Seven years after requiring South Korea’s three major Internet service providers (ISPs) to pay additional fees to send data to each other, the country’s legislators are now proposing that global content providers such as Twitch, YouTube, and Netflix pay these ISPs for their data traffic while also risking penalties if they offer bad service.
The proposed policy is intended to level the playing field among domestic and foreign content providers. But Korea University law professor Kyung Sin Park warned that it may ultimately suppress innovation, push “unicorn” start-ups in Korea to move overseas, and affect the distribution of media among Korean consumers.
Speaking at a recent online forum on Internet freedom in South Korea, Park said that the imposition of fees on content providers would also set a “dangerous precedent” for other countries in the Asia-Pacific to follow suit in imposing a similar network-usage fee.
This could collectively throttle net neutrality in the region — a concept that allows open and non-discriminatory access to the Internet for all, he said.
According to The Internet Society, mobile and wireless communications have become “increasingly the primary means of access for users in Asia-Pacific,” making protection of net neutrality a greater imperative in the region.
Asia-Pacific is estimated to have about 2.8 billion Internet users at present. But with shrinking civic spaces across the region, efforts to protect free speech and the free flow of information rely on the non-interference of actors on what content is shared.
Prateek Waghre, policy director at the Internet Freedom Foundation, an India-based advocacy group focusing on digital rights, describes net neutrality as a principle built on “treating every byte of network equally.”
Just this September, the debate on net neutrality was revived in India after the Telecom Regulatory Authority of India (TRAI) publicized the responses it received from telecom companies to a paper it had floated regarding the regulation of content platforms.
Similar to what Korean ISPs have been pushing for, India’s telecom operators have been arguing that content platforms should shoulder the hefty costs brought about by their heavy traffic consumption and data use.
Over the years, telecom operators have repeatedly lobbied for and brought up some form of proposal to charge network fees from large traffic generators, said Waghre.
“In one sense, it looks like they’re asking again and again until they get the answer they want,” he said. “Or there is just seemingly not enough pushback for them to not push ahead with something like this.”
India’s largest telecom operator Jio has even demanded that content providers “contribute” toward network costs to even out the playing field — an argument that it says is “near consensus” among telecom operators across the globe.
Bias and algorithms
Besides the possibility of additional charges being passed onto consumers in the form of higher subscription fees, Waghre stressed that the imposition of network costs may lead to a tiered Internet where established players receive preferential treatment from telecom operators.
“When Netflix or Microsoft contributes to your revenue in a significant way,” he said, “you will likely favor them. That’s just how corporate decisions work.”
Data Ethics PH founder Dominic Ligot, for his part, said that when certain platforms like Facebook, TikTok, and YouTube are promoted with more attractive bundles, it can create a bias in how information is accessed and worsen the spread of false information.
“It’s because people are often forced to use these platforms as their main way to access the Internet,” he explained, “and these platforms may favor certain information based on algorithms.”
In simple terms, net neutrality is crucial to ensuring that information is shared and accessed by people fairly, said Ligot.
He noted that telecommunications are considered utilities and a provider of essential services, thereby requiring a “balance to be struck” with their demands for additional payment from content providers.
In the traditional set-up, individual users and businesses pay for Internet access and the content and services they use. For Waghre, the ‘sender pays’ model such as what South Korea is seeking to widen locally can lead to startups and younger companies being crowded out, stifling competition and innovation in the long term.
“That’s why it is worrying,” Waghre said. “What ultimately happens is the telecom provider becomes a gatekeeper of sorts.”
Waghre also believes that even if proposals to this end have yet to be approved in South Korea and the European Union, strong and vocal support from big telecom players in these countries lend “extra weight” to the Indian government’s consideration of a similar measure.
“The fact that the EU did a consultation around it, I’m sure that had implications,” he said. “You could certainly picture people lobbying, ‘Look, they’re doing this consultation, so we should look as well.'”
In Korea, the implementation of the “sender pays” model after a 2016 law amendment gave ISPs a way to charge content providers Internet access fees based on traffic generated by the latter’s customers. The amendment was supposed to cover both domestic content providers like Naver and Kakao and foreign providers of online content like Netflix, YouTube, and Twitch that use the country’s ISPs.
But the foreign content providers have so far evaded the rules by reducing the quality of their high-bandwidth content (thus lessening traffic and avoiding high network-usage fees) or limiting domestic availability, often keeping such content outside of South Korea for local ISPs to access. This has led to accusations that foreign content providers are “free-riding” on the Korean network and swimming in profits without paying due fees similar to their domestic counterparts – hence the recent move of the country’s legislators.
Crushing content creators?
A petition against the proposal has asserted that while Korean lawmakers believe it would only affect giant platforms like YouTube, “most of the people providing content on the big platforms are individual or small to midsize content creators.”
“If content creators have to pay every time people view their content, the world’s most viewed videos such as Baby Shark (100 million views) or Gangnam Style (44 million views) could not exist,” the petition from Open Net Korea read in part. “Could BTS or ‘Squid Game’ achieve their current popularity?”
At the Digital Rights Asia-Pacific webinar held last 9 October, Park – an Open Net Korea co-founder — also brought up the potential “trickle-down effect” from content providers to consumers. He said that if the proposal pushes through, it would suppress not just innovation but also affect the extent to which platforms are able to host content from small-time content creators.
“For instance,” Park said, “to speak online, the data has to be pushed out to show a video of you. If you are a popular YouTuber, that means a lot of your videos will come out of YouTube. And if a YouTube server is on a certain ISP, that ISP will want to charge YouTube for pushing out a lot of data. And then what is YouTube gonna do? YouTube will have to charge you if you are a popular influencer.”
Park said that a consequence of the 2016 guidelines, an app designed to notify people of COVID-19 hotspots through an announcement system was not fully functional due to its inability to meet demand after paying high interconnection fees.
Even South Korea’s homegrown video streaming platform Watcha Inc. went downhill due to operational losses from having 10 percent of its revenue going to cover Internet access fees, he said.
Too, while the 2016 regulations have been justified partly as shifting the cost burden from end-users to content providers, they have actually jacked up the cost of Internet access in Seoul compared to other major cities elsewhere — at least five to six times higher than New York and London, eight times more than London and Paris and 10 times more than Frankfurt, according to Park.
He said that any system that makes companies shell out money to deliver data violates the principles of net neutrality as Internet use should not be pre-conditioned on who has the ability to pay.
While the proposed policy in South Korea is far from an explicit censorship of online content, Park pointed out that the Internet is built on a foundational principle of individuals being able to communicate directly with billions without relying on gatekeepers.
In its petition, Open Net Korea also said that the imposition of a “network-usage fee” on content-sharing companies — and by extension, content providers and consumers — “did not exist in the Internet ecosystem” and had only been “concocted by Korean telcos who wanted to raise more revenues on the Internet.”
“(ISPs) have successfully lobbied the Korean government into basically taking one step back in the age of telephone and postage,” Park said.
“Because that is what the ‘sender pays’ (model) is,” he said. “It’s like a post stamp. And believe it or not, that’s the dream of all ISPs in the world. They want to go back to the age of the telephone where they can play the role of gatekeeper.” ◉
