South Korean Broadband Company Sues Netflix After Increased ‘Squid Game’ Traffic

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SEOUL, Oct. 1 (Reuters) – South Korean internet service provider SK Broadband has sued Netflix (NFLX.O) to pay costs related to increased network traffic and maintenance work due to an influx of viewers to American company content, a SK spokesperson said on Friday.

The move comes after a Seoul court said Netflix should “reasonably” give the Internet service provider something in return for network use, and several South Korean lawmakers have spoken out against content providers who do not pay for network use despite generating explosive traffic.

Netflix said it will review SK Broadband’s application, seek dialogue and explore ways to work with SK Broadband to ensure customers are not affected.

The popularity of the hit “Squid Game” series and other offerings has underscored Netflix’s status as the country’s second-largest data traffic generator after Google’s YouTube, but the two are the only ones not paying the fees. use of the network, which other content providers such as Amazon, Apple and Facebook pay, SK said.

Netflix’s data traffic managed by SK has jumped 24 times since May 2018 to reach 1,200 billion bits of data processed per second in September, SK said, building on the success of several Netflix productions from Korea, including “Squid Game “and” DP “.

SK Broadband said it has taken legal action against Netflix to pay for the use of SK’s networks since Netflix started using SK’s dedicated line from 2018 to deliver increasingly larger quantities data-dense high-definition video content to viewers in Korea from servers in Japan and Hong Kong.

Last year, Netflix took its own lawsuit over whether it had an obligation to pay SK for network use, arguing that Netflix’s duty ends with creating content and keeping it accessible. He said that SK’s expenses were incurred in fulfilling its contractual obligations to Internet users, and that delivery to the Internet world is “in principle free,” according to court documents.

The Netflix series “Squid Game” is played on a mobile phone in this photo illustration taken on September 30, 2021. REUTERS / Kim Hong-Ji / Illustration

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But the Seoul Central District Court ruled against Netflix in June, saying SK is considered to be providing “a service provided at a cost” and that it is “reasonable” that Netflix is ​​”obligated to provide something in return for the cost. service”.

SK estimated that the network usage fees that Netflix had to pay were around 27.2 billion won ($ 22.9 million) in 2020 alone, according to the court document.

Netflix has appealed the decision, according to court records, and new proceedings are due to open at the end of December.

Netflix said in a statement on Wednesday that it helped create around 16,000 jobs in South Korea through investments of around 770 billion won, as well as an economic effect of around 5.6 trillion won. won.

Ruling party lawmaker Kim Sang-hee said on Wednesday that of South Korea’s top 10 data traffic generators, 78.5% of traffic came from foreign content providers, up from 73.1% a year earlier, with “Google-YouTube and Netflix accounting for the majority turning a blind eye to network usage fees.”

In the United States, Netflix has paid fees to broadband provider Comcast Corp (CMCSA.O) for faster streaming speeds for more than seven years. https://reut.rs/2Y8wOzb

($ 1 = 1,187,3,400 won)

Reporting by Joyce Lee, additional reporting by Nivedita Balu in Bengaluru; Editing by Raju Gopalakrishnan and Anil D’Silva

Our standards: Thomson Reuters Trust Principles.


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