South Korea is recognized as a leading broadband nation for network access, use and skills by the International Telecommunications Union and the Organisation for Economic Co-operation and Development.

South Korea exports content and produces platforms which compete with leading tech platforms from the US and China. Yet few know and understand the important elements of South Korean broadband policy, particularly its unique interconnection and cost recovery regime.

For example, most Western observers mischaracterize the relationship between broadband providers and content providers as a termination regime. There is no such concept in the South Korean broadband market. Content providers which want to connect to a broadband network pay an “access fee” like any other user.

International policy observers are paying attention to the IP interconnection system of IP powerhouse Korea and the lawsuit between SK Broadband (SKB) and Netflix. There are two important subjects. The first is the history and major regulations relating to internet protocol interconnection in South Korea. Regulating IP interconnection between internet service providers is considered a rare case overseas, and I explain why the Korean government adopted such a policy and how the policy has been developed and what it has accomplished.

The second subject is the issues over network usage fees between ISPs and content providers and the pros and cons. The author discusses issues that came to the surface during the legal proceedings between SKB and Netflix in the form of questions and answers. The following issues were identified during the process.

First, what Korean ISPs demand from global big tech companies is an access fee, not a termination fee. The termination fee does not exist in the broadband market, only in the market between ISPs.

In South Korea, content providers only pay for access, not termination

For example, Netflix’s Open Connect Appliance is a content delivery network. To deliver its content to end users in Korea, Netflix must purchase connectivity from a Korean ISP. The dispute arises because Netflix refuses to pay this connectivity fee. Charging CPs in the sending party network pay method, as discussed in Europe, suggests that the CPs already paid access fees to the originating ISPs and should thus pay the termination fee for their traffic delivery to the terminating ISPs. However in Korea, it is only access fees that CPs (also CDNs) pay ISPs.

In South Korea, IP interconnection between content providers and internet service providers is subject to negotiation

Second, although the IP interconnection between Korean ISPs is included in regulations, transactions between CPs and ISPs are still subject to negotiation. In Korea, a CP (including CDN) is a purchaser which pays a fee to a telecommunications service provider called an ISP and purchases a public internet network connection service, because the CP’s legal status is a “user” under the Telecommunications Business Act. Currently, a CP negotiates with an ISP and signs a contract setting out connection conditions and rates.

Access fees do not violate net neutrality

South Korean courts have rejected attempts to mix net neutrality arguments into payment disputes. The principle of net neutrality applies between the ISP and the consumer, e.g. the practice of blocking, throttling and paid prioritization (fast lane).

In South Korea, ISPs do not prioritize a specific CP’s traffic over other CP’s because they receive fees from the specific CP. To comply with the net neutrality principle, all ISPs in South Korea act on a first-in, first-out basis. That is, the ISP does not perform traffic management for specific CP traffic for various reasons (such as competition, money etc.). The Korean court did not accept the Netflix’s argument about net neutrality because SKB did not engage in traffic management.

There is no violation of net neutrality in the transaction between Netflix and SKB. There is no action by SKB to block or throttle the CP’s traffic (in this case, Netflix). In addition, SKB does not undertake any traffic management action to deliver the traffic of Netflix to the end user faster than other CPs in exchange for an additional fee from Netflix.

Therefore, the access fee that Korean ISPs request from CPs does not create a net neutrality problem.

Why the Korean model is not double billing

Korean law allows for access to broadband networks for all parties provided an access fee is paid. Foreign content providers incorrectly describe this as a double payment. That would mean that an end user is paying for the access of another party. There is no such notion. Each party pays for the requisite connectivity of the individual connection, nothing more. Each user pays for its own purpose, whether it is a human subscriber, a CP, or a CDN. No one user pays for the connectivity of another.

Dae-Keun Cho, PhD is is a member of the Telecom, Media and Technology practice team at Lee & Ko. He is a regulatory policy expert with more than 20 years of experience in telecommunications and ICT regulatory policies who also advises clients on online platform regulation policies, telecommunications competition policies, ICT user protection policies, and personal information protection. He earned a Ph.D. in Public Administration from the Graduate School of Public Administration in Seoul National University. This piece is reprinted with permission.

Request the FREE 58 page English language summary of Dr. Dae-Keun Cho’s book Nothing Is Free: An In-depth report to understand network usage disputes with Google and Netflix. Additionally see Strand Consult’s library of reports and research notes on the South Korea.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

From the 12 Days of Broadband:

• On the Fifth Day of Broadband, my true love sent to me:
  5 Federal Communications Commissioners
  $42.5 billion in Broadband Equity, Access and Deployment funds
  Section Two-30 of the Communications Decency Act
  24 Reverse-Preemption Pole Attachment States
  and A Symmetrical Gigabit Network.

