Stock Groups

South Korea broadband firm sues Netflix after traffic surge from ‘Squid Game’ By Reuters

© Reuters. This picture illustrates how the Netflix series “Squid Game”, is played on a smartphone. It was taken September 30, 2021. REUTERS/Kim Hong Ji/Illustration

By Joyce Lee

SEOUL (Reuters) – South Korean Internet service provider SK Broadband sued Netflix (NASDAQ 🙂 for increased network traffic, maintenance costs and damages due to a spike in viewers of the U.S. content. A spokesperson from SK said Friday.

After a Seoul court ruled that Netflix should give “reasonably” something in exchange for its network usage, multiple South Korean legislators have condemned content providers who don’t pay for their network usage, even though they are generating a great deal of traffic.

Netflix stated that it would review SK Broadband’s claim and engage in dialogue with them to find ways to continue working together to protect customers.

SK stated that Netflix is the second largest data traffic generator in the country after Google’s YouTube. However, the company has not paid network usage fees. Other content providers like Apple (NASDAQ) or Amazon (NASDAQ) pay them.

SK reported that Netflix’s data traffic increased 240% from May 2018, to 1.2 Trillion bits per second by September 2018. This is due to the popularity of many Netflix Korean productions, including “Squid Game”, and “D.P.”

SK Broadband claimed it filed a suit against Netflix in order to get compensation for the use of SK’s networks. In 2018, Netflix began streaming video from SK’s dedicated line. This allowed it to provide more data-heavy and high-definition content to its viewers in Korea via servers in Japan, Hong Kong, and other countries.

Netflix brought its own suit last year to determine if it was under any obligation pay SK network usage. Netflix argued that Netflix’s duty is limited to creating and making it available. According to court papers, it claimed that SK was obligated to pay SK for Internet usage and that delivery is free of charge.

However, in June the Seoul Central District Court ruled against Netflix. They argued that SK provides “a service at a cost” so it was reasonable for Netflix to be “obligated” to give something in return.

According to court documents, SK had estimated that Netflix would need to pay 27.2 billion won (or $22.9 million) for network usage fees in 2020.

Netflix appealed the decision, according to court records. New proceedings will begin in December.

Netflix released a statement Wednesday stating that its investments of approximately 770 billion won and an economic impact of roughly 5.6 trillion won had contributed to South Korea’s creation of around 16,000 jobs.

Kim Sang-hee, a ruling party lawmaker, stated Wednesday that 78.5% came from foreign content providers out of South Korea’s 10 top data traffic generators. This is up from 73.1% a a year ago. “Google-YouTube” and Netflix account for most people turning a blind eye towards network usage fees.

Netflix, a streaming service that provides faster speeds than traditional broadband providers in America (NASDAQ:), has been paying Comcast Corp (NASDAQ.) a fee since 2007.

(1,187.3400 won = $11)

Disclaimer Fusion MediaThis website does not provide accurate and current data. CFDs are stocks, indexes or futures. The prices of Forex and CFDs are not supplied by exchanges. They are instead provided by market makers. As such, the prices might not reflect market values and could be incorrect. Fusion Media is not responsible for trading losses that may be incurred as a consequence of the use of this data.

Fusion MediaFusion Media and anyone associated with it will not assume any responsibility for losses or damages arising from the use of this information. This includes data including charts, buy/sell signal, and quotes. You should be aware of all the potential risks and expenses associated with trading in the financial market. It is among the most dangerous investment types.

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.