Mang User Fee 2R... Netflix "Why Are Same Telecom Operators Like This?"

Second Hearing Date for 'Network Usage Fee' Trial
Netflix: "We Also Act as an ISP"
SKB: "The Premise Is Wrong"
Key Issues Are the Principle of Mutual Settlement and Prior Agreement

[Image source=Yonhap News]

[Asia Economy Reporter Cha Min-young] Netflix, which has entered the second round of legal battles with SK Broadband over the issue of 'network usage fees,' reiterated its claim during the second hearing that "we act as an Internet Service Provider (ISP)," following the first hearing. This time, Netflix abandoned its previous argument from last year's first trial that 'internet access is paid, transmission is free,' and instead focused on whether the principle of mutual settlement exemption (bill and keep) between ISPs should be applied.

Netflix: "We Are Also an ISP"

The 19-1 Civil Division of the Seoul High Court held the second hearing on the 18th regarding the appeal in the lawsuit filed by Netflix seeking confirmation of non-existence of debt and the lawsuit filed by SK Broadband claiming unjust enrichment. Lawyers from Kim & Chang law firm and Sejong law firm, representing plaintiff Netflix and defendant SK Broadband respectively, conducted presentations (PT) and continued with the arguments.

The core issues are the status as a telecommunications operator and the responsibility for paying network usage fees. Netflix argued, "Through Open Connect Appliance (OCA), we are already connected to over 7,200 ISPs on a bill-and-keep basis," and "Since we connect directly to SK Broadband’s network via peering without going through a transmitting ISP, we are not required to pay." They claimed that, based on the international ISP bill-and-keep practice, there is no need for either party to settle network usage fees with the other.

SKB: "Not an ISP under Current Law"

The defendant SK Broadband countered that Netflix’s claim of acting as an ISP is fundamentally incorrect. SK Broadband stated, "The bill-and-keep principle applies between ISPs, but Netflix does not fall under this category at all," and "Netflix does not hold the status of a telecommunications service provider under the domestic Telecommunications Business Act." Under current law, the Telecommunications Business Act defines a telecommunications service provider as "an operator performing telecommunications services that transmit or receive voice, data, video, etc., without changing the content or form."

The issue of whether there was an agreement on payment of network usage fees also emerged as a key point in SK Broadband’s unjust enrichment claim lawsuit. Netflix argued, "They did not raise this issue before and proceeded with the installation of OCA on an implicit agreement basis without charge, but now they have changed their mind and are demanding payment." SK Broadband responded, "In 2018, when traffic volume on SK Broadband’s public network surged, we provided a dedicated private network to resolve customer inconvenience and prioritized solving technical issues first, postponing the cost claim." In fact, SK Broadband filed a request for enactment with the Korea Communications Commission in November 2019, and additional network connection to Hong Kong was established in January 2020.

The court indicated that it will examine the claims of both parties based on evidence focusing on international contracts between overseas content providers (CPs) and domestic ISPs, as well as domestic CPs and overseas ISPs. At the third hearing scheduled for June 15, the court plans to focus on the 'bill-and-keep agreement' as the main issue while also addressing questions raised during the second hearing.