"Fare Evasion Frame Is Distortion of Facts" Netflix Loses First Trial on Network Usage Fees... Effectively Intends to Appeal

[Asia Economy Reporter Eunmo Koo] Global online video service (OTT) Netflix lost the first trial in a lawsuit filed against SK Broadband, claiming it cannot pay network usage fees. After the ruling, Netflix effectively expressed its intention to appeal, stating that framing the issue as "free riding" distorts the facts.

On the 25th, immediately after the ruling, Netflix released a statement saying, “Content providers (CP) have the obligation to invest in and provide content for consumers, and internet service providers (ISP) have the obligation to smoothly transmit the content requested by consumers.” Netflix argued, “Demanding compensation from CPs in addition to individual users who already pay internet access fees to ISPs ignores the roles and responsibilities of ISPs.”

They added, “Labeling this as ‘free riding’ is a distortion of facts,” and countered, “Rather, it is the ISP, not the CP, that is trying to unjustly profit by double charging consumers who have already paid ISPs.”

Netflix also emphasized that it is making large-scale investments in content production and has invested about 1 trillion won in Open Connect, which reduces the traffic burden on ISPs. Netflix stated, “Open Connect, developed and provided by Netflix to ensure smooth content transmission by ISPs, is an innovative technology that cannot be simply explained as a ‘local logistics center of an overseas internet shopping mall.’” They explained, “Using Open Connect can reduce Netflix-related traffic transmitted to Korea by at least 95%.” In other words, it can significantly reduce traffic for domestic ISPs, including SK Broadband.

Netflix also denied claims that it pays network usage fees overseas, including in Japan. Netflix said, “We have installed Open Connect in Tokyo and only pay local ISP partners in Japan for services necessary to maintain Open Connect. We do not pay any network usage fees demanded by SK Broadband.”

Furthermore, Netflix emphasized that it does not pay network usage fees in the manner SK Broadband demands to any ISP worldwide. Netflix explained, “No court or government agency anywhere in the world has ever forced CPs to pay ISPs ‘network usage fees.’ This is not only without legal basis but also contrary to internet governance principles.”

Additionally, Netflix clarified that it does not receive any internet access services from SK Broadband. Netflix stated, “Domestic CPs receive dedicated internet lines and IDC services from SK Broadband, but Netflix does not receive any services, including dedicated internet lines, from SK Broadband.”

Finally, Netflix added, “As demand for Netflix content and the resulting traffic increase, SK Broadband’s profits and subscriber numbers are also increasing.” This can be confirmed by SK Broadband’s net income disclosed in its 2017-2020 business reports. SK Broadband’s net income was 32 billion won in 2017 and 150.7 billion won last year.

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