'Network Usage Fee Lawsuit' SKB and Netflix Remain at an Impasse in 5th Hearing Session

[Asia Economy Reporter Lim Hye-seon] SK Broadband (SKB) and Netflix, who are engaged in a legal dispute over network usage fees, remained at an impasse over whether there was an 'implicit agreement' during the 5th hearing held on the 24th. SKB stated that it never made a free-of-charge agreement with Netflix, while Netflix countered that SKB never requested any payment.

On the afternoon of the same day, the Civil Division 19-1 of the Seoul High Court held the 5th hearing of the appeal trial for Netflix's claim against SKB for confirmation of non-existence of debt. A witness from SKB appeared at the hearing. Both sides clashed over whether there was a settlement without payment when they first connected in 2016.

Netflix first connected with SKB through the Internet Exchange (IX) in Seattle, USA, during its domestic service launch in 2016. An IX is an internet interconnection service that facilitates smooth data traffic exchange between Internet Service Providers (ISPs). The Seattle IX used a Layer 2 (public peering) method. Public peering is a method where ISPs pay port fees to the IX based on capacity, and the IX connects data addresses to other registered ISP lines. It is common that ISPs and Content Providers (CPs) using the same IX do not pay each other for line usage. The 2018 connection to Japan Broadband IX used a Layer 3 (private peering) method, where ISPs and CPs contract line costs and use the IX as a location to connect lines by mutual agreement.

Netflix argued that since SKB did not request cost settlement when connecting to the Seattle network in January 2016, an implicit free-of-charge agreement was made, and that this arrangement continued in Tokyo and Hong Kong in 2018.

However, SKB rebutted, stating, "We have never made a free-of-charge agreement with Netflix regarding network usage fees." SKB said, "Netflix claims that public peering at Seattle IX and private peering after 2018 are the same, but there are clear differences not only in connection methods but also in legal relationships between the two. Unlike private peering, public peering does not require consent or consultation among individual participants, and there are differences in the purpose of connection and the services provided."

Furthermore, SKB stated, "Private peering between ISPs and CPs is generally paid," and added, "Currently, Netflix directly connects to SK Broadband’s network and exchanges traffic via private peering, and Netflix is seeking payment for this from SK Broadband."

Regarding this, Netflix said, "There is no content that can be seen as SKB demanding 'network usage fees' at the time of the Tokyo connection," and "Rather, an email from SK Broadband, which was admitted as evidence, acknowledged that 'there is an obligation to provide internet access to users and maintain its quality.'"