Dispute Over 'No Settlement Agreement' Status
[Asia Economy Reporter Minyoung Cha] As Netflix and SK Broadband engage in a 'dispute of the century' over network usage fees, the fourth appellate hearing also ended in a stalemate. Following the previous hearing, both parties once again debated the existence of a 'no-settlement agreement,' but no clear conclusion was reached.
The Key Point: Whether a 'No-Settlement Agreement' Exists
On the morning of the 20th, the Civil Division 19-1 of the Seoul High Court held the fourth appellate and counterclaim hearing for the lawsuit filed by Netflix against SK Broadband seeking confirmation of non-existence of debt.
In January 2016, Netflix connected to SK Broadband's network through SIX in the United States using the 'public peering' method. As traffic surged, SK Broadband and Netflix agreed in May 2018 to connect via 'private peering' at BBIX in Japan. Peering is a method of direct connection without passing through a content delivery network (CDN).
The core issue is whether there was a mutual agreement to pay network usage fees later when the private peering connection was agreed upon in 2018. Netflix claims that a 'no-settlement' agreement was made, while SK Broadband counters that no such agreement was reached and that the matter was left for future negotiation.
An SK Broadband official explained, "If both parties had tried to agree on network usage fees around May 2018, it was obvious that the entire negotiation would have collapsed. Therefore, the parties agreed only on the connection points and methods to ensure stable service, leaving the specific details of network usage fees as a matter for further discussion." The official emphasized that there was no mutual no-settlement agreement.
As of July, SK Broadband connects with ISPs or CPs at various IXPs such as SIX, Any2, Equinix (USA), BBIX (Japan), HKIX (Hong Kong), and Equinix Singapore (Singapore) using either public or private peering depending on the situation. Overseas CPs connected via private peering with SK Broadband are currently paying network usage fees.
SK Broadband maintains that content providers (CPs) generating large volumes of traffic require private peering connections to maintain quality. For example, Disney Plus has signed a CDN service contract with Akamai, a CDN provider, and Akamai has entered into network usage fee agreements with domestic ISPs to facilitate Disney Plus traffic, providing paid private peering.
Netflix: "SKB Fails to Establish Legal Grounds"
On the other hand, Netflix argues that SK Broadband has made various claims over the past four years to justify demanding network usage fees, including infringement, unjust enrichment, and merchant's claim for remuneration, but has failed to clearly establish the legal basis for these claims.
A Netflix representative stated, "In April 2018, SK Broadband proposed changing the connection point to Tokyo to Netflix. Netflix accepted this, and as a result, from May 2018, both parties engaged in peering in Tokyo." The representative added, "Since this was the same no-settlement method as the previous connection in Seattle, the connection point could be changed so simply based solely on SK Broadband's proposal." They emphasized that there was no change in the peering method.
Netflix also argued that SK Broadband's claim that network usage fees must be paid simply because it is private peering is incorrect. Netflix stated, "ISPs only receive content requested by their customers from CPs at peering points and deliver it to their customers, thus acting as the 'terminating ISP' in relation to CPs. They do not provide content transmission services to CPs that deliver content to them at peering points."
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