Good morning [%first_name |Dear Reader%],

What would you do if, one day, video streaming services like Netflix, YouTube, or Prime Video downgraded the ultra high definition content they provide? Let’s assume it gets restricted to 720p. Or worse, what if the streaming services ban the uploading of video-on-demand (VOD) content from India? Or WhatsApp call quality deteriorates and call drops increase?

These are not just figments of my imagination. Many of those scenarios have already unfolded in the past. 

For example, during the initial phases of the pandemic, European authorities asked Netflix to downgrade its video quality to ease the pressure on telecom networks which were struggling with limited bandwidth. Netflix reduced its data output by 25% in response. And just earlier this year, Amazon’s streaming service Twitch decided to block the uploading of VOD content from South Korea due to a dispute over network usage fees. 

And right now, SK Broadband, a South Korean internet service provider (ISP), and a subsidiary of the country’s largest telco SK Telecom, is fighting a court case against Netflix. SK wants compensation from Netflix for all the investments the ISP made to accommodate the 24X rise in traffic when Squid Games went viral locally. 

SK Broadband reportedly invested US$40 million to maintain and stabilise its network. So it first sued Netflix in a local court, seeking compensation. The local court ruled in favour of the ISP. The streaming company has now challenged the order in the country’s High Court. 

It’s one of the hottest legal cases in the tech and telecom world. And at its root is a raging decade-old tussle between tech companies/OTTs and internet/telecommunications service providers: 

Should the former pay the latter for burdening the telecom pipes with disproportionate traffic? 

For the record, the tech and cloud giants (Alphabet, Meta, Netflix, Apple, Amazon, and Microsoft ) contribute 57% of global internet traffic. 

It’s a contentious question and a long-running debate. And it’s one that has now reached Indian shores. 

Let’s dive in.

A matter of compensation

On 20 February, Financial Express reported that India’s telecom regulator TRAI is set to come out with a consultation paper on this issue, and that it had already spoken to both sides multiple times on the matter. More importantly, the report also indicated that tech and content companies may have to pay a carriage fee to internet and telecommunications providers.