S. Korean court rules against Netflix in network usage fee dispute

by BERNAMA / pic by AFP

SEOUL – A Seoul court on Friday ruled against global video streaming giant Netflix in its prolonged network usage fee dispute with South Korean major internet access provider SK Broadband Inc.

The Seoul Central District Court dismissed a request from Netflix to confirm that the United States-based video streaming service provider is not liable to pay network usage fees to SK Broadband. The court also rejected Netflix’s request to confirm that it has no obligation to negotiate with the South Korean company.

“According to the principle of freedom of contract, whether to conclude a contract and what price to pay is a matter to be decided through the negotiations of the concerned parties,” the court said, adding it is not a matter involving the judiciary.

The court also explained that the benefit to be gained by confirming the negotiation obligation does not exist is not recognised.

The dispute dates back to April last year, when Netflix Services Korea Ltd, the local unit of Netflix, filed a lawsuit against SK Broadband, claiming it has no obligation to pay fees for using the South Korean company’s network.

Six months earlier, the two sides failed to narrow their differences through the Korea Communications Commission’s arbitration.

Local internet service providers (ISPs), like SK Broadband, have been struggling with heavy data traffic amid rising popularity of over-the-top services and wanted major content providers, like Netflix, to share those costs.

SK Broadband, an affiliate of the nation’s top mobile carrier, SK Telecom Co, has accused Netflix of free-riding on its network despite huge traffic overload caused by its streaming service, whose number of subscribers here is estimated to have increased to about 4 million.

The SK company argues that Netflix pays what appears to be network usage fees to telecom companies in the US and France but not in South Korea, where local platform service providers, like Naver and Kakao, pay fees.

But Netflix has insisted that it has no obligation to pay network usage fees as ISPs are responsible for managing their networks and any demand of network usage fees for specific services violates the principle of net neutrality that prohibits content discrimination.