[2020 National Audit] Netflix "Not Korea Passing... No One Pays Network Usage Fees" (Comprehensive)

[Asia Economy Reporter Koo Chae-eun] Netflix has stated that its ongoing lawsuit with domestic telecom company SK Broadband over whether to pay network usage fees is not a case of "Korea passing," while also asserting that "there are no places overseas that pay network usage fees."

On the 23rd, Yeon Joo-hwan, team leader of Netflix Services Korea, appeared as a witness at the National Assembly's Science, Technology, Information and Broadcasting and Communications Committee comprehensive audit and made these remarks. Yang Jung-sook, a member of the Democratic Party of Korea, pointed out, "Netflix is called 'Gapflix' because it exerts its power by not paying network usage fees when contracting with domestic ISPs," and added, "There is criticism of 'Korea passing' because Netflix shows very different behavior in the domestic market compared to overseas markets such as the U.S. and France."

In response, Team Leader Yeon said, "At the time, we applied for a financial procedure with the Ministry of Science and ICT, the competent authority, and exchanged positions sincerely with SK Broadband for several months, but ultimately thought that this issue required a legal judgment," adding, "We decided to let the court make a conclusion and focus on providing the service." Regarding criticism that Netflix bypassed the proper government financial procedures and directly filed a lawsuit in domestic courts, ignoring the process, he explained, "There was no such intention, and we sought the best method for our 200 million customers worldwide and thousands of partner companies."

However, contrary to domestic telecom companies' insistence that network usage fees must be received, Netflix clearly stated that there is no reason to pay such fees. Team Leader Yeon emphasized, "We collaborate with thousands of ISPs worldwide, but none of them actually pay network usage fees in the form demanded by domestic telecom companies," and added, "Even in the U.S., where our headquarters is located, we do not pay such costs."

Regarding criticism that the rapid increase in Netflix users causes traffic surges and network overload, he said, "We are striving to minimize network overload through the Open Connect program." On criticism that Netflix unfairly uses its dominant position to make revenue-sharing contracts with content providers, Team Leader Yeon stated, "We are making efforts to realize profits for partner companies and creators by calculating appropriate compensation."

He also denied allegations of offshore tax evasion. Earlier in August, the National Tax Service launched a tax investigation targeting multinational online platform companies like Netflix, examining whether they avoided corporate taxes and transferred income earned domestically overseas. Team Leader Yeon said, "Since the tax investigation is currently ongoing, it is difficult to provide specific answers, but we believe it is not tax evasion," and explained, "We are faithfully paying all corporate and value-added taxes in accordance with domestic laws."

This content was produced with the assistance of AI translation services.