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SK Broadband demands Netflix pay for Squid Game delivery

South Korean ISP SK Broadband has sued Netflix for a share of the cost of delivering its video streaming content.

Korean video traffic has surged in the streaming boom, much of it driven by demand for Korean-made content such as Squid Game – the current number one Netflix series globally – Crash Landing on You and Kingdom.

SK Broadband firm says it carried 1.2 Tbps of Netflix traffic in September, a 24-fold increase in volume since the OTT player began using SK Broadband's dedicated line service in May 2018, Reuters reported.

Red light: Will Netflix stagger under the beady eyes of SK Broadband as they try and recoup the costs of streaming the global K-Drama blockbuster Squid Game.  (Source: Netflix)
Red light: Will Netflix stagger under the beady eyes of SK Broadband as they try and recoup the costs of streaming the global K-Drama blockbuster Squid Game.
(Source: Netflix)

The ISP, a unit of SK Telecom, is demanding that Netflix pay "network usage fees" that are already paid by most other big content providers.

Its legal action follows a Seoul court ruling against Netflix three months ago and is the latest in a years-long joust between the two companies over fees for broadband content.

Tug of war

The case is the first anywhere in the world between an OTT player and a telco on the issue. While it has likely caught the attention of streaming and platform players around the world, it is also very much a result of Korea's distinctive telecoms and digital regulatory environment, which resembles no other market.

In court, Netflix had argued that SK Broadband had incurred its costs while fulfilling obligations to its own customers and it had no obligation to pay any share of them. The court determined thatSK Broadband had provided "a paid internet connection" and that it was "reasonable and fair that Netflix pays for the service." It directed the parties to negotiate a settlement. Netflix has filed an appeal.

According to SK Broadband, major local and foreign companies including Facebook and Amazon pay usage fees. The only exceptions are Google and Netflix. The biggest Korean platform companies – Naver and Kakao – reportedly pay 70 billion won ($59 million) and 30 billion won to ISPs respectively.

Play the game

In an email to Light Reading, SK Broadband cited Korea's Telecommunications Business Act, which requires content providers to pay telcos for carrying their traffic once volumes cross a certain threshold.

For its part, Netflix argues that its content delivery network, Open Connect, does not place any traffic burden on networks.


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The company acknowledges it pay fees to providers in other countries, but says these are not network usage charges. In Japan, for example, it only pays for services that ensure that Open Connect can run and for servers that deliver streaming video content, not fees for network use.

Netflix has said it will seek a dialogue with SK Broadband – but after multiple legal contests it is difficult to imagine either of the parties shifting from position.

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— Robert Clark, contributing editor, special to Light Reading

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