Wednesday, October 23, 2019
Criticism Mounting over Network Fee Discrimination between Content Providers
An Unlevel Playing Field
Criticism Mounting over Network Fee Discrimination between Content Providers
  • By Kim Eun-jin
  • September 18, 2019, 12:15
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Foreign content providers (CPs) generating massive data traffic pay nothing or close to nothing for their network use.

Internet traffic is soaring in South Korea with video and music streaming services becoming increasingly popular. Still, foreign content providers (CPs) generating the massive traffic are paying nothing or close to nothing for their network use. It is pointed out that the unlevel playing field will become even more so as 5G multimedia services become prevalent and Internet traffic surges even more.

The discrimination between local and foreign CPs in the South Korean media market has been criticized for long. For example, Naver, the largest Internet content provider in the market, pays a network fee of 70 billion won a year and Kakao pays 30 billion won a year. On the other hand, Facebook pays KT 15 billion won a year and Google, which runs YouTube as the largest video platform in the world, pays little network fee in South Korea.

At present, the foreign CPs are maximizing the quality competitiveness of their services by taking advantage of their much lower network fees. Their South Korean counterparts, meanwhile, must pay progressive fees and, as such, their network fees skyrocket in the case of UHD content whereas the foreign CPs could introduce 4K UHD services and the like relatively earlier based on their lower network fees. An even bigger problem is that how much their data traffic ratio will increase down the road with the market becoming increasingly dependent on the foreign CPs including YouTube, Netflix and Facebook.

Experts point out that traffic data disclosure and more reasonable network fee calculation standards can be solutions. “Exhausting debates can be ended if local and foreign CPs’ network fee data is made public,” said an industry insider, adding, “We can take a leaf from France, where the data is regularly submitted to the competent authorities and disclosed in the form of de-identified data.”