SK Broadband, a South Korean Internet service provider, has sued Netflix to recover costs incurred as a result of increased network traffic and maintenance work due to a surge in viewers to the American company's content.
Netflix's status as the country's second-largest data traffic generator after Google's YouTube has been highlighted by the popularity of the hit series "Squid Game" and other offerings, but the two are the only ones not paying network usage fees, which other content providers such as Amazon, Apple, and Facebook are paying, a representative for SK Broadband said.
The move comes after a Seoul court ordered Netflix to "reasonably" compensate the Internet service provider for network usage, and several South Korean lawmakers have spoken out against content providers who do not pay for network usage despite generating massive amounts of traffic.
Netflix stated that it will investigate SK Broadband's claim, seek communication, and explore methods to cooperate with SK Broadband in the meantime to ensure that users are not disadvantaged.
SK Broadband said it filed a lawsuit against Netflix to force it to pay for using its networks since it began using SK's dedicated line in 2018 to transport growing larger volumes of data-heavy, high-definition video content to South Korean consumers from servers in Japan and Hong Kong.
Netflix's data traffic handled by SK increased 24 times from May 2018 to 1.2 trillion bits of data processed per second as of September, according to SK, thanks to the success of various South Korean Netflix productions, including "Squid Game."
Last year, Netflix filed its own case to determine if it was obligated to pay SK for network usage, claiming that Netflix's responsibility ends with generating and making content available.
Court documents show SK's expenses were incurred while fulfilling contractual commitments to Internet users, and delivery in the Internet world is "free of charge as a principle."
However, in June, the Seoul Central District Court ruled against Netflix, stating that SK provides "a service provided at a cost" and that it is "reasonable" for Netflix to be "obligated to provide something in return for the service."
The court statement showed SK estimated that the network usage fee Netflix would have to pay in 2020 would be around 27.2 billion won (US$22.9 million).
Netflix has filed an appeal against the ruling, court records showed, with new proceedings set to begin in late December.
