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The legal battle between the two firms has been ongoing since 2020
South Korean internet service provider SK Broadband, subsidiary of network operator SK Telecom, have entered into a strategic partnership with Netflix to provide entertainment experiences to customers.
The deal will also see the companies collaborate on SK’s AI products, potentially offering them a new route to market.
“By teaming up with Netflix, SK Telecom and SK Broadband aim to help customers enjoy Netflix shows and films on mobile devices and IPTV (B tv) with easier access and payment options. SK Telecom and SK Broadband will offer various price plans and products, including bundled packages,” said the partners in a joint statement.
The partnership has resulted in both firms withdrawing from a legal battle over network usage fees that has been raging for over three years.
The dispute began back in 2020 over the question of whether Netflix should pay a fee for the use of SK Broadband’s network, as the streaming firm transmits a huge amount of data across the network, which SK Broadband argued was causing massive traffic overloads and therefore maintenance costs for SK Broadband.
Netflix countered this by arguing that it should not be penalised for its success, as well as noting that its content delivery network, Open Connect, could serve to reduce the network traffic by up to 95%. According to Netflix, this option had been wilfully ignored by SK Broadband.
Other firms, such as Apple and Facebook, currently pay usage fees to South Korean internet service providers in return for increased costs due to higher network traffic.
The argument came to a head in 2021 due to the release of Netflix’s most popular show to date, “Squid Game”, which caused Netflix to be transmitting 1.2 terabits per second of content through the network in September 2021. This pushed Netflix up to South Korea’s second-largest data generator after YouTube.
With the companies’ arguments broadly resulting in a stalemate, SK and Netflix have decided that collaboration could be the best way out of the legal quagmire.
“Moving forward, SK Broadband and Netflix will end all disputes with the signing of today’s partnership, and collaborate as partners for the future. This mutual decision stems from both parties’ shared foundational principle that prioritizes customers,” said a joint statement from the two firms.
The years of contention between the two firms feeds into the wider debate taking place internationally around whether major content players like Netflix should be forced to help subsidise the telco networks they rely on so heavily to deliver services. This so-called ‘fair share debate’ continues to be discussed at length in various markets, most notably in Europe, where the European Commission is currently conducting a consultation on the matter.
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