Twitch’s Exit calls for repeal of sender-pay interconnection rules as it undermines content diversity, fragments the internet.

On December 6, Twitch, a live internet broadcasting interactive service platform, officially announced its withdrawal from South Korea, citing “network fees” that are more than 10 times higher than the rest of the world. Twitch’s withdrawal is an urgent warning to the Korean internet network ecosystem, which has been ignoring the principle of net neutrality and implementing the sender-pay interconnection fees since 2016, raising internet access fees to 8 times that of Paris and 10 times that of Frankfurt.[1] The consequences of this ignorance will come back to haunt us in the not-too-distant future: the end of content diversity and the fragmentation of the internet, making it less open and connected. Open Net demands that politicians and network operators abandon their short-sightedness and abolish the sender pay interconnection rule before it’s too late.

Twitch’s withdrawal from South Korea is a continuation of the trend of smaller streaming platforms like Pandora TV, Mgun, and MnCast exiting the business because they could not afford to pay the network fees. Streaming platforms have only been able to make ends meet by bombarding videos with ads or charging streamers unfairly large fees. Pandora TV and other streaming platforms shut down before Twitch because they changed their revenue model by adding ads to videos to cover high connection fees, which caused users to migrate to other platforms. Afreeca TV’s survival in the face of exorbitant connection fees is only possible because its competitors failed to survive in the dysfunctional ecosystem. A situation where platforms are currently paying more than half of their operating profit in connection fees is hardly normal.

In this situation, Naver’s CHZZK, an alternative service, is about to launch, but it will not revitalize the dwindling content diversity. It is not good news for the diversity of the ecosystem that only large platforms that can afford exorbitant internet access fees can fill the void left by Twitch. By undermining net neutrality, we are undermining content diversity at our own peril while paying lip service to the need to prevent monopolization by a few companies.

Net neutrality ensures that people of different abilities have equal and fair access to the network without discrimination. In the past, we have had the opportunity to discuss the issue of unfair net fees. When small streaming platforms were going out of business one after another, high network fees for domestic players were pointed out as a problem. However, the focus of the discussion shifted to the “reverse discrimination” theory, which inadvertently tries to extend high network fees to overseas platforms. The argument challenging the unfair way telecommunications companies charge domestic companies outrageous amounts of money was a minority opinion that went unnoticed. This was a missed opportunity to prevent what happened today.

The undermining of net neutrality not only devastates domestic content ecosystems, but also undermines the connectivity and openness of the globally connected Internet, ultimately isolating and fragmenting countries. The Internet has provided an opportunity for people around the world to freely share and access information, content, and services across borders, overthrowing local political repression and economic monopolies. If local network operators are forced by law to charge network fees to businesses and individuals who send traffic directly to their networks, as was the case with the sender pay system instituted in 2016, our citizens will increasingly become frogs in a well of domestic information, content, and services.

What we don’t understand is that none of the stakeholders arguing for the imposition of a mandatory network fee are related to content production or streaming services. Do they even have the common sense to think about the amount of money they would have to pay if other countries with larger populations than South Korea followed suit, i.e., if they implemented a mandatory net neutrality fee? Or are they “confident” that the content they produce will never be a hit overseas?

As of December 11, more than 285,000 people have joined the campaign against the network usage fee bill launched by Open Net in September 2022. The campaign was not only against the new bill. The ‘Network Fee’ bill was an attempt to expand the scope of duty-bearers under the 2016 sender pay rule, and the signatories of the petition clearly expressed their opposition not only to the new bill but also to the existing sender pay rule. The Ministry of Science and ICT should take note of the voices of internet users.

Korean text available here

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[1] Under the sender pay rule system, when a network operator adds a content provider as a customer to its network, it increases the amount of traffic sent from its network to other network operators’ networks, which increases the amount of money it has to pay to other network operators. This makes them reluctant to receive content providers as customers, and naturally increases the amount of access fees they charge to content providers. Higher access fees also increase the amount of paid peering fees they receive from foreign content providers who do not purchase internet access from the local network operators. Whether it is a cache server for overseas content or a main server for domestic content, it is an economic burden on the network operator that hosts it. In the first place, there is no such thing as a “network fee” under net neutrality; there is only an access fee (Internet access fee or paid peering fee). However, by charging callers for sending traffic to the network, the sender pay rule artificially creates an element of a network fee and forces it to be included in the access/peering fees paid by domestic and international companies.