November’s midterm elections saw the Democrats hold on to power in the Senate, where executive and judicial appointments are confirmed. But Democrats also held to power in the previous term, yet the upper chamber did not hold votes on the prospective fifth commissioner of the Federal Communications Commission, Democrat Gigi Sohn.

Sohn, who was nominated by President Joe Biden in October 2021, has been in a bit of a political purgatory since making it through the Senate commerce committee in March. Former FCC commissioners were concerned about her prospects of making it to Senate votes before the midterms, with the lingering possibility that the Republicans would win the chamber and nuke her nomination over concerns that she would not be able to remain non-partisan on the issues the FCC addresses.

 Download the complete 12 Days of Broadband report

But the predicted red wave sweeping Washington didn’t come to bear this November, and the Democrats have maintained control of the upper chamber – with an opportunity for another Senate representative when Georgia holds its run-off election on Tuesday. Analysts are now speculating that Sohn has a real shot at breaking the party deadlock at the FCC, which consists of two Democrats (Nathan Simington and Brendan Carr) and two Republicans (Chairwoman Jessica Rosenworcel and Geoffrey Starks). That could happen as early the “fist few months of 2023,” New Street Research wrote in a recent note.

Swearing Sohn in would allow the Democrats on the commission to resurrect old but important issues impacting the broadband industry and that has deeply divided the parties, notably reversing the Republican reversal in 2017 of net neutrality rules instituted during Barack Obama era. That would mean classifying broadband under Title II of the 1934 Communications Act, which would give the commission greater regulatory muscle to make providers respect the principle of common carriage, in which traffic on their networks cannot be tampered with, sped up or given preference.

But Democrat senators aren’t waiting for the commission. This summer, Senators Doris Matsui, Ca., Edward Markey, Mass., and Ron Wyden, Ore., introduced the Net Neutrality and Broadband Justice Act, which would codify net neutrality into law so that it wouldn’t bend to the changing personnel of the regulatory body. Simington has said he welcomes congressional, not FCC, action on the item.

Nor are some states. California had its net neutrality law upheld after industry trade groups challenged it at the U.S. Court of Appeals.

As Rosenworcel has firmly committed to bringing back those rules, the lag on Sohn’s nomination has given the Republicans a possible legal mechanism to challenge that authority. That’s because the Supreme Court ruled this summer that only Congress has the power to decide “major questions” of “vast economic or political significance,” though some are skeptical as to the impact on the FCC.

Despite that, Rep. Cathy McMorris Rodgers, R-Wash., wrote to Rosenworcel asking for pending and expected rulemakings of the commission, with a warning that – as the ranking member of the House Energy and Commerce Committee – the committee will “ensure the FCC under Democrat leadership does not continue to exceed Congressional authorizations.”

WASHINGTON, October 28, 2022 – Rep. Cathy McMorris Rodgers, R–Wash., accused the Federal Communications Commission of politicized actions in excess of its statutory authority, in a letter sent in September and apparently released by the agency last week.

To prevent possible FCC overreach, McMorris Rodgers, the ranking member of the House Energy and Commerce Committee, asked FCC Chairwoman Jessica Rosenworcel to provide a list of pending and expected rulemakings, and the congressional authorizations therefor. Rosenworcel responded earlier this month in a letter released with the congresswoman’s original correspondence.

The Washington Republican wrote that the Biden administration has been overly reliant on executive orders and cited recent Supreme Court precedent as evidence. McMorris Rodgers highlighted the Environmental Protection Agency’s loss in West Virginia v. EPA, in which the Court invoked the “major questions doctrine,” a legal doctrine limiting of the executive branch’s ability to permissively interpret Congress’s statutory language. She also referenced the Court’s rejection of the Center for Disease Control’s eviction moratorium and the Occupational Health and Safety Administration’s vaccine or testing mandate.

“Our founders provided Congress with legislative authority to ensure lawmaking is done by elected officials, not unaccountable bureaucrats,” McMorris Rodgers wrote.

“I assure you the Committee and its members will exercise our robust investigative and legislative powers to not only forcefully reassert our Article I responsibilities, but to ensure the FCC under Democrat leadership does not continue to exceed Congressional authorizations,” she added.

Is net neutrality coming back?

In April 2021, McMorris Rodgers co-signed a letter with numerous congresspeople urging Rosenworcel to reject net neutrality, a policy supported by the chairwoman.

Today’s FCC is evenly split between Republicans and Democrats, one commissioner short of the standard five. President Joe Biden nominated Gigi Sohn for the fifth spot, but her nomination is stalled due to Republican opposition in the Senate. Since Sohn supports net neutrality, some experts believe the FCC may once again pursue the policy should Sohn be confirmed.