South Korean ISP Somehow Thinks Netflix Owes It Money Because Squid Game Is Popular

from the troll-tolls dept

We’ve noted for a while how the world’s telecom executives have a fairly entrenched entitlement mindset. As in, they often tend to jealously eye streaming and online ad revenues and assume they’re inherently owed a cut of those revenues just because at some point they traveled on their networks. You saw this hubris at play during AT&T’s claims that “big tech” gets a “free ride” on their networks, which insisted that companies like Google should pay them significant, additional troll tolls “just because” (which triggered the entire net neutrality fight in the States).

AT&T pretty solidly established this entitlement mindset domestically, and I’ve watched it slowly exported overseas. Like this week in South Korea, where South Korean broadband provider SK Broadband sued Netflix simply because its new TV show, Squid Game, is popular. Basically, the lawsuit argues, because the show is so popular and is driving a surge in bandwidth consumption among South Koreans watching it, Netflix is somehow obligated to pay the ISP more money:

“South Korean Internet service provider SK Broadband has sued Netflix to pay for costs from increased network traffic and maintenance work because of a surge of viewers to the U.S. firm’s content, an SK spokesperson said on Friday.

The move comes after a Seoul court said Netflix should “reasonably” give something in return to the internet service provider for network usage, and multiple South Korean lawmakers have spoken out against content providers who do not pay for network usage despite generating explosive traffic.

Except that’s not how any of this works. ISPs design their networks for maximum potential peak load. It’s completely irrelevant how popular some content traveling over your network is. Your job as a telecom operator is to design networks that easily flex to handle a surge in capacity, regardless of traffic type. If you’re failing to do that, it’s because you’re not designing your network and investing in capacity properly. It’s not suddenly the content company’s job to pay you more money to fix a problem you created.

Notice how SK Broadband also trots out the “Netflix doesn’t pay for bandwidth” trope, which is a deeply entrenched talking point in telecom lobbyist circles and also… simply isn’t true. Consumers pay ISPs for bandwidth. Streaming companies like Netflix pay ISPs for bandwidth. The idea that Netflix is somehow getting a “free ride” on telecom networks is just not based on any factual or technical reality. That hasn’t mattered to the South Korean courts, which have been leaning toward the telecom point of view in rulings the last few years:

“the Seoul Central District Court ruled against Netflix in June, saying that SK is seen as providing “a service provided at a cost” and it is “reasonable” for Netflix to be “obligated to provide something in return for the service”.

SK estimated the network usage fee Netflix needed to pay was about 27.2 billion won ($22.9 million) in 2020 alone, the court document said.

Netflix has appealed against the ruling, court records showed, with fresh proceedings to start in late December.

The South Korean courts, shockingly, are wrong. South Korean telecoms have convinced some in the South Korean legal system that content companies should pony up additional cash if something is popular “just because,” even if that makes no technical sense from a network design standpoint. It’s the kind of bizarre legal outlook AT&T dreams of here in the U.S., and the “big tech is getting a free ride” concept is the foundation of the argument, despite not actually being true.

In addition to paying for bandwidth, companies like Netflix and Google also spend massive fortunes on their own transit networks, underseas cables, and in some cases (Google Fiber) their own residential ISPs. In Netflix’s case, the company also operates a Content Delivery Network which helps greatly improve streaming efficiency and overall load, the hardware for which is provided to ISPs around the world, for free. Netflix has also been pretty flexible when it comes to designing adjustable tiers of service to help users on bandwidth caps (which, to be clear, are also bullshit cash grabs) avoid additional bandwidth fees.

So when you see a telecom (or one of their captured regulators, consultants, think tankers, or policy wonks) arguing that somebody is getting a free ride and should be throwing more money at them, what they’re really saying is “we’re too cheap to adequately invest in our networks and want you (Netflix, whoever) to give us money for no reason.” That the South Korean courts have bought into this argument (largely because the content companies in question are U.S. based), is unfortunate.

Again, this whole bumbling, bad faith argument was a cornerstone of the origins of net neutrality, a battle that was (in part) about preventing regional telecom giants from exploiting their gatekeeper power to demand obnoxious, arbitrary troll tolls. Pushed by AT&T, some U.S. regulators (most notably and recently the FCC’s Brendan Carr) are still pushing some variation of this dumb argument today. And the folks pushing it are generally hopeful you’re too dumb to realize that it makes absolutely no technical sense.

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Companies: netflix, sk broadband

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Comments on “South Korean ISP Somehow Thinks Netflix Owes It Money Because Squid Game Is Popular”

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29 Comments
Correctious correctersays:

"ISPs design their networks for maximum potential peak load."

Except that they don’t, they generaly go for average+margin.

That’s why all the internet bandwidths are marketed as "up to" and unless a court tells them otherwise (as happened in Germany), they happily consider 1 Mb/s as within "up to 1 Gb/s" (maybe a little exaragated).

In short if the ISP are left to their own devices they go full on "The Producers".

Anonymoussays:

I’d seriously like to know the power consumption comparison between a network merely being on, and whatever the average baseline is somewhere, and what it is when whatever Cash-Target-Internet-Thing like Netflix is in heavy use.

Otherwise, i’d like to know what this maintenance is. Is the transport so heavy that it vibrates the tubes, and they need an army of workers to keep tightening the pipes to stop leaks?

