SK Network Usage Fee Deal Said Relevant for European Debate
An agreement between Netflix and two South Korean telcos won't end the debate over whether content providers should compensate networks for transmitting their data but is relevant to the discussion, emailed Alessandro Gropelli, director-general, European Telecommunications and Network Operators Association.…
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Monday's announcement by Netflix, SKBroadband and SKTelecom outlined a "strategic partnership to provide better entertainment experiences to their customers." The telcos said they want to help customers access Netflix shows and films on mobile devices and IP TV more easily and with payment options. They will offer various price plans and products, including bundled packages, and all the companies will explore opportunities to leverage AI technologies to create better offerings. The agreement ends three years of feuding between SKBroadband and Netflix, which began when Netflix's traffic on the network ballooned and Netflix refused to negotiate with the operator for cost recovery, wrote telecom consultant John Strand. Netflix then sued SKBroadband, claiming it had no obligation to pay or make a deal for network usage. When a court disagreed, Netflix appealed, and the litigation continued through 10 court hearings, Strand wrote. The new deal is a mutual decision that the companies said "stems from both parties' shared foundational principle that prioritizes customers." "Ostensibly this means that in future, Netflix users of SK networks would purchase Netflix through their broadband subscription," Strand said. "This would appear to be the way to ensure that the usage cost of Netflix on SK's network is covered," suggesting a revenue share between Netflix and the network operator. Nevertheless, Strand said, the debate over how to recover costs for continued investment in next-generation networks continues in South Korea. Asked whether the agreement has implications for efforts by European telcos to win network usage costs from content providers, ETNO's Gropelli said it "shows that a regulatory and legal nudge is necessary to achieve successful agreements." The arrangement is "interesting and relevant also for us" despite the different market and policy contexts in Europe, he said. Gropelli predicted the policy debates "will remain separate, but it definitely proves that better commercial deals are possible in environments in which network investment is prioritised."