Korea’s ?~$3/month border charge on Youtube, Netflix, etc.

Korea Seoul Namdaemun Sungnyemun 20080% to telcos, 20% as tax to gov. You virtually can’t get to the 50 million fairly affluent Koreans without going through the network of Korea Telecom (largest in landline,) SK Telecom (largest in wireless,) or LG. Economists call this a “terminating monopoly” and like all monopolies it can be used to extract more from customers.

The government has now proposed to charge what one source estimates as $0.026/gigabyte on the traffic they receive, reviving a “sender pays” system.  I can’t find the primary sources, all of which are in Korean. Google translate works well if I could find a webpage or document. Help appreciated. A charge at that level is totally unrelated to costs, being several times higher than content delivery networks charge for a comparable service. Much of the impact will be on foreign companies, and the Korea regulations provide some benefits to local companies. From France and Germany to Korea and China, “tax the Americans” is a very popular cry.

At least in the developed world, most of the benefit goes of sender pays goes to the shareholders of the ISP, not network investment or lower prices. Most of the cost appears to hit consumers rather than the video providers, but the data is limited.

95%+ of ISPs do not charge to interconnect; only the largest have the power to do so. Deutsche Telekom, Telstra, and the Chinese have demanded the most. Verizon & Comcast have jumped in the last few years, but so far have kept the charges low enough they don’t change the market or have much effect on consumers. They might demand more as selling video becomes more central to their business. 

As far as I know, none of those currently charging take nearly as much as the Korean government now has set. I got this story from a large content delivery network and an Asian telco; the charge is killing them. I haven’t heard anything from the Googles and the Facebooks of the world. Unlike countries like Argentina, Korea has national champions in search, social networks, and video that could take over if the Googles of the world decided doing business on Korean terms was too expensive. It wouldn’t surprise anyone if advantaging domestic companies was part of the motivation. The U.S. often makes the argument that moves like this are a “non-tariff barrier to trade.”

So far, none of them have spoken up, at least in English. The U.S. State Department nearly always gives strong backing to big U.S. companies on issues like this, but I’ve seen nothing. At the WCIT, the American position was that if the Africans taxed incoming, they would be hurting themselves because Google and educational sites would pull out of Africa. This was a “politician’s truth.” No one was thinking of a charge so high a Google would have to leave the country. We used our power to block this at the ITU. 

Before Trump, the world has been going nationalistic. “Made in India” has such strong government support that Apple will now produce iPhones in Bangalore. 

“Korea First” would be a natural response to “America First.”







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