Korean court orders Netflix to pay for network usage
In this article (5)
Netflix has been ordered by a Seoul court to pay network usage fees to mobile carriers. This decision was reached after Netflix brought SK Broadband, the internet protocol subsidiary of SK Telecom to court, following a complaint filed against Netflix with the Korea Communications Commission in November 2019. Netflix had asked the court to review if the US-based over-the-top (OTT) content provider is obligated to pay for SK Broadband’s network usage.
After the review, the court ruled in favor of SK Broadband citing: “According to the principle of freedom of contract, whether to conclude a contract and what price to pay is a matter to be decided through the negotiations of the concerned parties.”
“Netflix is at least receiving network services, including management of the network quality, at a cost.”
This ruling is seen as a precursor for OTT content providers to pay for bandwidth usage fees in South Korea as the principle of net neutrality is losing relevance amid growing streaming audience and traffic. This is likely to impact the strategy of other OTT content providers such as Disney+ and Amazon Prime who are also looking to penetrate the market.
According to reports, Netflix accounted for 4.8% of all network traffic in South Korea in the last quarter of 2020. Last year, Netflix’s sales in South Korea reached US$356 million, while operating profits totaled US$7.54 million. Year-on-year revenues grew nearly threefold from the preceding year.
Questions & Answers
Q.What was the initial dispute about that led to this court case?
What was the initial dispute about that led to this court case?
Netflix asked the court to review whether it was obligated to pay for network usage by SK Broadband. This followed a complaint filed against Netflix with the Korea Communications Commission in November 2019 by SK Broadband.
Q.What was the court's reasoning for ordering Netflix to pay network usage fees?
What was the court's reasoning for ordering Netflix to pay network usage fees?
The court cited the principle of freedom of contract, stating that price is decided through negotiation. It also noted that Netflix receives network services, including quality management, at a cost, meaning they benefit from the network.
Q.How might this court ruling affect other streaming services operating in South Korea?
How might this court ruling affect other streaming services operating in South Korea?
This ruling is seen as a precursor for other streaming content providers to pay for bandwidth usage fees. It is likely to impact the strategy of services like Disney+ and Amazon Prime who are also looking to enter the market.
Q.How much network traffic did Netflix generate in South Korea recently?
How much network traffic did Netflix generate in South Korea recently?
According to reports, Netflix accounted for 4.8% of all network traffic in South Korea during the last quarter of 2020. This indicates a significant volume of data usage by the streaming service.
Reader pulse
Will this ruling accelerate global net neutrality changes?
18,580 votes so far