Amid SKB-Netflix Dispute, Claims Arise That "Internet Has Always Been Paid"

Dispute Over Network Usage Fees Reaching Second Trial
Associate Professor Cho Dae-geun of Sogang University Publishes Paper
"Burden on Profit Appropriators or Cost Causers"

[Asia Economy Reporter Minyoung Cha] "The internet has always been paid."

As the lawsuit between SK Broadband and Netflix over network usage fees proceeds to the second trial, a paper arguing that internet network usage is "paid" based on cases of telecommunications disputes in the United States has been published. Considering the history of the internet in the U.S. and the Charter case, it means that those who use the internet network in the U.S. bear the cost.

According to the Korea Telecommunications Operators Association (KTOA) on the 5th, a paper titled "A Study on the Paid Nature of Internet Network Usage," recently published by Professor Daegun Cho, an adjunct professor at Sogang University Graduate School of Public Policy, appeared in the Journal of Internet Information Studies.

This paper argues about the paid nature of the internet, which is the core issue in the lawsuit between the Internet Service Provider (ISP) SK Broadband and the Content Provider (CP) Netflix.

On June 25, the Seoul Central District Court ruled against Netflix Incorporated and Netflix Services Korea in a lawsuit seeking confirmation of non-existence of debt filed against SK Broadband. In the first trial, the court ruled that "Netflix has an obligation to pay network usage fees." However, Netflix appealed, and the dispute is now being re-examined at the Seoul High Court. SK Broadband has also filed a counterclaim against Netflix.

The paper reviews claims denying the paid nature of internet network usage, mainly from the CP side, based on the history of the U.S. internet and an analysis of the 2016 lawsuit related to the merger of the cable TV company Charter.

There are three specific grounds. First, the developers who originally conceived the internet did not consider the internet to be free of charge. Only principles regarding the technical characteristics of the internet were reflected, and no premise regarding whether it should be paid or free was included.

Second, individual users or institutions such as universities naturally paid backbone and other public internet network usage fees to ISPs from the early days of the internet, and operators charged regional ISPs for backbone usage fees (interconnection fees) to cover operating costs and provided connections.

Third, regulations such as net neutrality have never denied the paid nature of the internet. Public documents such as the Federal Communications Commission (FCC) administrative order related to merger approval, and the U.S. appellate court ruling on the Charter merger approval and withdrawal of approval conditions explain that ISPs still charge CPs.

Professor Daegun Cho stated, "Not only the end users such as individuals, households, and companies but also CPs were no exception," adding, "These fees include all acts by ISPs that enable internet use, such as line provision, transmission, and IP address allocation, which correspond to the consideration for 'use' under Korea's Telecommunications Business Act."

He continued, "End users such as individuals and households, as well as value-added telecommunications service providers, all obtain the right to use the internet network according to terms and conditions or individual contracts and simultaneously have the obligation to pay fees," and added, "It is more productive and practically necessary to institutionally establish that ISPs have the right to collect fees and the obligation to provide services at a certain quality level."