South Korea Gives Mobile Operators Permission To Ignore Net Neutrality By Surcharging Or Blocking VOIP Services

from the what's-in-it-for-the-customers? dept

Net neutrality arguments are often couched in rather theoretical terms, and many people can't really see what all the fuss is about. A recent decision in South Korea gives a handy example of what the loss of net neutrality means in practice:

In a move that has critics crying that it is ignoring net neutrality principles, the Korea Communications Commission said last week that it will let three local mobile operators, SK Telecom, KT and LG U+, charge users extra fees for VOIP [voice over IP] applications or block their use entirely.
Among the VOIP services affected is the mobile phone messaging app KakaoTalk, which has a massive following in South Korea:
KakaoTalk has 36 million Korean users and 9.2 million international users. More than half of 50 million Korean cell phone owners use smartphones, according to the Korea Communications Commission.
In other words, thanks to this latest ruling, tens of millions of KakaoTalk users in South Korea will either be forced to pay more, or may even find the service blocked completely. It's hard to see why the South Korean telecom authority decided this kind of tilted playing field was a good idea: the only ones to benefit are the mobile operators who get to attack new entrants that threatened to disrupt their market, while huge numbers of Korean citizens will be worse off as a result. You could hardly hope for a better demonstration of why net neutrality matters, and is not some purely theoretical concern.

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Filed Under: net neutrality, south korea, voip
Companies: kakaotalk

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  1. icon
    Lutomes (profile), 12 Jul 2012 @ 10:04pm

    What is always missing from these arguments is what happens if you allow telcos to just be carriers or dumb pipes.

    Lets say you have 3 plans on your hypothetical carrier:

    1) $20 for x minutes of calls,
    2) $20 for x GB of data,
    3) $35 for x minutes of calls + x GB of data (i.e. better deal for getting both)

    Lets say their user base is split 30%,30%,40% in terms of signups. Per 100 users that would result in revenue of $2600.

    If you allow net neutrality and everyone switches to plan #2. We all know the costs of switching calls and data round the network don't change with volume bar fractional electricity and maintenance costs - your big cost is capital outlay. Also we know VoIP traffic is inconsequential in terms of MB/GB used. So to maintain the same network & profit margin, plan pricing has to change.

    Instead of being $20pm it's now $26pm. This is inescapable. Real world numbers will vary, but the overall accounting change is the same.

    The difference is - the above oversimplifies the situation. We don't just have 1 call plan, and 1 data plan. The telco can offer varying connections at prices where calls are a differentiation in pricing. Some plans will be below the average cost to maintain the network, some above.

    If you ask them to just be a big dumb pipe - they have to price closer to the network cost. So those on low volume/use plans will be the ones that miss out. It's these plans that people normally take advantage of when going on VoIP.

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