Facebook has decided to pay a network fee to SK Broadband. Under the circumstances, companies such as YouTube and Netflix are likely to be put under pressure.
The network fee negotiations between SK Broadband and Facebook were concluded on Jan. 24 in about two years. Details of their agreement are confidential.
The fee is estimated not to exceed the fee a South Korean company pays to a South Korean telecom company. At present, Naver pays approximately 80 billion won a year in network fee, about 20 billion won to each telecom company. The fee to be paid by Facebook includes that related to Instagram traffic.
SK Broadband and Facebook initiated their negotiations in 2016 and the negotiations showed little progress until recently due to their different opinions on the size of the fee to be paid. Facebook arbitrarily changed its subscribers’ Internet access routes, causing a connection delay, and the Korea Communications Commission imposed a penalty of 396 million won on Facebook. The negotiations began to pick up speed last year. “Our network fee negotiations with South Korean telecom companies are going well,” Facebook Korea CEO Damian Yeo Guan Yao said at the National Assembly in October last year.
Facebook’s decision is likely to affect global content providers such as YouTube and Netflix. Google, Facebook and Netflix are estimated to account for approximately 50 percent of the total data traffic in South Korea. Market research firm WiseApp said in November last year that YouTube accounts for 86 percent of Android phone users’ video app usage time.