Netflix has settled its network usage dispute with Korea’s SK Telecom and its ISP subsidiary, SK Broadband. 

Under a new partnership agreement announced Monday, SK Telecom will start bundling, beginning in the first half of 2024, Netflix Basic With Ads service in its subscription service, T Universe. 

SK Telecom will also explore opportunities to use its AI technologies with Netflix. These tools include “conversational” UX and personalized recommendation technologies. 

The partnership agreement ends a tiff that began ramping up at the beginning of 2021, when a South Korean court ruled that Netflix owed SK Broadband $23 million for the additional traffic on its network caused by subscribers streaming hits such as the locally produced drama series D.P. 

The dispute ramped up further when Netflix debuted its Korean-produced sci-fi series Squid Game, which became not only a huge hit locally but also Netflix’s most watched show ever globally. 

As a salve, Netflix offered SK Telecom the use of its content delivery network, Open Connect, but was turned down. 

It's unclear if the two companies ultimately pivoted to a paid peering relationship, similar to the agreement Netflix has with Comcast in the U.S. 

The Asia-Pacific region in which South Korea resides is Netflix's smallest quadrant, generating the streaming company $954 million in the second quarter (vs. the $3.6 billion garnered in the U.S. and Canada). 

Netflix has close to 40 million subscribers in the “APAC” region. According to a report issued last year by Korea's Ministry of Science, Netflix has only around 1.17 million paid subscribers in Korea. 

Netflix is pushing back on demands from Korean ISP SK Broadband that the streaming company compensate the telecom for network upgrades caused by the popularity for local shows, including the recent Korean-language global hit Squid Game.

"Squid Game is just the beginning. We appreciate what Koreans have long understood," wrote Dean Garfield, VP of global public policy, in a company blog post published Sunday. 

"There is so much more where this story came from. But, unfortunately we have come to a crossroads--Red Light, Green Light--where internet gatekeepers could get to decide if the next great Korean story can be watched, and loved, by the world," added Garfield, riffing on the macabre version of a popular kids game seen in Episode 1 of Squid Game.

Also read: Netflix Gets Congratulated by Jeff Bezos as Global 'Squid Game' Phenomena Goes Next Level

Prior to the emergence of Squid Game, a local court already ruled in June that Netflix owes SK Broadband for additional traffic drawn to its networks by other local Netflix hits, such as 2020 military-themed drama D.P. The assessment for Netflix's liability was valued at $23 million. 

 “Netflix is at least receiving network services, including management of the network quality, at a cost," the court said, according to the Korea Herald. 

“This decision clearly confirms by law that Netflix needs to pay network usage fees to SK Broadband,” the internet service provider added. 

The debut of the Korean-language series Squid Game--Netflix's most watched show ever after 28 days on the platform--only further highlights the issue, SK Broadband has contended. 

Sensing a bad precedent, Netflix is pushing back. The streaming company earns 15% of its APAC region revenue in Korea. Paying additional fees for broadband would consume 6% of what it makes in the country. 

Citing its cooperative "Open Connect" initiative with local ISPs, Garfield wrote that Netflix is "doing our part to ensure Netflix isn’t a burden on Korean broadband companies. 

"Working with companies like Samsung and Cisco in the Alliance for Open Media, we built a content delivery network called Open Connect, which we offer free-of-charge to internet service providers around the world," Garfield added. "It enables Netflix content to be stored as close to our members as possible, and avoids clogging up the internet. The overwhelming majority of our ISP partners around the world use Open Connect, because why wouldn’t they? 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. It saves cost. And most importantly, consumers are able to enjoy a high-speed, high-quality Netflix experience. In 2020 that cost saving was estimated to be $1.2B. Unfortunately, while more than a thousand ISPs around the world recognize these benefits, one of the largest internet companies in Korea is turning a blind eye. Why? Because by making both consumers, and content providers pay, they can get paid twice. Red Light, Green Light. "

Arris said SK Broadband of South Korea is tapping its next-gen network access platform, the E6000, to deliver 1 Gbps broadband service and to provide the necessary capacity to support an IP-based 4K video offering that was announced by the service provider last August. 

SK Broadband services about 2.6 million customers with an IPTV service.

Launched in 2013, the Arris E6000 started off as a high-density cable modem  termination system, but will evolve into a fully integrated Converged Cable Access Platform that will also combine edge QAM functions. CCAP-related revenues rose 997% percent, to $1.4 billion, in 2014 versus the prior year, according to Infonetics Research.  

"SK Broadband is the first company to break through the 1Gbps speed barrier in Asia-Pacific and exceeds the high-speed data service levels of most other regions of the world,” Tim Gropp, Arris’s SVP of sales for Asia Pacific  said in a statement.

The companies have been working together for years. In 2011, SK Broadband tapped Arris’s previous flagship CMTS, the C4, to bond 16 downstream channels – enough to deliver 800 Mbps in the operator’s labs.

The 1-Gig work also amplifies some recent momentum for Arris in the region. NBN Co, a government-owned entity tasked with bringing next-gen broadband to millions of homes and businesses in Australia, is leaning heavily on Arris to upgrade HFC networks connected to about 3.4 million homes and businesses. Last week, NBN announced that it will factor DOCSIS 3.1, a platform that will be capable of multi-gigabit speeds, into its HFC network upgrade plans.