Netflix and SK Broadband are ending their three-year dispute over network usage fees with a resolution in a legal battle that began in April 2020. This dispute garnered global attention as it revolved around the responsibilities of an internet provider and a leading streaming service regarding the maintenance of network quality, especially in the face of surging traffic driven by Netflix.
The clash between SK Broadband and Netflix had escalated over time, with SK contending that Netflix’s network usage had surged dramatically, reaching 1,200 gigabits per second (Gbps) in September 2021 from a relatively modest 50 Gbps in May 2018.
This surge in demand was attributed mainly to the global popularity of Korean-language dramas such as “Squid Game.” In contrast, Netflix had argued that SK Broadband’s demand for internet access fees amounted to double-charging since users were already paying subscription fees for the service.
The legal dispute ensued, and a local court ruling in June 2021 initially favored SK Broadband, deeming it “reasonable” for Netflix to provide compensation for its network usage. Netflix subsequently appealed this decision, leading to ongoing litigation.
However, recent developments have made a shift in this ongoing saga. SK Broadband and its parent company, SK Telecom, announced a strategic partnership on the 18th of this month.
This development came after Netflix decided to withdraw the lawsuit. The dispute originated in 2019 when SK Broadband sought mediation from the Korea Communications Commission regarding network fee negotiations.
Subsequently, in April 2020, the KCOM initiated mediation proceedings. Still, Netflix filed a lawsuit seeking confirmation of the non-existence of debt associated with network usage fees. However, the tide turned in June of the following year when the court of first instance ruled in favor of SK Broadband. In response, Netflix lodged an immediate appeal, leading SK to file an unjust enrichment suit with the Seoul High Court, aiming to ascertain the appropriate amount owed for network usage fees.
SK has announced its decision to cease all disputes with Netflix. This decision ends the legal wrangling between the two entities over whether Netflix should bear the costs associated with increased network traffic and maintenance work. While the exact terms of the agreement remain undisclosed, both parties seem to have opted for collaboration and partnership as the way forward.
Amidst prolonged legal disputes, Netflix, SK Telecom, and SK Broadband have set aside their differences to form a collaborative partnership. This alliance aims to offer mobile carrier and IPTV provider customers access to Netflix memberships, allowing them to enjoy the streaming giant’s content.
Furthermore, this partnership intends to introduce new subscription packages that closely resemble Netflix’s existing ad-supported membership model, expanding the range of choices available to users.
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