The conflict between SK Broadband and Netflix over network sharing costs could be resolved as early as May as the Korea Communication Commission (KCC) is expected to come out with an arbitration proposal.
The arbitration results will likely be utilized as a future dispute resolution guideline for local telecom companies and global content providers.Since December 2018, SK and Netflix have voiced their differences over network usage fees."The arbitration results between SK Broadband and Netflix will be confirmed in May," a KCC official said.SK Broadband, an affiliate of the nation's top mobile carrier SK Telecom, has clashed with Netflix as the U.S. streaming giant refuses to pay for using SK Telecom's internet networks. Netflix causes heavy network traffic as it is a streaming service.SK Broadband CEO Choi Jin-hwanLast month, the KCC requested both companies to submit formal stances.
Industry watchers say the KCC will review the two stances and fact-check to produce a detailed arbitration draft."We have submitted all requested documents to the KCC and are waiting for the arbitration results to come out. We hope the results can create an environment where fair price measurement for network usage is established," an SK Broadband official said.The deadline for Netflix to submit all required documents to the KCC was originally set for early March, but has been extended until the end of the month."We plan to submit the requested documents within this month," a Netflix spokesman said. "The firm has made heavy investments into network and infrastructure worldwide, and established the Open Connect Appliances (OCA) to reduce traffic."Netflix says it is operating in conjunction with more than 1,000 internet service providers worldwide, including Korea.
Netflix CEO Reed Hastings
All eyes are on the direction the KCC is planning to take. The KCC's "network usage guideline" is expected to include specific dispute cases and provide a standard for network usage.Depending on the results, experts predict the other two major telecom companies KT and LG Uplus could file for arbitrations of their own.After the arbitration is confirmed by the KCC, SK Broadband and Netflix will have 60 days to file a lawsuit, or the arbitration results will become official. Market watchers believe that, considering the costs involved in funding a dispute, it will be difficult for the two sides to refute the arbitration results.
Domestic content providers such as Naver and Kakao are known to have paid tens of billions of won to telecom companies annually for using their networks, but there have not been particular guidelines for global content providers.On Nov. 12, SK Broadband, submitted an application for arbitration with the communication regulator marking the first case of a Korean internet service provider requesting arbitration with a global content provider.
SK Broadband says it has had the burden of rising costs caused by an increase in traffic due to Netflix's data heavy video streaming services, but that Netflix were reluctant to engage in negotiations, which led to calling on the KCC to mediate the issue.SK Broadband signed a contract with Facebook in January 2019 to share data traffic costs.