Netflix response to first trial defeat to SK Broadband may set rate norm for foreign players

South Korea’s internet service providers (ISPs) and global content platforms are paying attention to how Netflix would respond to its court defeat against SK Broadband over network fee dispute as it may lead to new rate norm for foreign streaming players.

The Seoul Central Court last Friday dismissed Netflix’ argument that it is not liable to pay fees for using SK Broadband’s network because it just logs on to the network to connect to the usersand doesn’t;’ use it to transfer data.

But experts say ‘logging on’ and ‘transfer’ cannot be technically separated because they occur simultaneously when sending and receiving traffic.

As the court decision has made it clear that not only users but also content producers and providers should pay network usage fees, it is likely that Korean ISPs would go through similar disputes with global content platforms such as Google and Disney Plus, the Walt Disney’s video streaming service set to launch its service in Korea.

The decision is also expected to prompt the government and National Assembly to revise related regulations to prevent global video streaming platforms from free-riding on networks of Korean telcos.

Some market watchers worry that consumers may experience inconvenience if Netflix decides to lodge an appeal, but the California-based streamer said it is open to negotiations to find common ground with SK Broadband for the interest of their shared users.

An official from SK Broadband also said that it will make efforts to reach compromise with domestic and overseas content providers and increase investment to upgrade its network to meet the rising demand for traffic.

SK Broadband estimates Netflix’s network usage fee at 1.5 billion won ($1.3 million) for 2015 and 27.2 billion won in 2020. The U.S. streamer accounted for 4.8 percent of overall traffic load in Korea last year, according to the data from the Ministry of Science and ICT. Naver that took 1.8 percent paid 70 billion won. Korean telcos would be able to demand more than 100 billion won for network fees to foreign-based content providers.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]