South Korean ISP Wants Netflix to Pay More for Broadband

On the heels of Netflix’s global hit “Squid Game,” a legal battle between the world’s largest subscription streaming operator and a South Korean ISP has reignited the debate over net neutrality laws in the country.

Specifically, SK Broadband, the high-speed internet distributor of SK Telecom in South Korea, recently filed a countersuit against Netflix demanding the streamer pay for increased usage put on the network by its programs such as “Squid Game,” “Kingdom,” “#Alive,” “Itaewon Class,” “Sweet Home” and “D.P.,” among others.

In late June, the Seoul Central District Court dismissed Netflix’s claim and ruled that SK Broadband had the legal right to seek compensation — an amount to be determined through negotiation between the two companies.

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Currently, Netflix doesn’t pay for its 3.8 million subscribers using upwards of 10% of South Korea’s broadband capacity streaming “Squid Game,” the horror-themed dystopian game show that has been watched by more than 142 million Netflix households since launching Sept. 17.

The debate has also ushered in political action within the government regarding tax payments and other expenses foreign companies generate doing business in the country.

In an Oct. 24 blog post, Dean Garfield, VP, global public policy at Netflix, argues SK Broadband’s fiscal demands would stifle Netflix’s ability to make a profit in the region, in addition to the streamer’s ongoing investment in local content production — it values at more than $1 billion.

“‘Squid Game’ is just the beginning,” Garfield wrote. “We appreciate what Koreans have long understood. There is so much more where this story came from. But, unfortunately we have come to a crossroads … where internet gatekeepers could get to decide if the next great Korean story can be watched, and loved, by the world. Why would anyone want that? That is the question.”

To counter claims worldwide that Netflix’s popularity puts strains on local ISP networks, the streamer has long advocated ISPs employ its free open-connect cache servers to help alleviate the strain its subscriber’s usage. It enables Netflix content to be stored as close as possible to subscriber homes, avoids clogging up the internet, saving ISPs upwards of $1.2 billion in related usage costs, according to the streamer.

“The overwhelming majority of our ISP partners around the world use Open Connect, because why wouldn’t they?” writes Garfield. “We deliver it to them for free. It’s proven to reduce at least 95% of network traffic, leaving lots of room for other content to go through.”

Meanwhile, some South Korean lawmakers allege Netflix has shifted much of its localized revenue to a Dutch holding company to reduce its tax burden. Netflix in 2020 generated about 415.4 billion won ($355 million) in revenue, realizing a profit of $7.5 million. Lawmakers contend Netflix reduced its tax burden to 2.1 billion won ($1.8 million) through its offshore accounting maneuver.

Parks: U.S. Pay-TV Industry Lost More Than 18 Million Subscribers From 2014 to 2020

The U.S. pay-TV and high-speed internet markets keep going in opposite directions.

Cable keeps losing viewers, while the streaming business continues to see gains.

New data from Parks Associates estimates that from 2014 to 2020, domestic pay-TV providers lost more than 18 million subscribers, while the broadband market exploded, with 40% of broadband households receiving a standalone service. In 2020, more than 7 million households dropped their pay-TV services. Traditional pay TV — television services delivered over an operator-controlled network to an operator-controlled device — declined by an estimated 10 million subs.

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“Online pay-TV service from virtual MVPDs, players that target the general population instead of offering services to a specific geographic footprint, grew by an estimated three million,” senior analyst Kristen Hanich said in a statement. “[Online TV] overall [has] grown to represent an increasingly large percentage of the pay-TV market — accounting for 16% of subs in 2020.”

In the domestic market, online TV represented the only segment of the pay-TV space to experience growth during the COVID-19 pandemic. Dallas-based Parks estimates that by the year 2024, the traditional pay-TV sub base will decline to just 53 million households — while online TV will increase to more than 23 million.

Internet service providers and others operating in the pay-TV space are thus seeking alternatives to traditional pay-TV in their consumer services arsenal. Cable operators have had some success in encouraging new bundling by launching Wi-Fi-first mobile virtual network operator (MVNO) services, primarily running on Verizon’s network. In the research company’s Q1 2021 survey, 4% of broadband households reported subscribing to Comcast Xfinity Mobile, Spectrum Mobile or Altice Mobile — making them some of the largest players in the MVNO space.

“U.S. ISPs collectively have over 110 million residential and small business internet subscriptions as of Q1 2021,” Hanich said. “The standalone broadband market will continue to grow, increasing pressure on these service providers to find the next combination of services that best leverages this massive subscriber base.”

Report: 40% of Americans Want Faster Broadband Service

In an over-the-top video world, high-speed Internet connection is a must-have. New data from BroadbandNow contends that much of the country — rural America — does not have fast-enough Internet to handle streaming video.

