Korea's fight over who pays for network traffic is really about where servers sit
A decade of disputes between Korean carriers and global content platforms has produced no settled legal principle, but it has produced observable movement in where companies choose to host the content Koreans watch.
The argument is easy to state and unusually hard to resolve. Internet service providers build and maintain the networks that carry traffic to subscribers. A small number of content platforms generate the majority of that traffic. Subscribers already pay for access. Should the platforms pay as well? Korea has been running the experiment for longer and more aggressively than almost anywhere, and its results are worth attention less for who won than for what moved.
Korea’s starting conditions are not the global default. In 2016 the government revised the interconnection rules governing how domestic ISPs settle traffic between themselves, replacing the reciprocal no-payment arrangement typical elsewhere with volume-based settlement. Once carriers must pay each other in proportion to the traffic they hand over, hosting a popular service inside Korea becomes more expensive for whoever hosts it, and that cost propagates outward to content providers, content delivery networks and data-centre operators. Much of what looks like a fight about foreign platforms is downstream of a domestic accounting rule.
The signature case ran between Netflix and SK Broadband. Netflix went to court in 2020 seeking a declaration that it owed no payment for delivering traffic to the carrier’s subscribers. The Seoul Central District Court ruled substantially against it in June 2021, SK Broadband counterclaimed for usage fees, and the appeal was pending when both parties withdrew in September 2023 and announced a commercial partnership instead. The outcome was a settlement between two companies. It was not a rule, which is why the dispute continued in every other venue.
The legislative track produced comparable ambiguity. From 2020 onward, members of the National Assembly introduced a series of bills that would in various ways oblige large content providers to negotiate or pay network usage fees. The proposals attracted opposition from the United States government on trade grounds, from digital-rights organisations on open-internet grounds, and — most effectively — from platforms that mobilised their Korean creator communities against them in 2022. None of the bills has been enacted.
What did happen was relocation, and this is the part other countries should study. In the second half of the 2010s a large social platform rerouted Korean traffic to servers outside the country during a dispute over interconnection costs, degrading service for Korean users; the communications regulator fined the company, and the courts eventually overturned the penalty. In February 2024 a live-streaming service withdrew from Korea entirely, stating that its network costs there were roughly an order of magnitude above other markets. One can be sceptical of a departing company’s account of its own costs and still notice the pattern: when hosting inside a jurisdiction carries a surcharge, some services choose to serve it from a jurisdiction next door. Latency for Korean users rises, and the carrier collects nothing from a server in Tokyo.
The carriers’ position is not frivolous. Network capital expenditure is real, traffic is genuinely concentrated in a handful of sources, and the video platforms that drive peak-hour load contribute to costs they do not bear. That case has been made in Europe too: the European Commission ran a consultation on “fair share” contributions in 2023, and it closed without a legislative proposal, with the body of European regulators expressing scepticism that the mechanism would improve investment rather than simply transfer money while creating leverage over content.
Korea’s decade offers a modest, unromantic conclusion. Sender-pays rules do not so much settle who funds the network as determine where the servers go — and infrastructure, once relocated, is slow to come back.