The world’s only attempt to legislate ‘network use fees’ will further damage consumers – the illusion of charging ‘delivery fees’ on the internet will disincentivize investment in network expansion

For Korean original, press here.

In December 2020, MP Jun Hye-sook proposed an amendment to the Telecommunication Business Act (bill no. 2106370) to prohibit ‘acts to unduly impose unreasonable or discriminatory conditions or restrictions in agreements for the use or provision of telecommunication networks.’ The provisions consist of flowery words such as avoiding ‘unreasonable’ or ‘discriminatory’ acts, however, given the intention and structure of the bill, it is feared that the bill may be the world’s only law to legalize ‘network use fees’ formulated as data delivery fees. In particular, such a legislative attempt may send the wrong policy signals about the obligation of network operators to guarantee internet speed as advertised to customers, which might further worsen the recent problem of internet speed overbilling. The Open Net Korea is against the repeated attempts to legislate network use fees, and this will be discussed at a webinar on May 18 at 1:30 pm (sign up for the webinar).

The notion of ‘network use fees’ as used in Korea, i.e., network operators are paid by content providers for delivering content providers’ data to network operators’ customers, is seen nowhere else in the world. In 2012, European network operators suggested the Sending Party Network Pays rule to ITU, under which data senders would pay the data-receiving network operators for data delivery costs, only to be sharply rejected and condemned by the Body of European Regulators for Electronic Communications (BEREC) and give up on it (as in the following excerpt):

<BEREC Response to ETNO’s 2012 Proposal for SPNP, i.e., charging termination fees>

IP interconnection agreements only involve the provision of capacity of the interconnection link and not the end-to-end transmission of particular data flows across different autonomous IP networks. Unlike voice traffic on old PSTN networks, data does not travel over an exclusive, dedicated network connection, and it is not possible to ascertain the nature of volume of a particular data flow end-to-end (and so not possible to charge for it that way either).

Therefore, charging for IP-interconnection usually takes place on the basis of the capacity provided at the interconnection point. ETNO’s proposed end-to-end SPNP approach to data transmission is totally antagonistic to the decentralised efficient routing approach to data transmission of the Internet. The connection-oriented nature of end-to-end SPNP, with its focus on charging based on the actual volumes or value of the traffic, would represent a dramatic change from the existing charging framework operating on the Internet.

In 2015, the U.S. Obama administration’s Federal Communications Commission Open Internet Order expressively prohibited network use fees formulated as delivery fees (as in the following excerpt):

FCC 2015 Open Internet Order, <para. 113> Finally, as with the 2010 no-blocking rule, today’s no-blocking rule prohibits broadband providers charging edge providers a fee to avoid having the edge providers’ content, service, or application blocked from reaching the broadband provider’s end-user customer.

Although the Open Internet Order was later revoked by the FCC under the Trump administration, the states preserve net neutrality in their laws, hence California’s 2018 Net Neutrality Act, which inherited the provision to prohibit data delivery fees in section 3101(a)(3)(A) (excerpt follows). The Californian Net Neutrality Act was suspended by the Department of Justice plea agreement under the Trump administration but is not in effect after the Biden administration withdrew the lawsuit.

California Network Neutrality Act 2018 – California Civil Code Section 3101(a): It shall be unlawful for ISP to engage in (3) requiring consideration, monetary or otherwise, from an edge provider in exchange for (A) delivering internet traffic to and from the ISP’s end users.

There has been no law in Korea that explicitly allow for ‘network use fees’ in the sense of  data delivery fees. The interconnection rules enforced in 2016 required ISPs to settle with each other the access fees in the amounts calculated in proportion to the net data sent, instituting SPNP only among ISPs. In 2020, the so-called ‘CP service stabilization obligation law’ obliged content providers to stabilize data delivery to customers, allowing ISPs to pass the burden of SPNP settlement on to CPs. Up until now, the government never explicitly mentioned “network use fees.” MP Jun Hye-sook’s bill now expressively mentions in its legislative intention as it declares to remedy ‘discrimination in network use fees’ between foreign content providers and the domestic ones as if all CPs must pay some sort of data delivery fees, and even empowers the government to change terms of interconnection agreements.

We are against this legislative intention and Jun Hye-sook’s bill. First, it is directly against net neutrality, which forms the financial backbone of the new expanded freedom of expression on the internet. The internet is simply the state in which computers all over the world have connected with one another, not a communication system owned by anyone to be made available for use by others for a fee. All ISPs are held together by an agreement to stay interconnected and receive data from one neighbor and forward the same to their other neighbor just one step closer to the destination without any condition or fee, and they provide customers with access based on the same terms. In this context, what ISPs sell to their customers is not data usage but access speed (capacity), and what they purchase from higher tier ISPs is also access speed (capacity). If ISPs received delivery fees, people uploading contents would have to fear their content might be viewed by too many people, and the world of freedom opened by the internet would regress to the past when people were worried about enormous telephone bills and postages if they wanted to deliver messages to many people.

Many news outlets in Korea, which benefit from advertisements by big ISPs, simply regurgitate ISPs’ contention that in other countries ISPs charge data delivery fees, but these are extremely rare and outdated cases or paid peering, i.e., access fees rather than delivery fees paid by CPs connected to that ISP. The provisions in the service stabilization act and the Jun Hye-sook bill seem to require CPs to pay ISPs without connecting with them and seem to suggest that the fees will be proportional to the amount of data delivered, showering death ash over the world of free expression unencumbered by data delivery fees, opened by the internet.

Second, ISPs are obliged to guarantee internet speed as advertised to and agreed with users, hence ought to expand their network facilities accordingly, and this legislative trend will weaken ISPs’ sense of obligations. ISPs have the obligation to guarantee internet speed from their data centers to user devices and, to some extent, maintain access speed (capacity) with higher tier ISPs in connection to access to overseas content. However, the 2016 SPNP rule, the 2020 service stabilization act, and the Jun Hye-sook bill give ISPs false hopes that they will receive subsidies for network expansion. Network slicing and zero rating is permitted only with stringent conditions in other countries. The South Korean government has publicized that these measures would be extensively permitted and such assurance has driven ISPs to neglect their duty to guarantee internet speed.

On top of that, MP Jun Hye-sook’s bill shows ISPs a delusional image that ISPs could charge data delivery fees found nowhere else in the world. This would result in ISPs neglecting their obligation to guarantee advertised internet speed by expanding local network facilities, and in users being concerned about delivery fees whenever their messages are conveyed to many people through the world wide web.

May 11 2021

Open Net Korea

Contact: Kyung Sin Park kyungsinpark@korea.ac.kr