History and implications of IP interconnection regulation in South Korea

South Korea has been an outlier in terms of its regulation of internet protocol (IP) interconnection domestically. IP interconnection charges are regulated between internet service providers (ISPs). These charges are passed on to other stakeholders including smaller ISPs, content and application providers and start-ups offering services in South Korea. As a result, prices for paid peering and domestic transit – which are not directly regulated – have remained very high by international standards. We understand that domestic transit prices now exceed international transit prices, meaning it is more expensive for content providers in South Korea to exchange traffic with users in the country, than with users anywhere else in the world.

This has led to several challenges for South Korea’s international connectivity, internet infrastructure and domestic competition between large telecoms operators (KT, LG U+ and SKB).

International connectivity:

• South Korea has significantly fewer submarine cables than other countries in the Asia–Pacific region (APAC), despite relying on them entirely for international connectivity. There are currently eight international submarine cables landing in South Korea, compared to 22 in Japan, 13 in Australia and 11 in the Philippines.

• South Korean telecoms operators are the primary providers of international connectivity to the country. However, no new cables backed by cloud or content providers have been installed in the country since the interconnection regulation came into force.¹

• Only two new cables became ready for service between 2016 and 2024, and three more are planned between 2025 and 2028, with one content provider participating as one of ten investors in one of those cables. This compares to many more new cables planned or deployed between 2016 and 2028 in Australia (17), Japan (17) and the Philippines (11), many of which are part or fully owned by content providers. 

• This suggests that the disincentive for parties other than national telecoms operators has led to underinvestment in international infrastructure in South Korea.

Internet infrastructure:

• There are a limited number of internet exchange points (IXPs) in South Korea. IXP capacity per person is similar to that of the Philippines, which is a much less developed economy. It is also 10–20 times lower than in Australia and Japan. Of the largest three Korean ISPs, only one is present at a domestic IXPs, with a relatively small port size, suggesting not much traffic exchanged.

• Content and cloud providers appear to operate more limited infrastructure than in neighbouring countries. For example, Google Cloud’s Media content delivery network (CDN), used to provide streaming for their cloud customers and Google’s own services, is not present in South Korea, despite being deployed in most countries in the APAC region.

• Latency for services accessed internationally is significantly higher than for those accessed domestically. Cloudflare data suggests users can face latency nearly twice as high as it could be with a more fluid interconnection regime. Furthermore, latency data from RIPE Atlas suggests that users in South Korea are much more likely to access Google and Meta services via international routes than users in Japan.²

Domestic competition:

• The current situation also results in competitive disruptions in adjacent sectors. The large telecoms operators in South Korea offer CDN services in competition with standalone CDN providers, despite offering a bundled connectivity price not available to users of the other CDNs.

• These operators also offer bundles of co-location and interconnection services, where they offer cheaper interconnection prices to content providers that use their captive data centres. This comes at the expense of international data centres, which might otherwise have provided artificial intelligence (AI) training or inference services.

• Local ISP and start-up representatives have told us that, although the market has adapted around high interconnection fees, this is having an impact on the level of competition in the connectivity market, and has reduced the ability of South Korean and international start-ups to expand in Korea.

Although South Korean users have access to high-quality connectivity overall, this masks a situation where the largest three ISPs in the country can leverage very high domestic interconnection charges to compete in adjacent sectors. They do not invest heavily nor innovate rapidly in those sectors, which leaves South Korea exposed to underinvestment, high prices and potentially less access to state-of-the-art services. Although there is data-centre investment in South Korea, as there is in many other countries, data-centre supply (on a per-person basis and including data centres under construction) is similar to Jakarta and less than half what it is in Singapore or Tokyo.

South Korea has missed an opportunity to become a regional connectivity hub, and risks missing out on becoming an AI hub as a result. 

¹ Two cables with Meta as an investor landed in 2016 and 2018, respectively, but were announced before 2016. They are part of a consortium which includes South Korean telecoms operators.

² See RIPE Atlas, accessed July 2025 (https://atlas.ripe.net/).