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| Logos of Apple TV Plus, Netflix and Disney Plus / Korea Times file |
By Kim Bo-eun
Netflix finds itself in an increasingly difficult position after its global competitors opted to pay network fees in the Korean market through content delivery networks (CDN).
A CDN is a geographically distributed network of proxy servers and associated data centers. Content providers such as media companies pay CDN operators to deliver their content to end users.
The controversy over network fees snowballed in recent weeks, following the overwhelming popularity of Netflix shows such as "Squid Game." Increased views have resulted in a spike in data traffic, which internet service providers claim is posing a burden to them.
SK Broadband is currently engaged in a lawsuit with Netflix over network fees. Netflix has maintained its stance that it will not pay for using local networks.
Netflix Vice President of Public Policy Dean Garfield last week reiterated at a press conference in Seoul that the company will use its open connect appliances (OCA) as a means to help alleviate the traffic.
According to Netflix, it has 14,000 OCAs around the world that have been accepted by over 1,000 ISPs in 140 countries. The company says OCAs have helped reduce traffic by 95 percent.
The Netflix executive flew in for the event and held meetings with Korean government officials and lawmakers as public sentiment toward the company here soured. This prompted President Moon Jae-in to urge the U.S. entertainment platform to take responsibility.
But Netflix appears to remain firm in its stance and plans to have another executive visit Korea in the coming weeks to introduce the system of OCAs. Korea currently does not host an OCA, with the closest being located in Japan. Local network operators view OCAs as a cheaper and less effective alternative for Netflix over paying for network fees and claim they will continue to be burdened by network operating costs, even with a local OCA.
"Even if an OCA were to be set up here, ISPs would have to bear the costs of operating the network connecting the OCA with customers," an official at a local ISP said.
The controversy is set to escalate, given Apple TV Plus and Disney Plus, are both known to have opted to pay network fees via CDNs. A CDN in turn pays internet service providers for hosting its serves in their data centers.
When asked about the choice of its global competitors, Garfield at Netflix said "I think each company has to make the decision that makes the most sense for them."
Netflix has instead chosen to share a larger portion of profits from the locally-produced "Squid Game" with Korean production companies as a means to quell the controversy.
A local court in June dismissed a request by Netflix to confirm that it is not liable to pay to use SK Broadband's network. The U.S. company appealed the following month.
Lawmakers are preparing to introduce a regulation that will require content providers to pay for use of local networks.
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