The end to legal action is unlikely to help the European push for a ‘fair contribution’
Operators in South Korea to launch ‘Netflix bundles’
On 18 September 2023, South Korean operator SK Telecom and its subsidiary SK Broadband announced that they had signed a strategic partnership with Netflix to provide entertainment services to their customers. Under the agreement, SK Telecom and SK Broadband will introduce plans that include access to the streaming giant’s content via users’ mobile devices and through B TV (SK Broadband’s IPTV service), reflecting offerings already available on the market from KT and LG Uplus. The operators will also launch additional Netflix packages for SK Telecom's subscription service, T Universe. In addition to the content deal, the firms will explore opportunities for Netflix to leverage AI technologies developed by SK Telecom and SK Broadband, such as Conversational UX and Personalised Recommendation Technologies, to create better entertainment experiences for customers.
The agreement means an end to the dispute over network usage fees
Notable in the announcement is the agreement between SK Broadband and Netflix to end all disputes regarding payments for the delivery of data traffic. Reforms to the country’s Telecommunications Business Act in 2020 meant that content providers with at least 1m users and those responsible for more than 1% internet traffic must share accountability for (and cost of) providing a stable service to users. Since then, the firms have been embroiled in a legal battle over network usage charges, with the dispute intensifying following the surge in traffic caused by the launch of the popular show Squid Game. In June 2021, a court found in SK Broadband’s favour, but did not determine how much it should be compensated for increased network traffic and maintenance costs. In July 2023, the Electronics and Telecommunications Research Institute (ETRI) was tasked with calculating a figure, which the telecoms industry has estimated at KRW40bn (£24.3m).
South Korea’s Parliament, however, will still consider the issue of network usage fees during an audit of MSIT policy
The decision to end legal action was mutual and stems from both side’s shared principle of prioritising customers. It may also reflect frustration with slow court progress, the Government’s eagerness to attract investment from Netflix and concerns from some politicians that network charging proposals could cause tech firms to raise subscription fees and that they could undermine local content creators. The upcoming National Assembly hearing (whereby politicians assess MSIT policy) will consider the issue of network usage fees and the potential impact of the strategic partnership. Operators in the EU, which have looked to South Korea for an example of how ‘fair share’ might work in practice, have often encountered political opposition to their request for financial contributions from big tech, with only a few Member States (e.g. France and Spain) publicly announcing their support.
