South Korea internet service provider sues Netflix for increased traffic costs News
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South Korea internet service provider sues Netflix for increased traffic costs

SK Broadband, a South Korean internet service provider (ISP) and a subsidiary of SK Telecom, filed a counterclaim suit Thursday against global streaming giant Netflix for payment of increased network costs and bandwidth usage that the US company has generated in the country’s market. It claimed that Netflix’s traffic on its ISP network has increased by 24 times within the last three years, from 50 gigabits per second in May 2018 to 1,200 gigabits in September 2021.

The suit comes a few months after the Seoul Central District Court ruled against Netflix in June and confirmed its liability to pay for network usage costs incurred by ISPs. SK Broadband filed its first complaint against Netflix with the Korea Communications Commission in November 2019, leading to Netflix counter-suing the ISP and asking the court to review its payment obligations for bandwidth usage. It argued that since its customers who stream the content are already paying for it, charging the streaming company would also amount to charging a “double bill.”

The court held that since Netflix is receiving network services in the form of management of network quality and maintenance work to maintain its explosive surge of viewers, it must pay a reasonable price to be negotiated between the parties. Netflix has filed an appeal against the Seoul court decision, which is currently pending.

Netflix is South Korea’s second-largest data traffic generator after Youtube, and its popularity is escalating even further after the release of the hit Korean show Squid Game this month. The decisions in the pending appeal by Netflix and counterclaim by SK Broadband, as well as the outcome of negotiations between Netflix and South Korea’s ISPs, will be instrumental in shaping the market participation of other streaming giants such as Disney Plus and Amazon Prime.