South Korean Internet Service Provider Firm Sues Netflix Over 'Squid Game'

Squid Game has created quite the wave around the world. It is well on its way to becoming Netflix's most-watched show. With the type of hype the show has been receiving, it is no surprise that there is a surge of viewers flocking to the streaming site to see what they're missing.

And as it turns out, if the show on your platform is too good, you will have to pay for the consequences. Sure, you get to reap the benefits of hosting a smash hit like Squid Game, but Netflix has to now also prepare to pay for the surge in traffic it's creating.

South Korean Internet service provider SK Broadband has sued Netflix to pay for the increase in cost caused due to escalated network traffic and maintenance work because of a surge of viewers. “We will review the claim that SK Broadband has filed against us,” a Netflix spokesperson told CNBC. “In the meantime, we continue to seek an open dialogue and explore ways of working with SK Broadband in order to ensure a seamless streaming experience for our shared customers.” A Seoul court has ruled that Netflix should, in fact, "reasonably" give something in return to the internet service provider for network usage.

Several South Korean lawmakers have also spoken out against content providers who do not pay for network usage despite generating explosive traffic. Netflix's data traffic handled by SK jumped 24 times from May 2018. Netflix also began using SK's dedicated line the same year to deliver increasingly larger amounts of data-heavy, high-definition video content to viewers in Korea from servers in Japan and Hong Kong, reported Reuters. As of September, the internet company is processing 1.2 trillion bits of data per second. The company has claimed that this is mainly because of the success of several Netflix productions from Korea including Squid Game and D.P. 

Netflix is the second biggest network traffic generator in South Korea after Google’s streaming platform Youtube. But unlike Amazon, Apple, and Facebook the video streaming platforms do not pay network usage fees to SK Broadband. The problem of paying network surge-related maintenance has been an ongoing matter between SK and Netflix. In July, Netflix had appealed against the court ruling to pay, arguing that it has no obligation to pay any fees. It further added that internet service providers are responsible for managing their networks. But the court has ruled against Netflix.

Just in 2020, SK had estimated the network usage fee that Netflix needed to pay was about 27.2 billion won ($22.9 million.) In its defense, Netflix has raised an appeal against the court's orders and claimed that it has contributed to the creation of over 16,000 jobs in South Korea stemming from about 770 billion won in investments. This in turn has had an economic effect of about 5.6 trillion won. Additionally, the current suit is an ongoing discourse about net neutrality. Some experts have argued that the current judgment by the court hampers net neutrality. They have stated that this policy will end up catering to only larger providers since smaller content providers will not be able to pay internet service providers for a more seamless service, as per Forbes.