South Korea Ponders More Fees on Hyperscale App Providers

Though South Korean internet service providers already charge fees on a few hyperscale app providers, the South Korean government is considering new and heavier fees aimed at  a few hyperscale app providers pay for access to South Korean internet access networks, Reuters reports. 

EU regulators and U.S. regulatory officials also are looking at levying such new taxes. Ignore for the moment the obvious winners and potential losers if such policies are adopted. Ignore the industrial policy implications. Ignore the changes to interconnection policies and practices that might also occur. Ignore the complete overturning of network neutrality rules and principles. 

Consider only the issue of who should pay for universal service. Traditionally, customers have paid such fees. The new potential thinking on who should pay for the construction of internet access networks also changes how we think about “who” should pay for universal service. 

Ignore for the moment the wisdom of shifting support burdens from customers of a service to others. Also ignore the potential implications for content freedom or higher potential costs for users of content services. 

For the first time, both European Union and U.S. regulatory officials are considering whether  universal service should be supported by a combination of user and customer fees. The charges would be indirect, rather than direct, in several ways. 

In the past, fees to support access networks in high-cost areas were always based on profits from customers. To be sure, high profits from business services and international long distance voice calls have been the support mechanism. In more recent days, as revenue from that source has kept dropping, support mechanisms have shifted in some markets to flat-fee “per connection” fees. 

But that already seems not to be generating sufficient funds, either, at least in the U.S. market. So in what can only be called a major shift, some regulators are looking at levying fees on some users, who are not actually “customers.” 

Specifically, regulators are looking at fees imposed on a few hyperscale app providers, using the logic that they represent a majority of internet traffic demands on access network providers. Nobody has done so, yet, but the same logic might also be applied to wide area network transport. 

Nobody can be quite sure what new policies might be adopted by hyperscale app providers subjected to such rules. Nobody knows whether virtual private networks might be a way some content providers seek to evade such rules. 

Nobody knows whether users of content, app and transaction networks, advertisers, retail merchants or others  will bear the actual burden of the new costs, but that is entirely likely: somebody other than the hyperscale app providers will wind up paying. 

Many will argue such rules are “fair.” Whether they are, or are not, is debatable. That users of some popular apps, advertisers, retailers or others will find their costs rising is not very contestable.