transmission speed in this process, Korean Internet service providers (ISPs) built cache servers that collect and store high-utilization data and allowed YouTube to use their networks for free.
Some problems were caused by an explosion in data traffic due to YouTube and Facebook. ISPs' costs for network expansion and maintenance are steadily increasing but global CPs that are one of the main culprits behind the rise in traffic are enjoying increases in their profits without paying for such costs.
Last June, in Korea, YouTube's monthly average users (MAUs) stood at 25 million, half of the Korean population. The figure is six times higher than the number of Naver TV MAUs, which hit 3.9 million. According to MezzoMedia, YouTube's video ad sales revenues swelled 40.7% to 116.9 billion won in the first half of this year. Although YouTube’s video ad sales revenues were higher than Naver (8.7%), Naver paid 73 billion won for the use of networks but YouTube paid virtually nothing.
"Korean Internet platform companies pay tens of billions of won as network fees which are very high even compared to those of North America and Europe," said Cha Jae-pil, chief of the Policy Office at the Korea Internet Companies Association. "Korea needs to find feasible ways to compel foreign companies such as Google, Facebook and Netflix to shoulder appropriate burden based on traffic volume."