South Korean tech giants Naver and Kakao fear damaging ripples from a new local regulation aimed to levy wireless surcharge on multinational platform operators like Google and Netflix if they cause traffic overload.

The Ministry of Science and ICT announced its plan to implement an ordinance under the revised telecommunications business act on Tuesday. The new act will require overseas platform operators to appoint local agents to maintain service stability if they cause network overload.

Platform providers with the number of daily users surpassing 1 million and taking up more than 1 percent of total network traffic will be subject to the new regulations. Based on data around June this year, three foreign players including Google, Facebook and Netflix and two local operators Naver and Kakao will fall into this category.

Kim Nam-chul, head of telecommunications competition policy team at the ICT ministry, said the companies will be required to go through negotiations with local mobile carriers and put prior notice when they have to expand server capacity or change traffic passage due to the growth in the number of users and network traffic.

Google, the owner of YouTube, used the largest 23.5 percent of domestic networks, followed by Netflix 5 percent, Facebook 4 percent and Naver and Kakao 1 to 2 percent, according to data from May to July.

The new law called “Netflix law” passed the National Assembly in May amid complaints of local wireless and internet content players arguing that multinational platforms have a free ride on the nation’s 5G network while causing overload.

But Naver and Kakao urged the government to reexamine the regulation because it only benefits wireless carriers and can hurt domestic content providers. They demanded the government apply fair standards and modify contents subject to violation of basic constitutional rights.

Korea Internet Corporations Association said Tuesday that the 1 percent traffic threshold is ambiguous because there is no official rule that calculates the amount of traffic used by wireless carriers and platform providers. It also argued that the 1 percent baseline is unfair because the overseas operators take up much higher share of more than 20 percent.

By Lee Seung-yoon, Lee Yong-ik and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]