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Netflix and SK Broadband fight over who pays in South Korea – Diplomat

The synergies between streaming giant Netflix and Korean content creators have benefited both sides in recent years. With Netflix’s global platform providing streaming services to 190 countries, South Korean TV series and movies have become easier for viewers to access far beyond the core Asian market. In return, the Netflix Korean original series, which was a hit with Korean content such as “Kingdom,” “Sweet Home,” and “Crash Landing on You,” attracted millions of viewers and brought significant benefits to Netflix. I did.In South Korea alone, the number of paying users has skyrocketed from about 80,000 users in 2016 Netflix is ​​currently the most used streaming platform in South Korea Sales of 356 million dollars (Korean won 416 billion won), operating income of 7.54 million dollars..

Netflix saw its success and potential in the Korean market and founded a limited company. Netflix Entertainment KoreaLast year, we focused on content creation, acquisitions and market investments.Earlier this year, Netflix also announced its plans Invest $ 500 million For studio production including original movies in Korea.

However, as it became more popular, it also created complex problems. Specifically, the question is who should pay for the increased traffic due to Netflix’s success.

Netflix streaming is according to data from the Ministry of Science and ICT of Korea 4.8% of South Korea’s total internet traffic According to SK Broadband (SKB), the recent surge in Netflix users in South Korea has put a structural and financial burden on Internet companies, and SKB argues that Netflix should make up for it accordingly. As a result, Netflix was involved in a court battle with one of South Korea’s Internet service providers over network usage fees.

Netflix, on the other hand, emphasizes the principle of net neutrality, arguing that ISPs should not discriminate against a particular content provider (CP) or demand payment for network use. .. Consumers pay for Internet services to their ISP. Therefore, CPs such as Netflix are not responsible for additional network usage fees.

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Netflix is ​​currently contracting with other Korean ISPs (KT Telecom, LGU +, and D Live), which Exclusive content partnership with Netflix Or Netflix reduces the crunch of Internet traffic by providing a cache server called. Netflix Open Connect Rather than providing them with financial compensation directly. Netflix, like other Korean ISPs, proposed to mitigate traffic by building its own cache server, but SKB rejected the proposal and claimed financial compensation. ..

However, the two sides did not reach an agreement, and the issue escalated to the Korea Communications Commission and filed a proceeding in April 2020. In late June 2021, the Seoul Central District Court dismissed Netflix’s allegations and ruled that it had the authority required by SKB. Compensation in this case and it should be negotiated between the two private companies. Although this ruling can be seen as a SKB victory, it does not really provide a basis for what the rewards will be, and the two companies will negotiate their own terms.

Netflix responded by appealing the court’s ruling, Verdict denies the role of content providers and Internet service providers respectively, And it is shifting the responsibility of the ISP to the CP, weakening the Internet ecosystem.

The dispute between ISPs and CPs is not unique to South Korea. It is done in other countries, including the United States. However, South Korea is the first domestic lawsuit between a Korean ISP and an overseas CP, and because domestic and international platforms are competing with each other in the growing and crowded over-the-top (OTT) market. This is an interesting case. Netflix vs. SKB sets an important precedent for other streaming services domestically and potentially globally. Korean domestic CP such as Naver and Cacao are paying ISPMillions of dollars Although it has a much smaller market share than Google and Netflix.

Global CP does not have clear legal guidelines, and companies do not provide additional cash servers or financial compensation to ease the bandwidth burden of Internet providers. By concluding exclusive contracts with them, we are resolving disputes through bilateral negotiations. ..

Koreans in response to ongoing discussions The Ministry of Science and ICT will announce the guidelines. About network usage and net neutrality in September.Last December, the ministry passed a revised edition The Netflix Act and the Telecommunications Business Act, which was dubbed informallyAs an attempt to encourage foreign platform operators such as Netflix and YouTube to share the costs of ensuring stable Internet services. However, there were concerns about the vague and vague language of the ordinance and how it would be enforced.The ministry has officially stated that the government has no intention of interfering with the ongoing Netflix proceedings. Network usage fees must be decided voluntarily by the industry, The guidelines show the Korean government’s attitude towards this issue.

Other global streaming platforms such as Disney +, Apple TV +, and HBO Max are considering launching in South Korea this year and may affect their services, so be careful with the Netflix case. I’m watching over you.The long-awaited Disney + is already Postpone the release date and consider using a third-party content delivery network (CDN) To completely avoid legal disputes with Korean ISPs.

SKB is likely to file proceedings against Netflix proceedings, and these series of proceedings can last for a long time. How these proceedings are rolled out will be an important factor in Netflix’s business relationship with the streaming platform industry in South Korea. Even if Netflix and SKB reach an agreement, the exact terms and conditions will have a butterfly effect on both domestic and global CP, as well as on the cost and quality of streaming services, for consumers as well. ..

Netflix and SK Broadband fight over who pays in South Korea – Diplomat

Source link Netflix and SK Broadband fight over who pays in South Korea – Diplomat

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