Legal logic takes a new turn in the dispute between SK and Netflix

The Netflix logo is shown on a TV screen in a May 9 file photo.  (Reuters-Yonhap)

The Netflix logo is shown on a TV screen in a May 9 file photo. (Reuters-Yonhap)

A Supreme Court lawsuit between internet service provider SK Broadband and global streaming service Netflix is ​​taking a new turn as Netflix uses new logic to argue that it is not required to pay fees to use the South Korean company’s network.

Netflix’s legal representatives argued in a lawsuit in the Seoul High Court on Wednesday night that the two companies agreed on the principle that the interconnection of individual Internet networks, also known as “peering”, involves zero fees between the parties involved.

Lawyers for SK Broadband countered that they did not reach an agreement after adopting a new takeover model since their initial negotiations in 2015.

Netflix said in a statement that the two companies have agreed that neither side will pay for traffic the other calls. This has resulted in peering through the Seattle Internet eXchange, a neutral, unsettled peering point in the United States, as well as through Netflix’s own Open Connectivity Alliance locations outside of Korea, which have been reducing data traffic since January 2016.

“SK Broadband would not enter into a ‘no charge peering’ agreement with us if they intended to charge us for network use,” Netflix said in a statement.

“SK Broadband knew that the interconnect method would include zero network usage compensation, and was committed to further expanding the peering points.”

However, SK Broadband said in a statement that conditions between the two have changed since May 2018. The two companies have since agreed to migrate from Japan’s BroadBand Internet eXchange to their own leased SK Broadband line for private peering as opposed to interconnect. structure on the Seattle Internet Exchange.

SK Broadband said the decision was inevitable in order to maintain the quality of the internet given the growing amount of network traffic from Netflix. He added that the two companies have agreed to defer payment talks in line with the new takeover structure.

Netflix said nothing about talks with SK Broadband in 2018.

Netflix traffic on SK Broadband bandwidth is reported to have grown 20 times, from 50 gigabits per second at the end of 2018 to 1200 gigabits per second as of September 2021. Government data showed that Netflix accounted for 7.2 percent of internet traffic in Korea in 2021. second largest share among content providers after Google.

This is a twist in Netflix’s rhetoric compared to the district court hearing where they argued that SK Broadband’s demand for network charges undermines the principle of net neutrality, under which end-users of content are responsible for the cost of their access to the network, and not content providers. .

In June 2021, the district court favored SK Broadband, stating that Netflix is ​​required to share the burden of service costs due to increased traffic, like other Korean content providers such as Naver and Kakao, as stipulated in the “Neftlix law”, which valid from December 2020

Netflix filed an appeal a month later. The Korean Court of Appeal began the trial in March.

This is the world’s only legal dispute over who is responsible for the costs of preventing network traffic clogging. SK Broadband said that Netflix was responsible, given that its high traffic affects the quality of Internet services in SK Broadband. Netflix denied this information.

Hearings will resume on July 20.

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