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

© Reuters. In this illustration, the Netflix series “Squid Game,” is being viewed on a cell phone. This was taken September 30, 2021. REUTERS/Kim Hong Ji/Illustration

By Joyce Lee

SEOUL (Reuters). SK Broadband, a South Korean Internet provider has filed suit against Netflix (NASDAQ) in order to recover costs incurred due to increased network traffic and maintenance. This was in response to a spike of American viewers who were interested to see SK Broadband’s content. A spokesperson for SK stated on Friday.

This decision comes following a Seoul court ruling that Netflix must “reasonably” pay something to it for internet usage. Several South Korean legislators have also spoken out against content providers not paying for network use, despite the fact that they generate a lot of traffic.

Netflix indicated that it will examine SK Broadband’s claims and open dialogue to determine if there are ways for Netflix to help 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 filed a lawsuit against Netflix to demand payment for its use of SK networks. Since Netflix started using SK’s dedicated line in 2018, it has delivered increasing amounts of high-definition, data-heavy video content to Korean viewers from servers in Japan.

Netflix filed a lawsuit last year asking whether it was obligated to pay SK for network use. Netflix argued Netflix’s obligation ends at creating content and making it easily accessible. According to court papers, it claimed that SK was obligated to pay SK for Internet usage and delivery is free of charge.

In June, the Seoul Central District Court ruled in favor of Netflix. It stated that SK was seen as providing a “service provided at a price” and that Netflix should be “obligated” to return something for it.

The court document stated that SK calculated the cost of Netflix’s network usage fee at 27.2 billion won ($22.9 Million) for 2020.

Netflix appealed against this ruling according to court records. Fresh proceedings are expected to begin in late December.

Netflix stated Wednesday in a statement that the company contributed to South Korea creating approximately 16,000 jobs through investments totalling about 770 Billion Won. The economic effects of these investments are estimated at 5.6 Trillion won.

Kim Sanghee of the ruling party said Wednesday that 78.5% (or 73.1%) of South Korea’s 10 largest data traffic sources came from overseas content providers.

Netflix paid Comcast Corp (NASDAQ 🙂 a fee for streaming speeds that were faster in the United States.

Netflix spokeswoman said that it does not pay Comcast anymore for network access. It also works with thousands of other internet service providers worldwide to reduce congestion and increase internet transit costs.

$1 = 1,187.3400 won

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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.