Netflix and YouTube have joined the fray.
Streaming platform Twitch announced that it will reduce its maximum video quality in South Korea from 1080p to 720p starting September 30 to ease the burden of rising network usage bills.
South Korea is a country with one of the highest internet penetration rates in the world. About 98% of the people in the country are connected to the internet. It also has one of the fastest internet connections and the highest volume of internet usage in the world.
In 2016, the South Korean government introduced revised “Interconnection Standards for Telecommunication Facilities (Standards)” which required the three major internet service providers (ISPs) in South Korea, SK Broadband (SKB), KT and LG U+, to pay additional costs for sending of data among themselves, also known as “sender pays”.
As foreign content producers (CPs) like YouTube, Netflix, and Twitch began dominating Korean internet usage, Korean ISPs inevitably had to pay ever-increasing bills, leading to Twitch’s recent business decision.
Korean ISPs accuse foreign CPs like Twitch of being “free riders” while making profits
Korean ISPs have claimed that foreign CPs are “free riders” in Korean network usage, making massive profits in the process. Therefore, they charged and increased the cost of using the network to foreign CPs. Domestic CPs like Naver and Kakaotalk were already paying for the same network usage.
It was part of his “new solutions” to maintain services in the country to avoid rising tariffs and prices, which “are likely to continue to rise for the foreseeable future”.
The ISPs also tested an alternative method, a method that allows peer-to-peer streaming with the original maximum video quality with selected partner channels and their viewers.
Peer-to-peer streaming can reduce the ISP’s network load by allowing viewers to download and share segments of a stream with each other, rather than downloading the same stream directly from the data center.
However, they asserted that peer-to-peer streaming “needs to be considered further before widespread implementation.”
Both YouTube and Netflix have expressed their displeasure with the rising cost of network usage
On September 20, YouTube’s Executive Vice President for Asia Pacific Gautam Anand expressed his concerns on YouTube’s Korea Blog regarding the proposed Telecommunication Business Act Amendment BIll, commonly known as the Network Usage Fee Act, which is currently being discussed.
This law makes it mandatory for global CPs to sign contracts with local ISPs to codify their network usage fee obligations. This would force foreign CPs to pay the ISP’s network usage fees.
“Content companies are already paying significant sums to broadcast their content to networks of ISPs in places where Korean viewers live,” Anand explained. “There is no such legislation anywhere in the world, and for good reason.”
According to Anand, YouTube may have to change the way it does business in Korea if it becomes law. The company is well established in the country, contributing more than 2 trillion won to Korea’s GDP and providing more than 86,000 full-time jobs.
Netflix, on the other hand, has been in an ongoing legal battle with SKB for three years over its alleged obligation to pay additional network usage fees, arguing that end users should pay the network usage fee, not content providers.
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