News - April 26, 2022

INCOMPAS: New Paper Warns South Korean Fees Will Harm Streaming Innovation

WASHINGTON, D.C. (April 26, 2022) – INCOMPAS, the internet and competitive networks association, which represents the nation’s leading streaming services, has released a new report in conjunction with ITI analyzing the impacts of South Korean “network use fees” on the streaming industry. 

The new paper can be found here.

“U.S. leadership in streaming innovation has brought more jobs for creators and more choices for consumers,” said Chip Pickering, CEO of INCOMPAS. “The streaming revolution is still a young movement with massive potential, but adding new taxes and fees would threaten a new vibrant industry that consumers love.” 

The new INCOMPAS/ITI paper highlights key policy concerns with South Korea’s move to charge additional network use fees, including: 

  • Network use fees upend the open internet architecture by allowing internet service providers (ISPs) to double charge for services for which end users have already paid. Network use fees erect harmful barriers to consumer choice and competition as well as create market access barriers for content providers.
  • Network use fees set a concerning precedent for other markets.
  • Network use fees could potentially create a “race-to-the-bottom.” Network use fees distort market incentives and give ISPs disproportionate leverage over content providers, and could result in Internet fragmentation where all online platforms must pay ever-increasing fees to ensure market access around the world.
  • CPs are not “free riders” on the network. CPs invest massively in network infrastructure, such as submarine cables, data centers and caches, local peering, and other arrangements—often in partnership with telecom operators—that reduce the burden on local ISP networks and improve an end user’s experience by reducing latency and improving quality.
  • Pending legislation mandating network use fees disproportionately affects U.S. companies and contravenes Korea’s international trade commitments under the World Trade Organization (WTO) General Agreement on Trade in Services (GATS) and Korea-United States Free Trade Agreement (KORUS).
  • The fees will isolate Korea’s global connectivity and harm Korean consumers and digital exports.
“Now more than ever, open and free trade with our allies is critical. We urge President-elect Yoon Suk-yeol and South Korea to encourage a streaming industry that promotes innovation, competition, and consumers,” Pickering added.