The Korea Herald


[KH Explains] Why a small non-profit gets funding from Netflix, Google

Industry sources show concern over Open Net's meeting with European telelcom authorities in Seoul this week

By Jie Ye-eun

Published : April 3, 2023 - 15:28

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A South Korean civic group that has advocated for net neutrality for years has recently found itself at the center of controversy, as it is suspected of getting funds from global tech giants like Netflix and Google, according to industry sources on Monday.

In February, the non-profit organization, called Open Net, released the results of a survey asking people their opinions about a pending bill that aims to impose fees for network use on streaming service companies -- a thorny issue in the global telecom industry.

According to the survey conducted on 1,000 adults nationwide, 43.7 percent said they were against the bill, while 30.1 percent said they were in support of the bill. The opposition rate was higher among those in their 20s and 30s at 50.3 percent and 48.6 percent, respectively.

If the bill is passed, 62.9 percent of the respondents said they would expect fee hikes in their subscriptions, while 71.2 percent said they would cancel their subscriptions if service providers lower service quality or raise subscription fees to offset increased expenses.

“Open Net misguided respondents over the meaning of ‘network usage fees’ in the survey and deliberately excluded some survey results that were unfavorable (specifically to Netflix),” an industry official told The Korea Herald on the condition of anonymity, saying that the respondents were misguided to think imposing more fees on services providers would directly lead to fee hikes for service users.

He added Open Net is also suspected of getting “tens of millions of won” directly from Netflix’s local unit, Netflix Korea.

The US streaming giant reportedly funded a business trip of Open Net’s senior official to this year’s Mobile World Congress that took place in Barcelona in February, where net neutrality had been expected to top the agenda. The poll was conducted right before the largest annual gathering of the telecom industry.

Netflix has been engaged in a heated legal fight against SK Broadband, one of the top internet service providers, about network usage fees since 2021.

SK Broadband has said Netflix’s traffic on its network surged to 1,200 gigabits per second in September 2021 from 50 gigabits per second in May 2018 amid the popularity of a slew of hit series. The Korean firm is requesting pay for the heavy traffic triggered by Netflix's expanding business, while Netflix refuses to do so, citing net neutrality, which refers to the principle that internet service providers must treat all internet communications equally regardless of their content or type.

This is not the first time that questions have been raised over the neutrality of Open Net itself. During a parliamentary audit held in October last year, Open Net was found to have received 1.36 billion won ($1.04 million) from Google Korea since its launch in July 2013. At the time, Rep. Byun Jae-il of the main opposition Democratic Party of Korea claimed that Google had offered 300 million won to help set up Open Net, as its sole sponsor in a move to carry out lobbying activities in favor of Google's stance.

In a regulatory filing made in 2020, Google Korea reported a total of 40 million won in donations, but, in the same year, Open Net was found to have received 220 million won from Google alone, according to its tax report.

Regarding the funding from Netflix and Google, Open Net said, “Companies can sponsor any event they wish to sponsor.” It admitted that Netflix funded the February survey but denied claims that the survey was designed to represent the sponsor’s position, repeating that “It was a part of the group’s ongoing efforts for net neutrality.”

Amid the controversy over Open Net, sources expressed concerns over the group’s planned meeting with a delegation from the Body of European Regulators for Electronic Communications, or BEREC, the body of regulatory authorities for the telecommunications markets in the European Union, this week in Seoul.

The key purpose of their latest visit is to carry out market research on network usage fees in a series of meetings with representatives from diverse stakeholder groups.

“The BEREC is a credible international body across the telecom industry. They should not be swayed by Big Tech-sponsored Open Net,” said another industry official who also wished to be unnamed.