Following a yearslong dispute with South Korea’s internet service providers over network maintenance fees, Facebook has reportedly agreed to pay SK Broadband for using its server to secure faster internet connection to the social networking service.
According to the government and business sources here, Facebook and SK Broadband have reached an agreement that requires the global tech giant to offer a hefty sum of money for using the local telecom company’s cache server.
While details of the deal were not released or confirmed, industry watchers said the agreement would set a precedent for other global tech giants in negotiations over how much they should pay for local telecom firms’ internet services.
“Facebook’s deal with SK Broadband will serve as a baseline for global content providers’ future negotiations with local telecom giants,” an industry watcher said, citing the examples of Google, Youtube and Netflix.
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SK Broadband and Facebook declined to confirm the agreement. A Facebook official said the company had negotiated with SK Broadband over whether to pay for using the telecom company’s cache server, though both parties agreed not to disclose what they discussed to the public.
During a meeting with lawmakers in October last year, the chief of Facebook Korea said there was “significant progress” in the company’s negotiations with local telecom giants over network fees.
“We expect to come up with a win-win solution with one or two telecom companies,” said Facebook Korea CEO Damian Yeo Guan Yao, according to a Korean transcript released after the parliamentary inquiry.
Facebook had been in a dispute with SK Broadband over the network service fee since 2017, when it was accused of causing a slowdown in access for local users by intentionally rerouting network connections.
The tech firm was fined 396 million won ($369,600) for rerouting SK Broadband and LG Uplus’ networks to servers in Hong Kong without warning, causing a slowdown of 2.4 to 4.5 times compared to local access.
“Facebook’s unilateral decision to change connection route has caused massive discomfort to the public,” the Korea Communications Commission said in March last year, when the telecom watchdog ordered Facebook to correct the practice.
With the latest agreement, Facebook will pay network fees to two local telecom companies.
Facebook had paid KT for using the telecom company’s cache server until the deal expired in July last year. The tech firm has reportedly been engaged in negotiations with KT over whether to renew the agreement.
If Facebook ends up agreeing to pay a hefty price for using networks operated by local telecom giants, other global tech giants will likely come under pressure to follow suit, experts said.
South Korean tech firms, such as Naver and Kakao, have been complaining about global firms’ reluctance to pay high prices for network usage. During a meeting with reporters last week, Netflix declined to comment on the issue.