Court ruling on Facebook sparks tug-of-war over network costs

By Jun Ji-hye

Local and foreign content providers (CPs) such as Google, Facebook, Naver and Kakao are waging a publicity tug-of-war with internet service providers (ISPs) ― SK Broadband, KT and LG Uplus ― over whether CPs should share network use fees.

The quarrel between the two sides heated up after the Seoul Administrative Court ruled in favor of Facebook, Aug. 22, over a fine the Korea Communication Commission imposed on the U.S. social media giant last year for what it considered "a deliberate slowdown" of services.

CPs claimed the ruling indicates the responsibility to ensure a quality network connection for users lies with the ISPs, not CPs.

Google, Facebook, Netflix, Naver, Kakao, Watcha and TVING issued a joint statement, Monday, calling on the Korean government to overhaul its network fee calculation structure.

They said the interconnection standards on telecommunication equipment and facilities, which the government introduced in 2016, were designed to increase the burden of network costs on the content providers.

"The standards have also given a superior status to internet service providers," the statement said. "Rises in network costs will only weaken the international competitiveness of Korea's IT industry."

In response, KT and LG Uplus as well as SK Broadband, an internet service subsidiary of SK Telecom, issued a joint statement, Wednesday, claiming CPs surely need to share network use fees as their data-heavy services generate significant network traffic, especially after fifth-generation (5G) networks were commercialized.

They said Google, Netflix and other global CPs have had a "free ride" on networks established by ISPs and earned a lot of money.

"If CPs, which generate significant network traffic, do not pay for the use of networks, it will increase users' communication costs," the statement said.

They added their enormous investments in telecommunication equipment and facilities have contributed to the rapid growth of content providers.

Global content providers have so far faced criticism for not paying network use fees to local telecom companies, while Naver, Kakao and other domestic IT companies pay the fees regularly.

Among global CPs, Facebook is only one that pays network use fees to local ISPs, but the U.S. firm reportedly pays significantly less than Korean CPs.

Before the court ruling, the issue mostly surrounded controversy over discrimination between local and foreign CPs, but domestic CPs have begun speaking with one voice with foreign CPs after the court ruling.

The issue is expected to continue as the court ruling dealt a huge blow to the Korea Communication Commission, which expected the outcome of the case to act as an important regulation guideline for global CPs, if it had won the case.

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