The high-speed Internet aggregator believes 42 million Americans (16 million households) do not have access to a broadband-level connections — nearly double the FCC’s estimates.

Indeed, the survey-based report, from more than 700 households during May, contends 40% of Americans would sign up for a faster Internet option if the option became available. About 20% of respondents are somewhat dissatisfied with the speed of their existing service, including 25% in rural areas. The national average for broadband Internet is $79 per month.

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BroadbandNow suggests upstart ISP companies such as Elon Musk’s nascent SpaceX could help fill the void through its Starlink initiative, which aims to deliver high-speed broadband connections nationwide through a “mesh network” of satellites. Musk, creator of battery-powered Tesla cars, has said that the company needs 400 operational satellites to start service in the U.S.

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“If SpaceX’s Starlink service managed to enter the market in the $60 monthly range, it could pose a substantial threat to a status quo that has existed for decades in some areas,” Tyler Cooper, editor at BroadbandNow, wrote in the report. “Offering the service for $80 to $90 would likely still be attractive for many, but if it was significantly more expensive than current options, the company (and others working on new types of connectivity) may face an uphill battle with adoption, regardless of how robust the service is.”

 

 

 

Comcast’s Brian Roberts, Wife Donate $5 Million For Laptops to Philadelphia Public Schools

With public schools switching to online classes during the coronavirus pandemic, Comcast Corp. CEO Brian Roberts and his wife Aileen have pledged $5 million toward the purchase of laptop computers for school children in Philadelphia.

According to a 2019 School District survey, only about 50% of third- through 12th-grade students have the equipment they need to begin participating in online lessons. Roberts’ donation will support the purchase of 50,000 Chromebooks, which will help ensure that all students who attend the 220 District-led public schools across Philadelphia have the tools they need to learn at home.

“We’re living in an unprecedented time and COVID-19 is presenting our society with new challenges every day,” Aileen and Brian Roberts said in a statement. “When we heard that many Philadelphia students weren’t going to be able to learn from home without laptops, we quickly decided we wanted to help and provide these teachers, parents and students with the technology they need to begin learning online within just a few weeks.”

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The laptops will be distributed along with the estimated 40,000 laptops already in school buildings to students and families. Once the equipment is received at the School District headquarters, it will be dispensed between April 13 and 17. During the interim two weeks, the laptops will be prepared for the students and the Philadelphia School District teachers will be trained to support distance learning.

“The generous gift from Aileen and Brian Roberts and their family will help to transform the learning experience for thousands of Philadelphia’s public school students who will now be able to access online educational resources from home,” said Superintendent William R. Hite, Jr., Ed.D. “Our public schools belong to all of us and this is a great example of what’s possible when we work together to improve educational supports for all of our young people. I am grateful for their generosity.”

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Students and their families who don’t already have Internet access can get it through any Internet Service Provider (ISP) in Philadelphia. Comcast is currently offering low-income families who don’t already have Internet service two free months through Internet Essentials, which is the nation’s largest and most comprehensive high-speed internet adoption program.

Netflix Explains Streaming Video Quality Slowdown

Characterizing the current coronavirus spread as a “global crisis,” Netflix March 23 reiterated its responsibility to “help where we can.” Last week, the European Union asked companies like Netflix, Amazon and YouTube to ensure they are using telecommunications networks as efficiently as possible given the unprecedented network demand from quarantined residents.

In a blog post, Ken Florance, VP of content delivery at Netflix, said the SVOD pioneer quickly developed, tested and deployed a way to reduce its traffic on impacted networks by 25% — starting with Italy and Spain, which were experiencing the biggest impact.

“Within 48 hours, we’d hit that goal and we’re now deploying this across the rest of Europe and the U.K.,” Florance wrote. Netflix just reduced its streaming bit rate in Israel.

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To help clarify questions from subscribers concerned about the reduced streaming bit rates, Florance said the action taken by Netflix maintains the full range of video resolutions.

“Whether you paid for Ultra-High Definition (UHD), High-Definition (HD), or Standard-Definition (SD), that is what you should continue to get (depending on the device you are using),” he wrote.

Florance said that under normal circumstances sometimes has dozens of different streams for a single title within each resolution. In Europe, for the next 30 days, within each category Netflix just removed the highest bandwidth streams — resulting in a “very slight decrease” in quality within each resolution.

“But you will still get the video quality you paid for,” he said.

Florance said the ongoing crisis is impacting ISPs differently depending on where they’re located. He said some partners in regions such as Latin America want Netflix to reduce its bandwidth. But others with excess capacity want to continue with business as usual.

