Call it the undead argument: No matter how many times the “free ride” issue of Internet services is killed off, it inevitably comes back in one form or another.
If you follow Internet policy, you’re well acquainted with the “free ride.” It’s a position often taken by telecommunications providers that says online services and companies aren’t paying their fair share to maintain and upgrade the networks they run on.
The latest salvo comes from KT, one of South Korea’s largest ISPs, which is looking at charging online services that use lots of bandwidth—such as YouTube—extra for clogging up its pipes. KT recently blocked some Samsung video apps for this reason and is now looking to expand the move to other big data suckers.
“We want to set a rule that we can equally apply to every platform operator that offers data-heavy content as those services threaten to black out our network. They should pay for using our network,” Kim Taehwan, vice-president of KT’s smart network policy task force, told Reuters.
To say the company’s move is surprising would be an understatement, especially given how South Korea’s supposedly progressive ISPs have placed the country atop just about every broadband ranking there is.
The free ride argument is fallacious for a number of reasons. Firstly, large content providers do in fact pay for their bandwidth costs. Some estimates have even pegged YouTube’s expenditures at nearly half a billion dollars a year. Secondly, and more importantly, the most effective counter to the argument has been that without those popular data-hungry services that people want, there’d be little reason to subscribe to broadband. In other words, without YouTube, iTunes, Netflix and so on, the Internet would be a considerably more boring place that fewer people would pay to visit, which means a lot less dough for network owners.
The free ride argument hasn’t found much traction in the United States or Canada, although there was the near miss last year with the CRTC examining it in a different form—that of cultural equality. The regulator looked at whether online services such as YouTube and Netflix should be taxed in order to contribute to Canadian content creation, much like traditional broadcasters are, but wisely decided against such a move, at least for now.
As I wrote at the time, placing a “free ride” tax on services like YouTube in any country could effectively kill them because it would inevitably kick off a domino effect. ISPs, governments and regulators in other countries, seeing the potential bonanza, would no doubt institute their own versions of such taxes. Services like YouTube—which has yet to even achieve profitability, as far as anyone outside Google knows—might find it more economically prudent to simply pull their offerings. And never mind the chill effect such taxes would have on similar small startups.
The South Korean government has been very progressive in encouraging innovation in all areas of technology, from telecommunications infrastructure to robotics and biotech. What would be more surprising than KT’s move to stem the “free ride” would be the government allowing it to stand.