Twitch Korea Server Shutdown: Network Usage Fee
Twitch Korea Server Shutdown: Network Usage Fee
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  • 승인 2024.06.24 14:46
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 On December 6, 2023, Twitch, a video game live-streaming service, officially announced its decision to cease operations and paid services in Korea. On the same day, Amazon, the parent company of Twitch, stated via an official Twitch broadcast that Twitch streamers would no longer be able to generate revenue in Korea through ads, subscriptions, Bits, or Hype Chat due to internal system blockages. Consequently, on February 27, 2024, Twitch withdrew its paid services from Korea.


The Reason for Twitch's Withdrawal

 So, what led to Twitch's withdrawal from Korea? The main reason was the Network Usage Fee (NUF). NUFs, which are charged by internet service providers (ISPs), encompass the total expenses related to maintaining and running information and communication networks. This includes internet connection service fees for internet content providers (ICPs). For example, ICPs like Netflix or YouTube, which are heavily used by people in Korea, incur high costs for ISPs like SK Telecom or KT. NUFs in Korea are overwhelmingly higher compared to those in Europe or the United States: "As of July 23, 2021, in the United States, Canada and Europe, the estimated cost per Mbps (330 GiB/month) is $0.08/Mbps. In contrast, in South Korea, it is approximately $2.50/ Mbps, which is about 15 times higher." (CLOUDFLARE: AWS’s Egregious Egress)

 Alyssa Starzak, the Global Policy Officer and Chief Legal Officer (CLO) of Cloudflare Inc., the world's largest content delivery network (CDN), pointed out that, "In most cases, peering, which directly connects networks, does not incur costs. However, Korea requires payment for peering when one side connects to the other."

 NUFs also contributed to video quality restrictions imposed by Twitch headquarters on Korean users a year before the withdrawal announcement. According to Daishin Securities Research, despite already having paid approximately 500 billion won in NUFs annually, it was anticipated that Twitch’s traffic costs would reach close to 900 billion won as of October 2022. (Daishin Securities - AfreecaTV: “The Beginning of Twitch's Exodus Rush, AfreecaTV's Once-in-a-Lifetime Opportunity”)


Regulation of NUFs in Europe

 Europe is pushing for the regulation of NUFs for global content providers. The European Commission (EC) has published a white paper on the 'Digital Network Act,' suggesting that since the way traffic is handled between ISPs and ICPs has changed, new policy discussions regarding payment methods for NUFs should be conducted. EC, taking into account the views of the European Telecommunications Network Operators' Association (ETNO), has been considering the enactment of the 'Gigabit Connectivity Act' since last year, which would impose obligations on businesses accounting for over 5% of annual internet traffic to share network investment costs and engage in negotiations. Recently, EC and ETNO have emphasized the need for new discussions regarding NUFs with big tech companies. They have stated their position that although progress may be slow, they will not halt the long race towards fair sharing of NUFs. (MTN News: “European Union, more proactive in network usage fee legislation than Korea”)


The Aftermath of Twitch's Withdrawal

 Despite the significant impact of NUFs on corporate growth, the government has taken a passive stance on related issues. However, Twitch's announcement of withdrawal from Korea has reignited the debate surrounding NUFs. The Korea Telecommunications Operations Association (KTOA) chastised Twitch’s withdrawal, stating, “NUFs in Korea are similar to those in most Asian countries, and Twitch's withdrawal should be viewed as a result of business failure rather than a network usage fee issue.”

 Korean Twitch streamers, upon hearing the news of Twitch’s withdrawal from Korea, expressed bewilderment, using metaphors such as “My house is crumbling” and “I woke up one morning to find my house on fire” to convey their confusion. After the incident of video quality degradation, there were discussions among Twitch Korea's internal employees regarding signs of Twitch’s exit from Korea, but the sudden announcement of withdrawal was Twitch’s exit from Korea, but the sudden announcement of withdrawal was not unexpected. As a result of Twitch’s decision, some streamers migrated to platforms such as AfreecaTV, YouTube, and the newly emerged CHZZK, while a few decided to retire from broadcasting altogether in conjunction with the shutdown of the Twitch servers in Korea.

 On the day Twitch announced its withdrawal from Korea, there was an attempt to file a national petition to legislate net neutrality. However, the petition failed as the host website site crashed due to the high volume of concurrent users and could not be restored in time. Therefore, it might be worthwhile to keep an eye on the future response of the Ministry of Science and ICT (MSIT) may respond in the future, given that they announced plans in December 2022 to pursue net neutrality legislations.

 One of the biggest issues stemming from Twitch's withdrawal from Korea is the possibility of other companies following suit. Although YouTube and Netflix have shown critical stances towards network usage fees, they currently have no plans to withdraw from the Korean market. If these two companies were to exit Korea, the aftermath could be far more significant than when Twitch withdrew. However, all three major Korean telecommunications companies own cache servers for Google and Netflix, and YouTube has been engaging in activities with telecom companies such as launching premium subscription plans. Therefore, it seems unlikely that they would withdraw from Korea anytime soon.

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