[Asia Economy Reporter Lim Hye-seon] Telecom company SK Broadband and global online video service (OTT) provider Netflix have entered the second round of legal battles over 'network usage fees.' SK Broadband cited the legal principle of the 'merchant's right to claim remuneration,' while Netflix reiterated the traffic reduction effect achieved through its own technology. According to Article 61 of the Commercial Act, a business operator may claim remuneration when performing acts for others within the scope of business.
The 19-1 Civil Division of the Seoul High Court held the second trial of Netflix's lawsuit seeking confirmation of non-existence of debt against SK Broadband and the first hearing of SK Broadband's lawsuit for the return of unjust enrichment against Netflix on the 16th.
SK Broadband argued that it provided a dedicated internet line for Netflix, and since there was no special agreement excluding payment, Netflix should pay a reasonable fee. SK Broadband stated that the value of the network provided as a dedicated line exclusively for Netflix amounted to 70 billion KRW over three years. On the other hand, Netflix countered, "The subscriber network of the telecom company, which directly contacts consumers, is a fixed cost unrelated to traffic volume," and "The bandwidth required to watch Netflix is less than 2% of the bandwidth SK Broadband sold to consumers." Netflix also interpreted that "since no clear contract was made, both parties agreed to settle accounts without payment."
Netflix pointed out that SK Broadband is refusing the free provision of 'Open Connect Appliance (OCA).' OCA is a cache server dedicated to Netflix content to reduce data traffic. Netflix installs OCA close to users, providing traffic reduction benefits to telecom companies. Netflix's logic is that applying a mutual non-settlement method (bill and keep) is a 'customary practice in the existing internet world.' Netflix stated, "If OCA is installed in Seoul and Busan, traffic costs can be reduced, but SK Broadband refuses to install it and only demands network usage fees," adding, "SK Broadband, as a gatekeeper, intends to collect a 'toll' based on its monopolistic position."
In response, SK Broadband rebutted, "The mutual non-settlement claimed by Netflix is a trading practice applied between telecom companies of comparable scale," and "There is no precedent for this between telecom companies and content providers (CPs)." SK Broadband also pointed out, "Even if OCA is installed on the domestic network, costs arise from data transmission and IDC usage," and emphasized, "Since internet service providers (ISPs) pay for network construction and maintenance, CPs should also pay fees."
The second hearing will be held on May 18. Presentations will be made on technical issues such as network connection methods and submission of evidence.
Meanwhile, Netflix filed a lawsuit rejecting SK Broadband's demand for network usage fee payment but lost in the first trial.
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