Broadband Network Usage Fees in South Korea
Twenty Years of Network Usage Fees in South Korea: Impacts to Broadband and Content Industries
Roslyn Layton, Toshiya Jitsuzumi, and Dae-Keun Cho, March 13 2026
Journal of Information Policy
South Korea’s broadband policy, long recognized as world-leading, is now debated for network usage fees. This article examines the country’s framework, which mandates shared cost responsibility between internet service providers and content providers and analyzes the economic and regulatory implications. Findings suggest that network usage fees, which have been paid by many Korean parties since 2005, have not harmed the Korean content market or end users. Rather, fees facilitate broadband investment, deployment, and adoption and contribute to South Korea’s status as a leading broadband nation. It finds that network usage fees are reasonable tools for supporting broadband infrastructure policy goals.
The internet is built upon the two-sided market business models, whether for broadband, internet advertising, or video streaming. These models prevail in the online and offline world, notably in newspapers. For example, a person subscribes to wsj.com (WSJ) and pays a monthly subscription fee. These subscribers may be individuals or enterprises. The WSJ also sells advertising, event sponsorships, and other services to enterprise customers. That WSJ can offer different services to different markets at different prices, maximizing the revenue to build and grow a robust platform for news and information. The WSJ is incentivized the maximize offers to customers in both markets.
So too is the case for broadband. Broadband providers have household subscribers which pay a monthly fee for their account, access technology, premises equipment, customer service, and so on. Broadband providers serve a set of content providers by offering access to their customer base, security, hosting, caching, and other services. Because of the explosion of internet traffic in recent years, the cost of providing the infrastructure to accommodate traffic has increased. Indeed, for some broadband providers, the cost of maintaining and upgrading networks can exceed the fixed costs of connecting new users. Indeed, just a handful of content providers account for as much as 60-80 percent of all traffic globally. A few users watching Netflix can quickly consume a large portion of the network resources, reducing capacity for others which must use the network for work, school, healthcare and so on. Broadband providers wish to recover costs from the relevant content providers that create traffic, flows which neither the user nor the broadband provider can control. Indeed, as much of internet traffic today is advertising.
However broadband providers have little to no market power to engage with the world’s largest content providers to recover costs of their network usage. These content providers engage globally to restrict the policy development for such free-market, cost recovery business models. Over time, this has grown into a significant free rider problem. There is lack of broadband investment in next generation broadband technologies, a growing gap amounting to trillions of dollars. Moreover, about one-third of the world remains offline for lack of affordability, as broadband providers are limited to recovering costs only from end users.
If the WSJ had to conform to such an arbitrary regime, the paper would be regulated in its ability to offer subscriptions and would be required to provide advertising for free without receiving compensation for an increasing use of its space.
In practice, the world’s largest telecom and content providers have inked contracts, also called paid peering, to cover the cost of this traffic. These deals are negotiated on traffic volume and last for years, with the confidential terms undisclosed (See media streaming Dan Rayburn’s discussion on such deal.). These arrangements work to keep the internet humming, but they are essentially unavailable to most broadband providers worldwide, as they lack the market power to negotiate with Big Tech, itself a serious antitrust issue. Nevertheless, broadband providers experience the same cost challenges. To date, governments have attempted to close the gap with subsidies
One nation which has addressed the problem is South Korea, which has law and policy that recognizes the shared responsibility for both broadband and content providers to ensure adequate capacity for content delivery. Content providers, both foreign and domestic pay network usage fees to ensure adequate network capacity and so that consumers are not unduly burdened with the marginal cost of distinct services for which they do not subscribe or consume. Negotiations are private and reflect two-sided market dynamics and incentives. The government does not mandate prices for broadband access. South Korea has long been recognized as a leading broadband nation for technology, access, use, and skills. Moreover, the nation has grown into the world’s 7th largest content economy with a policy that empowers all its people to become content creators through ubiquitous broadband.
Some policymakers outside Korea have mischaracterized this policy and some even claim (without evidence) that it harms consumers, the content market, and security. This paper describes the policy and provides relevant fact to assess its efficacy.
Opponents of network usage fees argue they could increase costs for consumers or deter investment. However, empirical evidence suggests otherwise. The Korean content industry has expanded despite usage fees. South Korea’s broadband access market generated approximately USD $22.7 billion in 2022, while the content market exceeded USD $120 billion in 2021. Furthermore, Google and Netflix reported record profits in South Korea during the period in which usage fees were implemented.
Contrary to claims of harm, Korea remains a global leader in broadband performance and content exports. Korean CPs have paid network fees for years without issue, while foreign CPs have resisted similar agreements despite generating significant traffic.
Network usage fees prevent market failures by ensuring cost-sharing among broadband stakeholders. Without these fees, ISPs would be forced to raise consumer prices, disproportionately impacting users who do not access data-heavy platforms like Netflix and YouTube. Arguments against network usage fees appear self-serving, as many opposing firms already charge for network access within their own ecosystems.
I have not received compensation to perform this analysis or write this paper. I completed this paper as a follow up to my doctoral research in business economics and regulation at Aalborg University.