Washington – A new report from the CCIA Research Center finds that claims made by Korean internet service providers to justify proposed fees on content providers don’t stand up to scrutiny. Internet service providers claim such fees are needed to address purported cost increases due to increased traffic from video content, but Korean ISP operating costs have been flat for years, and the traffic is growing linearly and predictably. The report explains that there is no plausible way to ascribe increased capital expenditures to streaming content providers, and debunks myths to illustrate why Korea should not adopt the proposals for Korean telecom firms to be paid a new network usage fee.
The report concludes that network usage fee proposals are attempts by the internet service providers who control 86% of Korea’s pay TV market to extract economic rents from their pay TV competitors: streaming content providers. Calls from Korean ISPs for network usage fee policies are a clear case of entrenched incumbents calling for the government to pick winners and losers to the detriment of consumers and dynamic market entrants. The report also argues that undue fees on content providers will force them to pass on cost increases to consumers.
The Computer & Communications Industry Association has advocated for strong telecommunications policy for over 50 years.
The following can be attributed to CCIA Chief Economist & Research Center Director Trevor Wagener:
“Proposed network usage fees on content providers are a thinly-veiled attempt by ISPs to extract revenue without economic reason from companies that deliver high-demand content to consumers. Claim by claim, this report debunks arguments for proposed fees and shows that ISPs have incurred no significant additional costs from increased data traffic that would justify having the government pick winners and losers by enforcing a new ISP attempt at rent-seeking.”