That One Guysays:

'We're not paying anything you said so what's the problem?'

Netflix should offer a deal. SK can get a cut of the profits from the show’s viewers in that area and all SK needs to do is pay all of Netflix’s internet costs for the entire area that SK offers service in. Since those costs are apparently nothing it should be an easy deal for them to take, with the only reason to refusing being if Netflix isn’t in fact getting a ‘free ride’.

Other than that option I’ll go with what others have suggested, if watching the show is such a huge pain/cost for the ISP then Netflix should just block it from being watched by anyone using that ISP, instantly the problem is solved and Netflix is no longer causing any strain on the IPS’s network.

ECAsays:

Love contracts.

This seems like an old Trope.
You signed the contract, and now you dont like it?
Because? WE are making more money then You, even tho we paid you want you wanted?

So now? I can take back all that I have given, that hardware. And anything else Iv created, and Leave you alone?
Suggest you ask your customers about this.

PS. all the content your nation created, that we bought, is NOW on our site. I hope you have copies, and a BIG bandwidth, as your customers are going to want it.

dan8mxsays:

Video conferencing

Do they somehow not have video conferencing in South Korea? If having everyone watch prerecorded video that can tolerate some buffering brings their ISPs’ networks down, it’s gonna blow their minds when remote workers fire up a flurry of real time videos feeds at roughly the same time at the start of the work day…

PaulTsays:

"it is "reasonable" for Netflix to be "obligated to provide something in return for the service"."

They do, Netflix doesn’t get its bandwidth for free. Maybe they don’t pay that specific ISP directly and they get it from a backbone provider, but the bandwidth is already paid for.

You know who does pay the bandwidth for the connection directly? The ISP’s customer. They pay you to provide them the service and bandwidth in return for supplying with the content they request. That’s your entire job. Your customer wants to watch Netflix, you connect them to Netflix.

The same bandwidth is now paid for twice, and you have been paid for supplying the service you have been contracted to provide. You don’t get someone to pay a third time for the same bandwidth just because you’re not competent enough to have the capacity to provide the service you’re being paid to provide. Your customer is requesting the connection, if you’re not being paid enough by them to supply it, that’s on you.

TaboTokasays:

Re: Right idea, wrong direction

You need to pay us for making people want your service.

THIS.

Netflix can just throw up a screen for anyone from that ISP that says:

"Sorry, but due to lack of license payment by your ISP, Netflix is not available via this connection. Please call your ISP at (phone) or email them at (ISP president’s email) or tweet/insta/whatever to tell them how you feel about their failure to pay for Netflix. We are sorry this is happening and want to restore service as soon as possible, but need your help."

Scary Devil Monasterysays:

Re: A man that sells fishes..

"An ISP that sells bandwidth gets a boost to their business of selling bandwidth and somehow that is bad?"

Yep. That bandwidth has already been paid for by the ISP’s customers. And those customers, using the bandwidth they already paid for are using Netflix. This is an attempt to defraud a judge in picking a pocket on their behalf.

It’s shit like this which sometimes makes me think we should have retained the whipping post and pillory as punishment for con men and shameless grifters.

That One Guysays:

Re:

You don’t get someone to pay a third time for the same bandwidth just because you’re not competent enough to have the capacity to provide the service you’re being paid to provide.

Apparently you do if the judges involved are either incredibly gullible or spiteful and/or corrupt enough to throw common sense out the window if it means sticking it to a company they don’t like.

PaulTsays:

Re: Re: A man that sells fishes..

What gets me here is that they are basically admitting they can’t provide their service economically if people actually, you know, decide to use it. Sure, in this specific instance they were brought to their knees by a single event (which, no matter how they want to spin it, consisted of the ISP’s users requesting content with the service they pay for). But, how easy is it going to be to do the same with multiple simultaneous events? Does everyone have to pay a 3rd time for bandwidth that’s already been paid for by the ISP’s customers and Netflix, or is this just a claim reserved for when Netflix embarrasses them?

To put this in further content, low end estimates of the average South Korean internet speed is around 40Mbit/s for standard broadband and 59Mbit/s for mobile (source: https://en.wikipedia.org/wiki/List_of_countries_by_Internet_connection_speeds). Netflix state that to get an UltraHD stream, you need a minimu of 25Mbit/s.

So, even if we take the lowest speed and highest video quality offered, customers would only have been using a maximum of 2/3 of their normal operating bandwidth to watch Netflix. If the ISP can be brought by their knees because their customers decide to start using 2/3 of what they pay for, I don’t think the problem is with Netflix.

Scary Devil Monasterysays:

Re: Re: Re: A man that sells fishes..

"If the ISP can be brought by their knees because their customers decide to start using 2/3 of what they pay for, I don’t think the problem is with Netflix."

That, in a nutshell, seems to be it. Yet another shady ISP decided to oversell bandwidth they couldn’t cover in the naíve hope that the customer base wouldn’t ever actually use what they paid for.

I’m somehow hoping this is just a move of desperation – one last Hail Mary pass by the ISP to drag themselves out of a sinkhole they’ve placed themselves in. But the fact that they even try is a warning sign, because what it means is that tort lawyers all over are gearing up to demand the network backbone needs to be run divorced from any form of business ethics.

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