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(LEAD) Netflix files suit against local internet service provider over network usage fees

All News 17:21 April 14, 2020

(ATTN: CLARIFIES paras 10-11; ADDS more info in 12th para)

SEOUL, April 14 (Yonhap) -- Netflix, the world's leading video streaming service provider, has filed a lawsuit against a local internet service provider over network usage fees, industry insiders said Tuesday.

Netflix Services Korea Ltd., the Korean unit of the U.S. streaming giant, filed the suit against SK Broadband Inc. requesting a Seoul court to confirm that it has no obligation to pay network usage fees regarding data traffic.

The legal action comes after the two sides failed to narrow their differences through the Korea Communications Commission (KCC)'s arbitration in November last year.

With rising popularity of over-the-top (OTT) services, internet service providers (ISP) have been dealing with heavy data traffic and wanted major content providers, like Netflix, to share those costs.

Netflix has been rapidly increasing its presence in South Korea, with the number of subscribers surpassing 2 million recently, up from 400,000 in 2018.

This image, provided by Netflix Services Korea Ltd., shows the corporate logo of Netflix. (PHOTO NOT FOR SALE) (Yonhap)

This image, provided by Netflix Services Korea Ltd., shows the corporate logo of Netflix. (PHOTO NOT FOR SALE) (Yonhap)

To help local ISPs reduce traffic, Netflix has offered them its open connect appliances for free, saying that it would reduce network overhead with cache servers storing its content.

While some local ISPs, like LG Uplus Corp. and D'Live Co., accepted Netflix's offer, SK Broadband has been seeking network usage fees, saying use of cache servers is a separate issue.

Netflix has been claiming that it would be a double charge of internet service if SK Broadband collects network usage fees from content providers because the local ISP already receives fees from its users.

SK Broadband said it wants to see a better solution from Netflix on solving data traffic caused by its service. The affiliate of the nation's top mobile carrier, SK Telecom Co., said it will decide its future moves after reviewing Netflix's suit.

Unlike local firms, such as Naver Corp. and Kakao Corp, foreign internet-based companies, like Google's YouTube, have not been paying network usage fees to ISPs here.

Last year, Facebook dealt with a lawsuit regarding heavy data traffic, but a local court ruled in favor of the social media giant, saying that ISPs are responsible for such matters. Facebook currently pays network usage fees to local ISPs.

Meanwhile, industry insiders said KT Corp., also a major internet service provider, is reportedly negotiating with Netflix over network usage fees, with the company apparently looking to collect the fees.


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