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.

AT&T to Start Capping Unlimited HBO Max Data Use

AT&T quietly announced it would begin capping data use for its wireless subscribers — a move that would affect some HBO Max subs from unlimited streaming. The telecom cited recent legislative action California supporting statewide net neutrality for the decision.

“California has enacted a ‘net neutrality’ law banning ‘sponsored data’ services that allowed companies to pay for, or ‘sponsor,’ the data usage of their customers who are also AT&T wireless customers,” the company wrote in a blog post. “Unfortunately, under the California law we are now prohibited from providing certain data features to consumers free of charge.”

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After President Trump’s FCC rescinded a federal net neutrality law that treated the Internet as a utility prohibiting ISPs from charging for higher bandwidth and streaming speeds, California, among other states, enacted its own net neutrality law. A federal judge last month upheld the move.

Prior to California’s law, AT&T said sponsored data subscribers were able to browse stream apps (i.e. HBO Max) from devices without using their monthly data allowance. The telecom said video providers utilized sponsored data enabling subscribers to stream movies and TV shows over their wireless service without it counting against their wireless data plan.

“Since it began, our sponsored data service, and competing offers from other wireless providers, have delivered significant benefits and saved consumers money,” AT&T wrote. “Consumers also have enjoyed an explosion of video streaming services.”

AT&T said the Internet does not recognize state borders, and thus the new law not only ends its ability to offer California customers free data services, but also similarly impacts customers nationwide.

AT&T is calling Congress to adopt federal legislation that would provide “clear, consistent and permanent” net neutrality rules for everyone to follow.

“A state-by-state approach to ‘net neutrality’ is unworkable,” wrote the telecom. “A patchwork of state regulations, many of them overly restrictive, creates roadblocks to creative and pro-consumer solutions. We have long been committed to the principles of an open internet. We deliver the content and services our customers want because it’s what they demand, not because it’s mandated by regulation.”

FCC Chairman Ajit Pai Departing Position on Jan. 20, 2021

As expected, FCC Chairman Ajit Pai, who was appointed to the position by President Donald Trump, Nov. 30 announced he would leave his position on Jan. 20, 2021 — Inauguration Day.

While Pai touted the agency’s work implementing rollout of 5G wireless technology nationwide, he will be best remembered for orchestrating a reversal of so-called “net neutrality” guidelines supposedly aimed at leveling the playing field for over-the-top video providers across the nation’s broadband networks.

Heading into 2021, Pai was reportedly working with the Trump Administration to impose restrictions on Twitter and Facebook, which the president has repeatedly criticized as the platforms have targeted Trump by tagging his social media posts as “misinformation.”

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“It has been the honor of a lifetime to serve at the Federal Communications Commission, including as Chairman of the FCC over the past four years,” Pai said in a statement. “I am grateful to President Trump for giving me the opportunity to lead the agency in 2017, to President Obama for appointing me as a commissioner in 2012, and to Senate Majority Leader McConnell and the Senate for twice confirming me. To be the first Asian-American to chair the FCC has been a particular privilege. As I often say: only in America.”

Charter/Spectrum Wants to Charge Netflix, Others Interconnection Fees

Charter Communications, owner of Spectrum cable, has petitioned the Federal Communications Commission to allow it to charge interconnection fees (or peering) to over-the-video services such as Netflix, Amazon Prime Video, HBO Max, Disney+ and Hulu broadband.

The fees were in part the genesis behind the Obama-era Net Neutrality guidelines, which specifically prohibited Internet Service Providers from up-charging streaming video services for faster access into subscriber homes.

Charter has been prohibited from charging fees as part of an anti-trust agreement with federal regulators when it acquired Time Warner Cable and Bright House Networks in 2016.

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The cable operator now claims that with online video booming and the FCC under new authority, it should be allowed to charge fees to third-party platforms delivering content on its broadband network similar to the interconnection fees charged by Comcast, Verizon and AT&T. Charter also wants the FCC to do away with its ability to impose data caps on subscribers.

“The online video marketplace has become extremely competitive,” Charter said in the June 17 petition. “Online video distributors have seen record-shattering growth and increased strength across all performance indicators, including number of subscribers, amount of content available, number of platforms, streaming hours, and revenue. In fact, the online video distribution marketplace is almost unrecognizable compared to what existed in 2016.”

