Trump Aims to End 'Big Tech Free Riding'... Is It Just a Pipe Dream for Korea?

Trump Administration Seeks to Impose Network Usage Fees on Big Tech
Potential Trade Disputes Loom for Korea
Korea-US FTA Stipulates "Non-Discriminatory Network Provision"
If Korea Demands Network Usage Fees
from US Big Tech Firms,
Controversy Over FTA Violation Expected

With the inauguration of the Donald Trump administration in the United States on the 20th (local time), there is growing anticipation that the era of ‘free-riding on internet networks’ by big tech companies like Google and Netflix will come to an end. This is because a figure who pledged to "end big tech free-riding" has been nominated as the head of the U.S. Federal Communications Commission (FCC). However, it seems difficult to apply this domestically due to provisions in the Korea-U.S. Free Trade Agreement (FTA).

A senior official from a domestic internet service company said in a phone interview with Asia Economy on the 21st, "The Trump administration’s clear stance on imposing network usage fees on big tech companies has domestic companies watching closely," adding, "The U.S. stance will have a significant international impact." Domestic internet service providers such as SK Broadband, KT, and LG Uplus are hopeful that "a path may open for collecting network usage fees from big tech companies in Korea as well."

The issue of free network usage by big tech is one of the challenges facing the domestic telecommunications industry. In 2019, a lawsuit was filed between SK Broadband and Netflix. According to the 2023 daily average traffic status investigated by the National Assembly’s Science, Technology, Information and Broadcasting Committee, Google (YouTube) ranked first with over 30% of traffic share. Netflix was second, and Meta (Instagram and Facebook) third. All are American companies, and combined, the top three account for over 40% of total traffic. While they increase traffic burden, there are no usage fees.

Industry expectations grew when President Trump nominated Brendan Carr as the next chairman of the U.S. Federal Communications Commission (FCC). Carr, who wrote in a 2021 Newsweek op-ed that he would "end big tech’s free ride," has proposed legislation requiring big tech companies above a certain scale to contribute funds for the expansion of internet services.

In the U.S. Senate, Markwayne Mullin, a close ally of Trump, and Democratic Senator Mark Kelly jointly introduced the ‘Law to Reduce Consumer Burden for High-Speed Internet Costs.’ Until now, only telecom companies have contributed to universal service funds targeting rural areas, public institutions, and low-income groups, but the key point is to grant the FCC authority to compel big tech companies to contribute funds as well. Although the two bills were discarded when the session expired on the 2nd, there is a high possibility they will be reintroduced with Carr leading the FCC.

However, even if the Trump administration imposes network usage fees on big tech companies, it is likely to remain a ‘pie in the sky’ for Korea. This is due to the clause in the Korea-U.S. Free Trade Agreement (FTA) that guarantees ‘non-discriminatory internet network provision.’ Analysts suggest that if Korea imposes network usage fees on American big tech companies, it could trigger disputes over violations of the FTA.

Park So-young, a legislative researcher (lawyer) at the National Assembly Legislative Research Office, analyzed, "If Korea amends laws to require big tech companies to pay network usage fees, it would be considered discriminatory against American companies and thus a violation of the FTA," adding, "This could escalate into a trade issue." However, she also predicted, "From Korea’s perspective, it is not targeting only American big tech companies, but fees could also be imposed on domestic companies like Naver or Kakao based on telecommunications usage, so it could be argued that it does not violate the Korea-U.S. FTA." This interpretation suggests that laws feasible in the U.S. could become controversial in Korea.

Legislation imposing costs on big tech companies is still pending in the National Assembly. Representative bills include three amendments to the Telecommunications Business Act (proposed by lawmakers Lee Hye-min, Kim Woo-young, Lee Jeong-heon, and Noh Jong-myeon) that stipulate that internet service providers can demand network usage fees from companies like Google and Netflix, and that big tech companies must accept such demands.

This content was produced with the assistance of AI translation services.