Netflix and SKB 'Network Usage Fee Dispute' to be Decided on the 25th

Global OTT·Big Tech-Domestic ISP Agreements
Could Set Important Precedents

[Asia Economy Reporter Cha Min-young] The dispute over network usage fees between Netflix, the world's number one online video service (OTT) since 2015, and SK Broadband is set to be resolved on the 25th of this month.

According to industry sources on the 21st, the Seoul Central District Court is scheduled to deliver the first-instance verdict on the lawsuit filed by Netflix against SK Broadband for 'confirmation of non-existence of debt' on the 25th.

Since Netflix filed the lawsuit in April last year, both parties have conducted three rounds of hearings and technical presentations (PT) from October to April this year. The case involved complex technical concepts including net neutrality, basic internet principles, and network usage fees, making the court's understanding a decisive factor in the ruling. Legal representatives from Kim & Chang, acting for Netflix, presented their arguments, while Sejong Law Firm, representing SK Broadband, rebutted them in turn.

In the hearings, Netflix consistently argued that 'connection and transmission are different,' maintaining that transmission fees, which correspond to network usage fees, should be free. They claimed that since maintaining quality is the responsibility of the telecom company, SK Broadband should bear the maintenance costs arising from increased traffic usage. Netflix also argued that their responsibility ended with the expansion of cache servers in Japan and Hong Kong.

SK Broadband countered that the distinction between connection and transmission is an arbitrary claim by Netflix and that internet network usage is fundamentally fee-based. They also pointed out that Netflix actively manages content transmission and reception using SK Broadband's network. Although SK Broadband cited cases where Netflix paid network usage fees to overseas telecom companies such as Orange in France, Netflix responded that these were 'private agreements.' Regarding the interpretation of net neutrality principles, Netflix maintained that 'network usage fees are free,' while SK Broadband argued that 'it only prohibits discrimination, not fees.'

This lawsuit has attracted attention as a case involving network usage fees between a major domestic ISP (Internet Service Provider) and a global CP (Content Provider). The industry anticipates it will set an important precedent for future contracts between Korean ISPs and global OTTs such as Disney Plus, Apple Plus, and other big tech companies.

There have also been ongoing criticisms of domestic reverse discrimination. In Korea, CPs including Naver all pay network usage fees to domestic ISPs. In the case of EBS, additional line capacity was urgently expanded in preparation for increased traffic due to online school openings earlier this year.

There is also a possibility that the verdict may be delayed. Previously, SK Broadband filed a motion to resume hearings on the 4th, requesting more time for additional arguments. An industry insider said, "There are cases where hearings are scheduled again just one day before the verdict," adding, "This is a matter that could affect the complex interests among foreign big tech companies and domestic ISPs, as well as between domestic ISPs and domestic CPs, so a careful decision is necessary."