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Charter contends that to ensure efficient allocation of its resources to accommodate the “explosive growth” in broadband usage, many Internet providers have incorporated data caps. It claims data caps imposed by companies such as Comcast, AT&T, Cox and Altice8 has not stifled the growth of SVOD services.

“In fact, the opposite is true: OVD services are thriving and growing at an unprecedented rate. In other words, the market is working,” Charter wrote.

Federal Appeals Courts Upholds Net Neutrality Deregulation

The U.S. Court of Appeals for the D.C. Circuit Oct. 1 affirmed the basic principles of Republican-led efforts to deregulate net neutrality guidelines established during the Obama Administration.

The three-judge panel did rule against the FCC superseding state efforts to impose local guidelines where the federal government did not.

“We uphold the 2018 order, with two exceptions,” the court wrote. “The order failed to examine the implications of its decisions for public safety; the order does not sufficiently explain what reclassification will mean for regulation of pole attachments; and the agency did not adequately address petitioners’ concerns about the effects of broadband reclassification.”

Dubbed “2017 Restoring Internet Freedom,” the bill reclassified the Internet under less restrictive Title I provisions of the Communications Act of 1934 under President Franklin Roosevelt.

Under Title II provisions of the Communications Act approved by the FCC under Obama, commerce and video distribution on the Internet, including ISP distribution of broadband to consumers, was regulated more rigorously as a utility.

Conservatives argued net neutrality guidelines would negatively impact business investment, among other issues.

 

House Approves Restoring Net Neutrality

As expected, the Democrat-controlled House of Representatives April 10 voted to restore net neutrality guidelines established by the Federal Communications Commission in 2015 and repealed in 2017 under the direction of President Trump’s appointed FCC chairman Ajit Pai.

The 232-190 vote (along party lines) on the Save the Internet Act would – if approved by the Senate and signed by Trump – restore guidelines prohibiting Internet service providers such as AT&T, Comcast and Verizon from throttling consumer access to online video services and enforce regulation characterizing the Internet as a utility similar to electricity and the telephone.

“With the Save the Internet Act, Democrats are honoring the will of the people,” House Speaker Nancy Pelosi (D-CA) said in a statement last month.

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Despite bipartisan support in the Senate, which passed (52-47) a Congressional Review Act in 2017 to overturn the FCC’s decision, approval of the House measure by the GOP-controlled Senate now seems slim.

Due to the rules of governance, passage of the CRA required a simple majority of votes. Passage of the Save the Internet Act requires 60 Senate votes (a supermajority), which the Democrats don’t have.

Indeed, Senate Majority Leader Mitch McConnell told the media the House measure would be “dead on arrival” once it is sent over.

And the White House April 8 issued a statement saying that if the bill was presented to Trump, he would be advised to veto it.

Trump Administration Pledges to Veto Net Neutrality Bill

As expected, White House officials April 8 said they would recommend President Donald Trump veto House Democrats’ efforts to revive net neutrality guidelines enacted in 2015 by the Federal Communications Commission under President Obama.

The current FCC, under Trump-appointed chairman Ajit Pai, reversed the guidelines, favoring so-called “light touch” regulation.

Following the 2018 midterm elections, Rep. Mike Doyle (D-Pa.) introduced H.R. #1644 (Save the Internet) that would reinstate net neutrality classifying the Internet as a utility under Title II of the Telecommunications Act of 1934.

The bill, which has 197 co-sponsors, seeks to stop Internet service providers from enacting speed lanes for higher-paying Web traffic and throttling third-party competitive services.

The legislation is up for possible vote in the Democrat-control House as early as April 9. If passed, it would be reconciled in the Senate and then sent to Trump for his signature or veto.

The White House (and many Republicans) argue that the current FCC last year sought to “restore Internet freedom” by adopting so-called “light-touch” regulation that it said enabled the Internet and entrepreneurs to “thrive” for nearly two decades.

In a tweet, the Office of Management and Budget said that since the FCC reversed its position on net neutrality, the United States has risen to sixth from 13th in global fixed broadband download speeds.

It said ongoing rollout of fiber technology benefited from a change in the law, underscored by an increase in capital investment by $2.3 billion.

“H.R. 1644 would undermine this success by repealing the FCC’s current rule,” the OMB tweeted. “If H.R. 1644 were presented to the President, his advisors would recommend that he veto it.”

