Netflix Resisting Network Usage Fees, Raised Korean Prices by Over 10%... Up to 17,000 Won

[Image source=AP Yonhap News]

[Asia Economy Reporter Joesulgina] Global online video service (OTT) Netflix has raised its subscription fees for the Korean service by up to 17,000 KRW (premium plan). Despite generating massive traffic domestically without paying any network usage fees, Netflix's double-digit price hike is expected to intensify the controversy over 'free-riding on network usage.'

On the 18th, Netflix announced the subscription fee increase for its Korean service. The standard plan will rise from 12,000 KRW to 13,500 KRW per month, and the premium plan will increase from 14,500 KRW to 17,000 KRW per month. These represent increases of 12.5% and 17.2%, respectively. The basic plan remains unchanged at 9,500 KRW.

The new fees will first apply to new members. Subsequently, existing members will be gradually charged the increased fees on their billing dates. Netflix stated, "Current members will receive an email notification 30 days before the fee change unless they change their membership."

Netflix argues that the price increase is inevitable to invest in content and maintain the service. Since the second half of last year, it has raised fees in major countries such as the United States and Japan. This is the first increase in Korea.

However, given the ongoing controversy over free-riding on network usage, the introduction of a double-digit price hike is bound to spark debate. Some speculate that Netflix raised prices in advance as the National Assembly is pushing a bill to mandate payment of network usage fees through bipartisan agreement.

The free-riding controversy involving global content providers (CPs) including Netflix has previously been a topic during the national audit. Although they earn huge profits based on domestic infrastructure, they do not pay network usage fees. This sharply contrasts with domestic CPs like Naver and Kakao, which pay hundreds of millions of KRW annually in network fees and cooperate in stable network management and expansion.

Especially, Netflix, which recently earned massive profits from the Korean original content "Squid Game," lost the first trial of a lawsuit claiming it has no obligation to pay network usage fees but has appealed the decision. Earlier this month, Dean Garfield, Netflix's Vice President of Policy, who visited Korea, reaffirmed the stance that Netflix cannot pay network fees and controversially argued that the government should intervene to prevent fees from being demanded from the company, drawing criticism. He also stated willingness to negotiate directly with SK Broadband, which is in legal dispute over network fees, but it was confirmed that he left the country the next day without any contact.

However, it has been confirmed that Netflix effectively pays network usage fees to overseas internet service providers (ISPs) such as Comcast, Verizon, and AT&T.

This content was produced with the assistance of AI translation services.