Facebook agrees to pay network fee to SK Broadband in Korea

2019.01.28 11:57:10 | 2019.01.28 16:34:20

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Facebook Inc. has agreed to pay unknown fees for providing contents to Korean users through the lines of South Korea’s internet service provider SK Broadband Inc., a move that may pressure other major platform multinationals like YouTube and Netflix to take similar actions.

SK Broadband, the internet service arm of the country’s top wireless carrier SK Telecom, reached a deal with Facebook to set up a separate cache server and charge fees for using its leased lines for the next two years, according to IT industry sources on Sunday.

The agreement would automatically be renewed for another two years if there is no advance notice from either party, people familiar with the matter said.

Facebook and SK Broadband declined to confirm the reports, citing confidentiality.

The social networking giant entered Korea in 2010 and now boasts a local user base of 18 million in a country of 50 million.

But under its policy of operating one cache server per country, the firm had paid only KT, Korea’s largest telecom company, to use its cache server, a dedicated network server that saves online content locally in a temporary storage to grant faster connection speed.

In 2017, Facebook was fined 396 million won ($354,000) in Korea for intentionally rerouting network connections of SK Broadband and LG Uplus to a server in Hong Kong without notification to avoid paying higher network fees to KT, causing access slowdown for local users. The other two internet service providers had at the time been using KT’s cache server.

The latest move is expected to put high pressure on other global tech giants such as YouTube and Netflix that have not paid network fees to local telecom companies although their content accounts for a hefty amount of local network traffic.

Their free riding has been criticized by local internet giants such as Naver and Kakao that pay a large sum of network fees to local telecom companies.

Facebook is also said to be in talks with KT to renew a contract for using KT’s cache server, according to sources.

By Lee Dong-in and Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]