 

 

‘Save the Internet Act’ Passes First House Test

A bill, spearheaded by Democrats in the House of Representatives to restore Obama-era net neutrality guidelines regulating the Internet as a utility, March 26 passed a panel vote, 18-11, along party lines to advance to a full committee vote.

If the “Save the Internet Act,” which would restore the FCC’s 2015 net neutrality guidelines mandating all Internet traffic be treated equally, passes the House, it would have to be reconciled with the Senate and then signed by President Trump – the latter not likely considering his FCC chairman pick, Ajit Pai, initiated rollback of the regulations in 2017.

Republicans argue net neutrality guidelines would give the government too much control of the Internet. Some have looped the bill with freshman Rep. Alexandria Ocasio-Cortez’s Green New Deal economic stimulus program that includes climate change and income equality, among other issues.

“I’m disappointed that we’re considering this proposal, which [is] like so many other things like the Green New Deal and all these other plans to have more government control over our everyday lives,” House Minority Whip Steve Scalise (R-La.) said in a statement.

Rep. Frank Pallone (D-N.J.) countered that without net neutrality, there is “no backstop” safeguarding consumers from corporations.

Phillip Berenbroick, senior policy lawyer at Public Knowledge, said that since the Trump-era FCC repealed its Open Internet Order in 2017, broadband providers have “slowly and carefully” moved to undermine net neutrality in their business practices and their advocacy.

“We urge members of the House to support this bill and encourage every American to demand that their Representatives vote to approve it immediately,” he wrote.

Lawmakers Introduce ‘Save the Internet’ Bill

As expected, Democratic lawmakers in the House and Senate March 6 introduced legislation aimed at overturning the FCC’s 2017 repeal of the 2015 Open Internet Order, or net neutrality.

Dubbed “Save the Internet Act,” the bill seeks to re-classify the Internet as a utility under Title II of the Telecommunications Act of 1934 prohibiting Internet service providers from blocking, throttling or creating fast lanes and slow lanes by charging extra fees to prioritize content.

“Since the FCC foolishly repealed net neutrality, we’ve seen a wild west where monopoly telephone and cable companies have been free to do what they want at the expense of consumers,” Michael Copps, a former FCC commissioner, said in a statement in support of the legislation.

Copp contends there exists evidence of broadband providers throttling speeds, degrading video quality, and creating service plans that favor their own content over competitors.

“The harms will only get worse the longer net neutrality remains repealed,” he said.

Jason Pye, VP of legislative affairs with FreedomWorks, a lobby group supporting small government, lower taxes and free markets, said repeal of net neutrality guidelines was an attempt to correct government overreach.

“This Democratic proposal is yet another solution in search of a problem,” said Pye. “Our Internet grew, innovated, and thrived under a light touch regulatory framework. The Democrats’ bill would inhibit future innovation and would only serve to increase big government control over the lives of everyday Americans.”

Regardless, the bill must pass Congress and then be signed by President Trump – a long shot considering Trump’s appointee to run the FCC – Ajit Pai – personally pushed for the net neutrality repeal.

 

 

House Democrats Seek to Reinstate ‘Net Neutrality’ Legislation

House Democrats in Congress reportedly plan to unveil legislation aimed at restoring net neutrality guidelines mandating Internet service providers (ISPs) treat all traffic on the Web equally.

The legislation, which would ban ISPs such as Comcast, AT&T and Verizon from blocking/slowing Web traffic or offering faster lanes for a fee, would be released Wednesday by House Speaker Nancy Pelosi, as reported by Reuters.

Internet giants such as Facebook, Amazon, Google and Netflix endorse net neutrality guidelines.

The Federal Communications Commission in 2017 voted 3-2 along party lines to repeal net neutrality guidelines it established in 2015 in a similar vote under the Obama Administration. Those guidelines classified the Internet as a utility under Title II of the Communications Act of 1934.

The repeal enabled ISPs to enforce how its subscribers access the Internet.

Pelosi seeks to work with Senate Democrats getting “Save the Internet” legislation passed that would then require President Trump’s signature — a probable long shot considering Trump’s pick to head the FCC, Ajit Pai, orchestrated the net neutrality repeal.

The U.S. Supreme Court last year refused to hear the appeal of the decision of the D.C. Circuit Court that twice upheld the 2015 Open Internet Rule.

Regardless, with 22 state attorneys general endorsing net neutrality, and the U.S. Senate — which is controlled by Republicans — voting in 2018 to restore guidelines, the House feels it has the political momentum.