Netflix Free Streaming Deadlock... SKB's Counter-Lawsuit Raises Tensions

Sharp Dispute Over 'Network Usage Fees'
Third Hearing on April 30
SKB Likely to File Counterclaim

▲Netflix. (AP=Yonhap News)

[Asia Economy Reporter Koo Chae-eun] As the free network lawsuit battle between SK Broadband and Netflix intensifies, the outcome of this lawsuit is expected to become SK Broadband's 'counterclaim' in the near future.

It is anticipated that SK Broadband's counterclaim will include arguments against the eligibility of the claim for non-existence of debt, the exclusive usage rights of the internet network, and Netflix's claim of 'free transmission.'

Contents of SKB's Counterclaim

According to industry sources on the 18th, SK Broadband plans to file a counterclaim around April, the date of the third hearing.

SK Broadband intends to first clarify the technical situation and the misinterpreted concept of the communication network before filing the counterclaim. During the technical presentation and witness examination scheduled for April 30, they plan to supplement the legal interpretation related to the network, which Netflix perceives as 'free,' to prove the 'obligation to pay connection fees.'

The validity of Netflix's claim for confirmation of non-existence of debt is also expected to be a key issue. Netflix argues that there is no obligation (debt) to pay for network operation, expansion, and usage fees related to their service.

However, SK Broadband believes that in a situation where traffic usage is explosively increasing, it is problematic to place all network quality obligations solely on the telecom company. From the telecom company's perspective, charging content providers network usage fees is necessary to provide high-quality network services to users.

In particular, although Netflix claims that content providers worldwide have never paid ISPs 'transmission' fees, the fact that Netflix has paid network usage fees (termination fees) during disputes with the US local ISP Comcast is also expected to become a point of contention in the ongoing lawsuit.

Legal Battle Started in 2019... Intense Legal Disputes

The legal battle between the two companies dates back to November 2019. SK Broadband filed a mediation request with the Korea Communications Commission to resolve the network usage fee conflict, but Netflix halted the commission's mediation and chose to file a lawsuit in court seeking confirmation of non-existence of debt, escalating the dispute.

The first hearing was held on October 30, followed by the second hearing on the 15th, but the two sides have shown only sharp differences in position, effectively turning the case into a proxy war between the content provider (CP) and the internet service provider (ISP).

The core issue is Netflix's claim that despite the explosive increase in traffic, it has no obligation to pay for network operation and expansion fees. In the hearing on the 15th, Netflix argued that 'connection' and 'transmission' are different concepts, and since the CP's obligation only extends to 'connection,' there is no need to pay for 'transmission.'

On the other hand, SK Broadband counters that even if Netflix's argument is accepted, there is still an obligation to pay connection fees, and the mutual connection notice stipulates that transmission is paid, thereby regulating the obligation to settle connection fees.