SK Telecom settles Netflix dispute with strategic partnership

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SK Telecom and Netflix have ended their dispute over network usage fees, opting instead for a strategic partnership.

As part of the partnership, SK Telecom aims to enhance the convenience of accessing and paying for Netflix shows and movies on mobile devices and IPTV for their customers. They will provide a range of pricing options and product bundles for users; including services that incorporate Netflix’s ad-supported pricing model.

Tony Zameczkowski, VP of APAC Partnerships at Netflix, commented: “The partnership with SK Telecom, a leader in Korea’s telecommunication and innovative technology industries, holds special significance as it enables Netflix to enhance entertainment experiences for a broader Korean audience.

“Netflix is committed to creating and delivering the best stories to members in Korea and audiences worldwide, and we have high expectations for the journey ahead as partners serving our customers with SK Telecom and SK Broadband.”

The streaming giant is also exploring harnessing AI technologies developed by SK Telecom – including conversational UX and personalised recommendation technologies – to enhance the experience for Netflix’s customers.

Choi Hwan-seok, VP and Head of the Corporate Strategy Office at SK Telecom, stated: “This strategic partnership with Netflix originates from the philosophy of SK Telecom and SK Broadband, where customer value is prioritised and comes as part of our efforts to provide customers with an enhanced media service environment.”

Settling differences

The feud between SK Telecom and Netflix began in October 2021, when SK Telecom initiated legal action against Netflix. At the heart of the dispute was the question of who should foot the bill for the colossal amount of data transmitted over mobile networks due to Netflix’s hit shows.

In September 2021 alone, Netflix sent a staggering 1.2 terabits per second of content through SK Telecom’s network. SK Telecom contended that Netflix should shoulder the surging costs it incurred in managing this torrent of data and demanded $24 million in network usage fees for 2020, asserting that Netflix was responsible for a significant share of South Korea’s Q4 2020 network traffic.

On the other hand, Netflix argued that it should not be penalised for its success. The streaming giant pointed to its content delivery network, Open Connect, which is provided free of charge and reduces network traffic by at least 95 percent. Netflix claimed that SK Telecom had ignored this tool, putting the onus of network costs on Netflix.

While the resolution of the dispute through a strategic partnership marks a new chapter for SK Telecom and Netflix, the feud reignited the contentious debate over “net neutrality”.

Net neutrality is the principle that Internet service providers should treat all data on the Internet equally, without discriminating or charging differentially based on the content or source.

Critics argue that SK Telecom’s initial legal action against Netflix raised questions about net neutrality, as it seemed to suggest that SK Telecom wanted to charge Netflix extra for delivering its content—potentially giving preferential treatment to certain services over others.

Proponents of net neutrality assert that all internet traffic should be treated impartially, without favouring or discriminating against specific content providers.

Without net neutrality, startups have even more of an uphill battle against successful incumbents that can attract exclusive deals or afford preferential treatment—leading to a less competitive environment and downgraded service for consumers.

While the partnership between SK Telecom and Netflix may have ended their legal dispute, it has cast a spotlight on the broader issues surrounding net neutrality. As these industry giants join forces to shape the future of digital entertainment, the debate over how the internet should be governed and regulated is likely to continue.

(Photo by JESHOOTS.COM on Unsplash)

See also: SK Telecom and Polygon Labs partner to build Web3 ecosystem

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