Netflix CEO "No Payment for Network Usage Fees"... Ongoing Conflict Expected with Domestic Telecom Industry

Ted Sarandos, co-CEO of Netflix, reiterated the company's existing stance on the 'network usage fee' issue, which has caused conflicts with the domestic telecommunications industry, stating that instead of paying monetary fees, the issue will be resolved through investment and technical solutions.

At a press conference held on the 22nd at the Four Seasons Hotel Seoul, Sarandos said regarding the network usage fee issue, "Content providers (CP) and internet service providers (ISP) must collaborate to present the best possible projects."

He added, "Netflix has invested about $1 billion in the Open Connect system for ISPs," and "we have also made a $1 billion investment in various countries to improve internet speeds." This is interpreted to mean that while there will be continued investment in internet infrastructure, there will be no direct payment of usage fees to ISPs.

So far, content providers like Netflix and the domestic telecommunications industry providing internet services have been in conflict over network usage fees. The domestic telecom industry demands network usage fees, citing a surge in data traffic caused by content providers, while content providers argue that consumers already pay network usage fees to telecom companies through subscription fees.

SK Broadband and Netflix have been engaged in a lawsuit over 'network usage fees' since 2020. In 2021, the first trial court (Seoul Central District Court) ruled in favor of SK Broadband, but Netflix appealed, and the second trial is currently underway.

The global trend is moving unfavorably for Netflix. On the 13th, the European Parliament adopted a resolution urging the establishment of policies for fair contributions from 'large traffic-generating companies.' The resolution passed overwhelmingly with 428 votes in favor, 147 against, and 55 abstentions.

The resolution states that a policy framework is needed for large traffic-generating companies to fairly contribute by bearing appropriate costs for building telecommunications networks, and that the asymmetry and imbalance in bargaining power between large traffic-generating companies and telecom operators should be resolved and mitigated in this process.

However, domestically, public opinion regarding Netflix and network usage fees is gradually shifting, as Netflix has promised a massive investment of 3.3 trillion won. The government is also promoting Netflix's investment decision as a key achievement of President Yoon Suk-yeol's visit to the United States, further solidifying Netflix's position in the domestic market.

There are concerns within the domestic telecommunications industry that the favorable public opinion toward Netflix might influence the outcome of the network usage fee lawsuit.

Meanwhile, Sarandos stated that the 3.3 trillion won investment will be used to expand the domestic content ecosystem. He said, "The investment will be used not only for entertainment and series but also for education for the entire ecosystem," adding, "This includes everyone working both in front of and behind the camera."

Regarding controversies over Netflix's intellectual property (IP) monopoly and compensation for production companies, he promised to guarantee the highest level of compensation in the content industry. Netflix had previously faced fairness controversies for exclusively holding the IP rights to the globally successful 'Squid Game' and reportedly paying only a certain amount of production costs without separate guarantees.

Sarandos said, "We will ensure that creators and producers receive sufficient compensation. We are already compensating at the highest market level," and added, "We will continue to build a good ecosystem so that creators and partners can work in better environments."

Regarding the timing of the domestic introduction of the new account-sharing method, he said, "The change in account-sharing methods will continue globally," and added, "There is nothing special to announce today, but please look forward to it."