Tomorrow, KCC-Facebook 2nd Trial Verdict... Will Global CPs Be Held Responsible for 'Network Quality'?

[Asia Economy Reporter Seulgina Jo] The results of the second round of the legal dispute between Facebook and the Korea Communications Commission (KCC), which was embroiled in controversy over intentional speed delays, will be revealed on the 21st. Previously, the court ruled in favor of Facebook in the first trial, but the key issue now is whether the court will recognize the obligation of global content providers (CPs) to maintain network quality and hold the operators accountable.

According to the KCC and industry sources on the 20th, the Seoul High Court Administrative Division 10 (Chief Judge Han Chang-hoon) will deliver the appellate ruling on Facebook's administrative lawsuit against the KCC at 2 p.m. on the 21st. In March 2018, Facebook arbitrarily changed its connection routes with SK Telecom, SK Broadband, and LG Uplus, causing user connection delays and was fined by the KCC. However, Facebook filed a lawsuit in May of the same year, contesting the fine. The first trial court ruled in favor of Facebook, and the KCC immediately appealed.

This second trial ruling comes one year after Facebook's initial victory. Both sides maintained strong opposing positions during the appellate hearings. As in the first trial, a major issue in the second trial is whether Facebook's actions constitute a prohibited act under the Telecommunications Business Act, specifically "acts that significantly harm user interests" or "usage restrictions." Additionally, the court is examining whether Facebook's change of connection routes was based on a 'justifiable reason.'

Facebook argues that the change in connection routes was solely to improve network efficiency and does not constitute intentional usage 'restriction' that causes user inconvenience. They also emphasize that internet connection quality is within the management domain of telecom companies, not content providers.

On the other hand, the KCC presented evidence that Facebook bypassed the connection route through Hong Kong and the United States without specific consultation or notification, despite having sufficient contract period remaining with KT at the time. This caused the wireless response speed of Facebook users to be 2.4 to 4.5 times slower than average. The KCC claims that if user inconvenience is severe enough to cause users to give up using the service, it constitutes a restriction. Earlier this month, KCC Chairman Han Sang-hyuk told reporters, "User restriction cannot be quantitatively distinguished," adding, "If speed delays make users frustrated and unwilling to use the service, it should be considered that the content provider has restricted users."

This ruling is particularly noteworthy as it comes amid controversies over global CPs generating massive traffic without properly paying domestic network usage fees, leading to accusations of free-riding on networks. The court's decision could potentially empower global CPs' free-riding behavior. Previously, the National Assembly established a legal basis through amendments to the Telecommunications Business Act, requiring global CPs to have network stability obligations. However, the detailed enforcement decree has not yet been issued.

Another global CP, Netflix, is also involved in a similar lawsuit. Netflix filed a civil lawsuit claiming non-existence of debt, arguing that it has no obligation to pay network usage fees to SK Broadband.