Will global content providers' network freeloading end?

By Kim Bo-eun

Content providers such as Google and Netflix will have to take responsibility for the stability of internet services, after revisions to the telecommunications business act went into effect, Thursday.

The latest developments are drawing attention to whether these companies will start paying for the networks they use.

Up until now, foreign content providers were not held accountable for poor quality or slow speed caused by heavy use of their services.

The latest revisions made to the law hold major content providers responsible for maintaining the quality of the networks they use. The firms subject to this regulation are those that had an average of over 1 million daily users in Korea in the last three months of last year and companies that account for at least 1 percent of local data traffic.

Five companies providing content here satisfy these conditions ― Google, Netflix, Facebook, Naver and Kakao.

These content providers are now required to communicate with internet service providers and content delivery network firms to ensure a surge in traffic does not lead to slower speed or technical glitches.

The revisions are contentious because of the implications that these firms will be required to pay internet service providers fees to manage the networks in order to guarantee network quality.

Local content providers Naver and Kakao have already been paying tens of billions of won to telecommunications firms each year for use of their networks.

Facebook pays a small amount while Google and Netflix do not pay to use the networks at all. They have contended that internet service providers are responsible for their networks, and therefore they should not be required to pay to use them. They have been able to get by without paying due to their status as dominant content providers which gives them an enormous advantage in negotiations.

Netflix is currently engaged in a suit with SK Broadband regarding the matter.

Now eyes are on whether the law will prompt foreign players to pay for network use here, given service providers now have legal grounds to demand fees for using their networks.

Some in the industry claim that the law will not help, given it does not technically specify that content providers are required to pay for the networks they use. Others state that because it will be up to internet service providers and content providers to solve the issue by themselves, nothing will change from before the revisions went into effect.

The ruling over the suit between Netflix and SK Broadband may determine the future course players take.

Regarding the revisions, Netflix did not specify its stance over making payments.

“Netflix seeks to adhere to local laws and regulations that apply to the company. We will keep our ears open, given it is a priority for Netflix to provide users with a pleasant entertainment experience,” an official from the company said, Friday.

An official of a local content provider said "It does not matter to us whether global content providers pay for the networks they use or not as them paying does not benefit us at all. What we mean by discrimination is certain players being left off the hook while others are required to pay. Our stance is that local companies should also be free from regulations."