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“This is understandable, as different ISPs around the world have built their networks in different ways, and operate within different constraints,” Florance said.

He said Netflix would provide “relief “to ISPs dealing with large government-mandated “shelter in place” orders by providing the 25% traffic reduction started in Europe. For other networks, Netflix will stick with normal procedures until situations change.

“Our goal is simple: to maintain the quality of service for our members, while supporting ISPs who are facing unprecedented strain on their networks,” Florance wrote.

Netflix’s Reed Hastings Meeting With European Union to Discuss Bandwidth Issues During Virus Pandemic

With much of Europe under quarantine due to widespread outbreaks of the coronavirus, the European Union is calling on streaming video services such as Netflix and Amazon Prime Video to curtail offering content in high definition.

The EU encompasses more than 450 million people, many of whom are home-bound as local governments and health officials battle to contain further spread of COVID-19, which has seen Europe surpass China in the number of infections and deaths.

With people turning to over-the-top video, demands on local ISPs and networks could exceed capacity, according to European Commissioner Thierry Breton, who tweeted “#SwitchtoStandard definition when HD is not necessary.”

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Breton reportedly met Netflix CEO Reed Hastings on March 18 about the issue and is scheduled to do the same today. Netflix, in a statement to CNN Business, said the service already limits streaming to network capacities, including housing content closer to subs in each country.

“Commissioner Breton is right to highlight the importance of ensuring that the internet continues to run smoothly during this critical time,” a Netflix spokesperson said. “We’ve been focused on network efficiency for many years, including providing our open connect service for free to telecommunications companies.”

By 2024, about 63 million Europeans are projected to have a Netflix subscription — up from 40 million in 2018. Netflix had 106 million international subs at the end of 2019, in addition to 61 million in the United States.

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Comcast Offering Free Wi-Fi Access During Coronavirus Pandemic

Comcast, one of the nation’s largest ISPs, March 13 announced it is making available free access to its Xfinity Wi-Fi hot spots nationwide, among other services, over the next 60 days during coronavirus pandemic. The cable giant is also suspending all data cap limits for subscribers during this period.

Hot spot access will be available to anyone, including non-Xfinity Internet subscribers. To find a local Xfinity Wi-Fi hot spot, click here. Once at a hotspot, consumers should select the “xfinitywifi” network name in the list of available hotspots and then launch a browser.

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The company said it would also not cancel a subscriber’s Internet service or assess late fees if the sub contacts Comcast informs the service he/she can’t pay their bill during this period. Comcast said it would work with subs offering flexible payment options, in addition to finding other solutions.

“During this extraordinary time, it is vital that as many Americans as possible stay connected to the Internet — for education, work, and personal health reasons,” Dave Watson, CEO of Comcast Cable, said in a statement. “Our employees also live and work in virtually every community we serve, and we all share the same belief that it’s our Company’s responsibility to step up and help out.”

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Charter Agrees to Record $174.2 Million Legal Settlement Regarding Fraudulent Internet Speed Claims

Cable operator Charter Communications (a.k.a. Charter Spectrum) has agreed to pay the state of New York $174.2 million to settle a consumer fraud allegation regarding its Internet speed claims.

The settlement – following unsuccessful appeals by Charter – is considered the largest-ever consumer payout by an Internet Service Provider in U.S. history.

Charter’s 700,000 ISP subs in New York will split $62.5 Million in refunds (about $75 each, in addition to $75 each to 150,000 subs who had inadequate modems), plus $100 million in premium channels and streaming services compensation for the pay-TV operator’s 2.2 million active subs.

“This settlement should serve as a wakeup call to any company serving New York consumers: fulfill your promises, or pay the price,” New York Attorney General Barbara Underwood said in a statement. “[This] sets a new standard for how Internet providers should fairly market their services.”

In an age when streaming of movies and TV shows on services such as Netflix, Amazon Prime Video and Hulu, in addition to online TV, proliferate, ISPs regularly champion ever-faster download speeds.

Charter, which launched standalone online TV platform, Charter Spectrum TV Plus, to its broadband subscribers in 2015, had claimed ISP download speeds of 100, 200, and 300 Mbps, while failing to maintain enough network capacity to reliably deliver those speeds to subscribers.

Underwood claimed Charter mislead subs with claims they could stream over-the-top video service seamlessly, while at the same time engaging in “hardball tactics” with Netflix and other third-party content providers that, at various times, ensured subs would suffer through frozen screens, extended buffering, and reduced picture quality.

Those “hardball” measures contributed to net neutrality guidelines being imposed in 2015 by the Federal Communications Commission — and rescinded this year by FCC under the Trump Administration.

