‘Squid Game’ hit raises stakes for Netflix in broadband battle

SK Broadband, wholly owned by South Korea’s largest mobile carrier SK Telecom, thinks Netflix should pay a congestion charge for hit shows like the streaming service's recently released "Squid Game." The company says the traffic that Netflix generates on its network has surged to 1.2tn bits of data processed per second as of September 2021, the month of Squid Game’s release, a 24-fold increase over three years. It has had to upgrade its network twice to accommodate the traffic surge caused by the show. Netflix sees those fees as contrary to its stance on net neutrality, which requires internet service providers to treat all content on their networks equally. It has argued that SK Broadband is calling for double billing, with subscribers paying for an internet connection via their Netflix subscription as well as a direct fee for internet service. It took its own legal action against SK Broadband over the charges in 2020. A district court dismissed Netflix’s claim in June 2021 and ruled it must pay outstanding fees to SK Broadband. Netflix has appealed against the ruling. Should Netflix lose its case against SK Broadband, the estimated fees of $84 million are unlikely to leave a dent in its bottom line. But it opens the door for global internet providers to consider charging streaming companies for their heavy bandwidth loads. This could mean a rise in prices for everyone as upgrade costs are spread across subscribers as a whole and not just corporations. Subscription costs of video streaming services could rise accordingly. Both SK Broadband’s lawsuit and Netflix’s hearing are scheduled for December 2021.

[June Yoon is a Lex writer for the Financial Times.]