April 25, 2022

WASHINGTON – Today, trade association ITI urged the Korean government to reconsider legislative proposals that impose disruptive and unwarranted fees on the delivery of online content. A new position paper authored by ITI in cooperation with INCOMPAS details how the implementation of mandatory network use fees will ultimately raise costs for end users and content providers while disincentivizing the innovation that contributes to Korea’s economic growth.

“ITI supports President-elect Yoon’s campaign pledge to strengthen economic and security partnership with the United States and other democratic allies, as well as the Korean private sector’s cooperation with international companies. Unfortunately, the network use fee proposal runs counter to those efforts,” said ITI President and CEO Jason Oxman. “ITI strongly encourages the Korean government to reinforce its commitment to global best practices in network interconnection by maintaining the current system whereby content providers (CPs) and internet service providers (ISPs) work together on a voluntary market-driven basis.”

“The latest legislative proposals would set a dangerous precedent,” states the position paper. “[We] urge the Korean government to respect the current and successful system whereby [industry partners] work together on a voluntary and market-driven basis in their mutual self-interests and for the benefit of end users.”

In the paper, ITI outlines key policy concerns about the Korean legislative proposals:

  • Network use fees upend the open internet architecture by allowing internet service providers (ISPs) to double charge for services for which end users have already paid. Network use fees erect harmful barriers to consumer choice and competition as well as create market access barriers for content providers.
  • Network use fees set a concerning precedent for other markets.
  • Network use fees could potentially create a “race-to-the-bottom. "Network use fees distort market incentives and give ISPs disproportionate leverage over content providers, and could result in Internet fragmentation where all online platforms must pay ever-increasing fees to ensure market access around the world.
  • CPs are not “free riders” on the network. CPs invest massively in network infrastructure, such as submarine cables, data centers and caches, local peering, and other arrangements — often in partnership with telecom operators — that reduce the burden on local ISP networks and improve an end user’s experience by reducing latency and improving quality.
  • Pending legislation mandating network use fees disproportionately affects U.S. companies and contravenes Korea’s international trade commitments under the World Trade Organization (WTO) General Agreement on Trade in Services (GATS) and Korea-United States Free Trade Agreement (KORUS).
  • The fees will isolate Korea’s global connectivity and harm Korean consumers and digital exports.

Read the full position paper here.

Public Policy Tags: Broadband, Communications, & Spectrum, Trade & Investment