Internet traffic tax in South Korea: an example for Europe to follow? (Spoiler alert: It’s not, here’s why)

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The most important present telecom operators in Europe are making an attempt to revive the thought Tech corporations should pay them when responding to person requests for information. That’s, the identical customers who already pay carriers for web entry now should pay once more for a similar content material by way of higher-priced streaming subscriptions or cloud providers.

This dream of communication pipelines is at present being analyzed by European regulators and politicians. It’s unusual that just one nation around the globe has carried out such a tax on Web visitors. South Korea started introducing the Fee Community Occasion (SPNP) idea in 2016 and specialists agree that the trial failed. Client costs have skyrocketed, content material supply is changing into much less various, latency is now among the many highest in OECD international locations, and community funding is declining.

This begs the query: Is that this the organizational mannequin that Europe actually needs?

SPNP is the technical identify for what we name the Web Visitors Tax. Because of this the occasion sending the web visitors to an finish person (a streaming platform like Netflix or Spotify for instance) is obligated to pay a price to the person’s Web Service Supplier (ISP) – resembling a service – for the visitors that can really be delivered.

In 2016, South Korea launched the SPNP mannequin, with ISPs charging charges for the information visitors they obtain from one another. 4 years later, the SPNP mannequin was expanded to additionally embrace main app and content material suppliers (resembling Google, Fb, and Netflix). Since then, these suppliers have been pressured to pay community charges for the Web visitors they ship over the ISP’s networks in response to person requests.

The introduction of an Web visitors tax has had dire penalties, each for South Korean customers and for his or her nationwide Web system as an entire.

Varied research have discovered that client costs a plus Considerably since 2016. South Korea is now among the many international locations the place customers pay for highest charges for cellular information on this planet. To offer an thought, the typical price of 1GB of cellular information in South Korea is over €12, whereas the European common (throughout all operators) is simply €1.85. South Korean client costs for cellular information are additionally seven occasions greater than the European common and greater than double these in Finland, the European nation with the best charges (€5.90 per GB).

Along with the costlier information plans, South Korean customers have additionally seen the worth of their Netflix subscription It elevated by 12.5 p.c Within the final years. It is a direct results of an ongoing authorized dispute between the broadcasting platform and Korea’s ISP SK Broadband. What’s extra, South Korea now has the worst latency charges amongst all OECD international locations, and latency is the period of time it takes information to journey from one place to a different – the quantity of delay you expertise on a video name, for instance.

In actual fact, latency has gotten worse since South Korea carried out the SPNP mannequin, beginning at about 120 milliseconds in 2018 and reaching practically 160 milliseconds simply two years later, the Group for Financial Co-operation and Growth present in latest research. Alternatively, European international locations have proven a development in the direction of decreasing latency in recent times. Denmark, for instance, went from 60 milliseconds to almost 50 milliseconds.

In addition to these shortcomings that buyers face immediately, the SPNP mannequin additionally impacts them not directly, because it creates a much less aggressive market and reduces the inducement to put money into the community.

As a direct results of the duty to pay ISPs excessive community charges, many South Korean and international content material suppliers have accomplished so. Companies deteriorated Which they provide to Korean prospects or just determine to get out of the market. For a similar cause, content material suppliers and small Korean startups are dealing with rising difficulties in coming into the market or increasing their market share. This has considerably diminished competitors in South Korea and led to sharp declines when it comes to the extent of service offered and the content material provided to customers.

As if that wasn’t unhealthy sufficient, the South Korean market can be experiencing structural Lower in community funding, each by home and international corporations. Some are involved that main infrastructure tasks resembling apricot google And the Fb echo Undersea cables might now fully bypass South Korea for these causes. Maybe surprisingly, 5G networks are additionally widespread in South Korea slowing downThe nation is seen by many overseas as a pacesetter in cellular know-how.

The scenario in South Korea speaks for itself. The Web visitors tax removes the inducement to put money into high-speed community infrastructure. What greater than this real-world expertise might clarify how poorly the SPNP mannequin was introduced for Europe?

If the European Union actually goals to satisfy its ambition 2030 digital targetsIn fact, the sending occasion’s community mannequin paying is the very last thing you want.