According to reports,After popular movies such as “Squid Game” triggered a surge in data traffic, Netflix rejected a request from a South Korean internet provider to pay to use its network, saying that this might hinder entertainment companies’ profitability in South Korea.Currently, SK Broadband Co. is filing a lawsuit against Netflix, asking it to pay usage fees. At the same time, the streaming media giant is appealing an earlier request by a South Korean court to deny Netflix not to bear such costs.
Netflix’s vice president of public policy Dean Garfield (Dean Garfield) said in an interview with Bloomberg that although the direct economic impact of paying for network usage on Netflix is unclear. But over time, it is likely to show “exponential” growth.
Local media including the “Korea Times” quoted a local court report in June that SK Telecom estimated that in 2020 alone, Netflix would have to pay 27.2 billion won (approximately US$23 million) in usage fees. . This figure exceeds 6% of the company’s total revenue in South Korea last year.
Netflix’s numerous lawsuits in South Korea have revealed the company’s challenges in one of the world’s most coveted streaming media markets. At present, the Korean market accounts for 15% of Netflix’s customers in Asia, and it accounts for roughly the same proportion of the company’s revenue in Asia.
Since Netflix entered South Korea in 2016, the company has spent more than $1 billion on developing episodes. As competitors such as Walt Disney Co. and Amazon.com Inc. increase their investment in streaming media in the South Korean market, rising costs may affect earnings.
Garfield said that internet usage fees will create an “unfair and anti-competitive environment” where internet providers can charge companies whatever they want. He said this move may “potentially limit the ability of Korean consumers to get the content they want to see, because once the price becomes so prohibitive, streaming services like ours simply cannot afford it.”
Netflix estimates the value of “Squid Game” will be close to 900 million US dollars. Garfield said he is also worried that Internet providers in other countries may follow the example of South Korean providers and charge fees.
He said: “There is no doubt that some network operators will see this happening in South Korea and try to replicate it because it is in their interest.”
A spokesperson for SK Broadband said in an email response that if Netflix expects that the cost of network usage will increase exponentially, it means that its users will also grow at the same scale, so that it is able to provide sufficient revenue. To pay for network usage. The spokesperson said that although South Korean content providers need to pay network providers, Netflix does not, and its users and traffic in South Korea are increasing, which is unfair.
The spokesperson said: “The Internet is not free. Not only individuals, but also public institutions, government agencies and universities have to pay Internet usage fees.”
According to Yonhap News, a South Korean court rejected Netflix’s request in June, which required Netflix to confirm that it did not need to pay for such payments to SK Broadband, a subsidiary of SK Telecom Co., Korea’s largest mobile operator. cost. Netflix is appealing this ruling.
According to TechCrunch, SK Broadband filed a counterclaim at the end of last month, demanding that Netflix pay bandwidth usage fees for the past three years. The company said that as of September 2021, Netflix’s network traffic has increased 24 times compared to May 2018. A few weeks ago, “Squid Game” was released for the first time and caused a sensation internationally.
Garfield said that SK Broadband and some other local network operators refused to use the free system developed by Netflix, which may absorb more than 95% of data traffic, but he did not disclose the names of other providers.
Through this system called “Open Connect”, Netflix will store programs on its own servers and then deploy them to the local data centers of Internet operators. These programs will then bypass the remote data transmission and be transmitted to nearby customers.
A spokesperson for SK Broadband said that opening the connection will not change the fact that Netflix must use the provider’s network to reach users, nor will it help reduce the cost of the provider’s transmission of Netflix content to users.
Although the South Korean court stated that Netflix will pay US network operators, Garfield insisted that the company does not pay any fees for using the network anywhere. He said that in some partnerships, Netflix and network providers shared some of the technical and marketing costs of the system.
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