S. Korean Internet firm sues Netflix after traffic surge from Squid Game

SEOUL • South Korean Internet service provider SK Broadband has sued Netflix to pay for costs from increased network traffic and maintenance work because of a surge of viewers to the American firm's content, an SK spokesman said.

The move comes after a Seoul court said Netflix should "reasonably" give something in return to the Internet service provider for network usage, and many South Korean lawmakers have spoken out against content providers who do not pay for network usage despite generating explosive traffic.

Netflix said it will review SK Broadband's claim, and seek dialogue and explore ways in the meantime to work with SK Broadband to ensure customers are not affected.

The popularity of the hit series Squid Game and other offerings has underscored Netflix's status as the country's second-largest data traffic generator after Google's YouTube.

But the two are the only ones to not pay network usage fees, which other content providers such as Amazon, Apple and Facebook are paying, SK said.

Netflix's data traffic handled by SK jumped 24 times from May 2018 to 1.2 trillion bits of data processed per second as of last month, SK said, riding on the success of several Netflix productions from South Korea including Squid Game and D.P.

SK Broadband said last Friday that it lodged a lawsuit against Netflix for it to pay for using SK's networks since it began using SK's dedicated line from 2018 to deliver increasingly larger amounts of data-heavy, high-definition video content to viewers in South Korea from servers in Japan and Hong Kong.

Last year, Netflix had brought its own lawsuit on whether it had any obligation to pay SK for network usage, arguing Netflix's duty ends with creating content and leaving it accessible.

The Seoul Central District Court ruled against Netflix in June, saying that SK is seen as providing "a service provided at a cost" and it is "reasonable" for Netflix to be "obligated to provide something in return for the service".

SK estimated the network usage fee Netflix needed to pay was about 27.2 billion won (S$30.7 million) for last year alone, the court document said.

Netflix has appealed against the ruling, court records showed.

Netflix said in a statement yesterday that it contributed to the creation of about 16,000 jobs in South Korea stemming from about 770 billion won in investments, as well as an economic effect of about 5.6 trillion won.

In the United States, Netflix had paid a fee to broadband provider Comcast Corp for faster streaming speeds. A Netflix spokesman said in a statement it no longer pays Comcast for network access and it works closely with thousands of Internet service providers around the world to ease network congestion and lower Internet transit costs.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 14, 2021, with the headline 'S. Korean Internet firm sues Netflix after traffic surge from Squid Game'. Subscribe