The direct restitution serves to compensate subscribers who, the N.Y. Attorney General claims, Charter equipped with outdated modems and routers and with premium speed plans that consistently failed to deliver the advertised speeds.

“The streaming benefits serve to compensate subscribers for Charter’s historic failures to faithfully deliver third-party Internet content that it had advertised,” reported the Attorney General.

 

 

California Inks Net Neutrality Bill; Trump Administration Sues

California Gov. Jerry Brown Sept. 30 signed legislation that returns key provisions of net neutrality law enacted by the Federal Communications Commission under President Obama.

Brown approved SB822 — dubbed the California Internet Consumer Protection and Net Neutrality Act of 2018 — prohibiting fixed and mobile Internet service providers (ISPs) from engaging in actions concerning the treatment of Internet traffic.

The law prevents ISPs (including Comcast, AT&T and Verizon) from blocking lawful content, applications, services, or nonharmful devices, impairing (i.e. throttling) or degrading lawful Internet traffic on the basis of content, application, service or use of specified practices known as “zero-rating,” which enable users to consume select content without impacting their monthly data caps.

It also denies ISPs from offering or providing services other than broadband Internet access service that are delivered over the same last-mile connection into consumer homes, if those services have the purpose or effect of evading the above-described prohibitions or negatively affect the performance of broadband Internet access service.

The Trump Administration responded with the Department of Justice filing a federal lawsuit claiming the state law violates provisions of the FCC’s rolled back net neutrality guidelines enacted under new chairman Ajit Pai.

“Under the Constitution, states do not regulate interstate commerce — the federal government does,” Attorney General Jeff Sessions said in a statement. “Once again, the California legislature has enacted an extreme and state law attempting to frustrate federal policy.”

Pai, who was appointed to the FCC by Obama, and promoted to chairman position by President Trump, has long argued previous net neutrality provisions represented government overreach on private enterprise and thwarted capital investment.

The revamped FCC last December voted to reclassify ISPs as “information service providers.” That action — restoring lighter regulatory oversight — overturned the prior FCC’s 2015 ruling that classified ISPs as common carriers under Title II of the Communications Act of 1934.

“Not only is California’s Internet regulation law illegal, it also hurts consumers,” Pai said, citing “zero rating” data plans he said enable low-income consumers to stream video and music.

“They have proven enormously popular in the marketplace,” Pai said.

Eddie Kurtz, with Courage Campaign, a civil liberties group, applauded the signing of SB822.

“Governor Jerry Brown did the right thing by choosing to institute the strongest net neutrality rules in the country, sending a clear signal to Californians that guaranteeing access to the internet for all, helping California communities — particularly low-income communities — and  boosting small businesses is a priority for our state,” said Kurtz.

 

Comcast Pledges Net Neutrality Support as Government Safeguards Expire

Comcast reiterated support for so-called net neutrality provisions the same day (June 11) the Federal Communication Commission’s “Restoring Internet Freedom Order” took effect, rolling back many safeguards intended to mandate a level playing field on the Internet.

In a blog post, Dave Watson, CEO of Comcast Cable, said the nation’s largest cable pay-TV operator would not change how it handles third-party streaming services on its broadband network.

“We still don’t and won’t block, throttle or discriminate against lawful content,” Watson wrote. “We’re still not creating fast lanes. We still don’t have plans to enter into any so-called paid prioritization agreements.”

Yet, throttling is precisely what Netflix co-founder and CEO Reed Hastings accused Comcast and other Internet Service Providers of doing in 2014. Hastings said Netflix was forced into paying “a toll” to “some big ISPs” so its subscribers wouldn’t be subjected to buffering and pixilated images.

“The essence of net neutrality is that ISPs such as AT&T and Comcast don’t restrict, influence, or otherwise meddle with the choices consumers make,” said Hastings at the time. “The traditional form of net neutrality which was recently overturned by a Verizon lawsuit is important, but insufficient. This weak [pre- 2015] net neutrality isn’t enough to protect an open, competitive internet; a stronger form of net neutrality is required.”

Hastings’ grumblings reached President Obama, who, together with former FCC chairman Tom Wheeler in 2015 helped push through tougher safeguards for streaming services – much to the chagrin of ISPs.

Under new FCC chairman Ajit Pai – a former cable lobbyist and Obama appointee – the agency did away with what Pai considered “unnecessary, heavy-handed regulations” imposed by Wheeler that characterized the Internet as a utility and regulated under the Telecommunications Act of 1934.

Watson contends the Internet can be better safeguarded under the same regulatory-light (i.e. scant government oversight) approach that helped create it.

“We continue to believe the best way to ensure lasting net neutrality rules that protect consumers and promote investment is for Congress to enact legislation,” he wrote.