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South Korean internet service provider sues Netflix, reigniting debate on Net Neutrality

This lawsuit is a consequence of Netflix losing an earlier court battle in which it had accused SK Broadband of double billing.

SK Broadband, a South Korean Internet service provider, has demanded that Netflix must pay for costs from increased network traffic and maintenance work in a lawsuit filed last week, according to a report in Reuters. A spokesperson for the SK Broadband said that the lawsuit against the streaming giant is a result of Netflix using SK’s dedicated line to deliver copious amounts of data-heavy, high-definition video content to viewers from servers in Japan and Hong Kong, the report added.

The upsurge in data traffic has been attributed to shows like Squid Game and D.P., among others, which led to SK processing 1.2 trillion bits of data per second as of September, Reuters reported, adding that the increase cements Netflix’s status as South Korea’s second-largest data traffic generator after Google’s YouTube. 

The lawsuit alleged that Netflix and Google are the only ones to not pay network usage fees whereas other content providers such as Amazon, Apple, and Facebook comply with the levy, the report stated.  

The demands being made by SK may renew the debate around the repealing of Net Neutrality laws. Net neutrality is the principle that ISPs should facilitate access to all content and applications regardless of the source, and without favouring or blocking particular products or websites.

Netflix has had several agreements in place to boost its streaming speed, especially with Comcast in the US, since 2014 but if a favourable verdict is passed in this lawsuit, many more ISPs will look to charge content providers triggering a race that will benefit rich content providers ultimately and defy the tenets of net neutrality.

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Why did SK Broadband decide to sue Netflix? 

Netflix had first approached courts in 2020 alleging that SK Broadband had no right to demand fees for the bandwidth because its subscribers were paying a fee to use its services, as per a TechCrunch report. The streaming company said that its duty ends with creating content and argued delivery in the Internet world is “free of charge as a principle”.

The company claimed that the ISP was trying to “double bill” by charging a fee from Netflix. SK Broadband estimates the fee to be around $23 million in 2020 for network use, TechCrunch added. 

The Seoul Central District Court ruled against Netflix in June this year paving the way for SK to levy network usage fees from streaming platforms for bandwidth and causing traffic on their network.

The court said that the broadband company’s offerings are “a service provided at a cost” and it is “reasonable” for Netflix to be “obligated to provide something in return for the service”, as per Reuters.  

Netflix appealed against the verdict in July and the hearing will commence in December this year. 

Netflix’s response 

A Netflix spokesperson told TechCrunch that they are reviewing the claims made in the lawsuit and are seeking open dialogue with SK Broadband. 

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Netflix’s arrangement with ISPs

Netflix has an Open Connect programme in which it partners with ISPs to deliver content more efficiently. This programme localises substantial amounts of traffic with Open Connect Appliance embedded deployments. Currently, there are over a thousand ISPs in the programme. Major US ISPs like Verizon and Comcast refused to sign up for the CDN (Content Delivery Network) service which provides access to Netflix’s servers for free as it would dilute their position to charge Netflix for a better connection.

Net Neutrality in India

India has made two major strides in Net Neutrality: one is banning zero-rating, a practice that lets telcos price certain apps and sites separately from the overall internet; and the second is baking Net Neutrality principles into telecom operators’ licenses. Strict Net Neutrality standards were codified into India’s Unified License, basically becoming law, in July 2018 but there is no one keeping a watch on ISPs to check for adherence. 

But the Indian government appears to no longer have the appetite to create a multi-stakeholder body, which the Telecom Regulatory Authority of India (TRAI) recommended in September 2020, to enforce Net Neutrality, MediaNama reported two months ago. 

The Department of Telecommunications (DoT) on June 25 wrote a memo to TRAI expressing discomfort to “establish a multi-stakeholder body (MSB) to ensure that Internet Access Providers adhere to the provisions of net neutrality in their license.” The DoT complained that this recommendation would be complex to run and cost the government too much money. 

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