A South Korean internet service provider has sued Netflix to pay for network and maintenance costs resulting from a surge in viewers attempting to access the streaming giant’s content.
The move comes after a Seoul court said Netflix should “reasonably” give something in return to the internet service provider for network usage, and multiple South Korean politicians spoke out against content providers who do not pay for network usage, despite generating explosive traffic.
The popularity of the hit series Squid Game and other offerings have underscored Netflix’s status as the country’s second-largest data traffic generator after Google’s YouTube, but the two are the only companies to not pay network usage fees, which other content providers such as Amazon, Apple and Facebook are paying, according to SK.
SK says Netflix’s data traffic handled by the service had jumped 24 times from May 2018 to 1.2 trillion bits of data processed per second as of September, riding on the success of several Netflix productions from Korea, including Squid Game and D.P.
Netflix said it would review SK Broadband’s claim for increased network traffic and maintenance work costs and, until then, would work with SK Broadband to ensure customers were not affected.
SK Broadband said it lodged the lawsuit against Netflix, after the streaming service began using SK’s dedicated line to deliver increasingly larger amounts of data-heavy, high-definition video content to viewers in Korea from servers in Japan and Hong Kong in 2018.
Last year, Netflix had brought about its own lawsuit as to whether it had any obligation to pay SK for network usage, arguing that Netflix’s duty ended with creating content and leaving it accessible.
It said SK’s expenses were incurred while fulfilling its contractual obligations to internet users, and that delivery in the internet world was “free of charge as a principle”, according to court documents.
However, 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”.
In its court documents, SK estimated the network usage fee Netflix needed to pay was about 27.2 billion won ($31.55 million) in 2020 alone.
Netflix has appealed against the ruling, with fresh proceedings to start in late December.