SKB "Network Usage Fees Must Be Settled" VS Netflix "No Settlement Is the Principle"

First Trial of the Year... Conflict Over Whether to Conduct Psychological Evaluation

Netflix and SK Broadband clashed sharply over whether to appraise the network usage fees.

On the 29th, the 19-1 Civil Division of the Seoul High Court (Presiding Judges Kim Yu-kyung, Hwang Seung-tae, Bae Yong-jun) held the 8th appellate hearing for Netflix's claim to confirm non-existence of debt against SK Broadband.

[Image source=Yonhap News]

During the trial, both sides opposed each other regarding the method of appraising the network usage fees. SK Broadband argued that Netflix's use of SK Broadband's network is equivalent to adding an overseas dedicated network to the domestic internet dedicated line service, and is no different from content providers (CPs) like Naver, which have servers in Korea and use the domestic network section of internet service providers (ISPs) such as SK Broadband. They claimed that the network usage fees can be calculated based on international dedicated line service charges for the international dedicated line section and internet dedicated line service charges for the domestic network section.

SK Broadband stated, "This service is also provided by other domestic ISPs such as KT and LG Uplus, so an objective and fair appraisal of network usage fees is sufficiently possible through the unit prices provided by these companies." They recommended the Korea Electronics and Telecommunications Research Institute (ETRI), the Korea Information Society Development Institute (KISDI), and Samdo Accounting Corporation as appraisal agencies.

Netflix countered by emphasizing the principle of 'settlement-free peering (direct connection).' Netflix stated, "Since the launch of Netflix service in Korea in January 2016, we have connected with SK Broadband in Seattle via settlement-free peering, and since May 2018, at SK Broadband's request, we have sequentially changed connection points to Tokyo and Hong Kong while continuing settlement-free peering." They added, "The agreement that each party bears the cost up to the network connection point aligns with established practices in the internet industry," and said, "SK Broadband gains economic benefits by significantly reducing transit costs through peering with Netflix."

The court requested Netflix to submit a written opinion on the appraisal method by the 19th of next month. The 9th hearing is scheduled for 4 p.m. on May 15.