[Column] Government Fails to Collect 'Network Usage Fees'... Only Companies Suffer

Is the claim by the United States Trade Representative (USTR) that the domestic bill imposing network usage fees could harm the content industry and be anti-competitive valid?

In its recently released 2024 Trade Barriers Report, the USTR pointed out that "since 2021, multiple bills have been proposed in the National Assembly requiring overseas content providers to pay network usage fees to Korean Internet Service Providers (ISPs)," and noted that "(Korean ISPs) are also content providers, so the fees paid by U.S. content providers could benefit Korean competitors."

However, there are many aspects that are difficult to understand if one accepts the USTR’s logic as is. First, the issue of ‘reverse discrimination’ faced by domestic CPs (content providers) is not considered at all. If global companies like Google and Netflix, which generate the most traffic, do not pay network usage fees, domestic providers like Naver or Kakao, who already pay, will inevitably face reverse discrimination. In fact, only those paying the network usage fees would become less competitive, which could lead to a decrease in the number of providers and negatively impact the domestic content ecosystem.

[Image source=Yonhap News]

It is also questionable whether the proposed bills were properly reviewed. The USTR portrays the network usage fee bills as mandatory and targeted specifically at global, especially U.S., companies, but in reality, they are based on negotiations between ISPs and CPs.

Among global CPs not paying network usage fees domestically, only Google remains in practice. Google holds a position and bargaining power far superior to ISPs internationally. Google argues that if network usage fee legislation is enacted, it may have to change its business operations in Korea, and the additional costs would disadvantage YouTubers. It is leveraging YouTubers and users as hostages to sway public opinion in its favor.

The bigger problem is the attitude of our government. Kang Do-hyun, the 2nd Vice Minister of the Ministry of Science and ICT, recently stated at a Media Day held at the Government Complex Sejong, "There are still various aspects to consider. We are also looking at international trends, not just domestically," indicating that the government has not yet decided its stance on network usage fees. The USTR report suggests that the U.S. government is actively intervening on behalf of its companies. Missing the timing to address the network usage fee issue could leave only our companies struggling.