USTR Takes Aim at Korea’s High Network Usage Fees

The U.S. Trade Representative’s Office (USTR) claimed that mentioning network usage fees benefits Korean competitors
Twitch withdrew because of the network usage fees

South Korea’s network usage fees are criticized for being particularly high compared to other countries. The US has raised concerns, calling it anti-competitive.

The U.S. Trade Representative’s Office (USTR) recently published a National Trade Barrier Report stating that numerous proposed bills have required foreign content providers to pay network usage fees to Korean internet service providers since 2021.

The report argued that the fees paid by foreign content providers, including the US, to Korea could benefit Korea’s competitors.

Network usage fees refer to the fees that foreign content providers like Netflix and Disney+ pay Korean internet service providers to deliver content using their networks, i.e., payments to KT, SK Broadband, and LG Uplus.

Seven bills pending in the 21st National Assembly would mandate that global operators pay network usage fees under a revised Telecommunications Business Act.

Due to network usage fees, the global internet broadcasting platform Twitch withdrew from the Korean market in February.

At that time, Twitch CEO Dan Clancy stated that the costs, more than ten times higher than other countries, made it impossible to break even, sparking controversy.

Cloudflare, a connectivity cloud company, also posted an article about global network usage fees, mentioning that Korea’s fees are more than 15 times higher than Europe’s.

YouTube has been campaigning against the legislation of network usage fees since 2019, openly criticizing the bills through its official blog and promoting a petition against them, employing unusually diverse means.

Despite U.S. criticism, domestic telecommunications companies are predicted to continue to benefit from network usage fees for the time being.

In April 2020, Netflix filed a lawsuit against SK Broadband over network usage fees, but the following year, the Seoul Central District Court ruled in favor of SK Broadband, stating that Netflix must pay the network usage fees.

Netflix appealed, and in September 2021, SK Broadband filed a counterclaim for the return of unjust gains, asking for a specific amount of network usage compensation to be determined.

Eventually, both sides reached a sudden agreement. This precedent is seen as a way to avoid criticism of network usage fees.