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The Courts Entertainment

Netflix Loses First Court Case Over Network Usage Fee (kedglobal.com) 87

Global streaming giant Netflix lost a South Korean court case on Friday, in the world's first ruling over a dispute about whether over-the-top service providers should pay internet service companies for network usage. From a report: In April 2020, Netflix filed a complaint against SK Broadband, rejecting the Korean internet provider's demand that the streaming platform pay for network use in South Korea. The legal action has drawn attention because it marks the world's first legal conflict between an OTT platform and a broadband company. South Korea is one of the world's fast-growing OTT markets, where Netflix posted triple-digit earnings growth in 2020 from the year previous. On June 25, the Seoul Central District Court rejected the case brought forth by Netflix, while dismissing Netflix's claim that the OTT platform has no obligation to negotiate with SK Broadband over the network use charges. "It needs to be determined by negotiations between the parties involved whether or not some fees will be paid, or whether they enter an agreement in accordance with the principle of freedom of contract," the court ruling reads.
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Netflix Loses First Court Case Over Network Usage Fee

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  • In the US they go the other direction. Sometime mobile carriers strike a deal with service providers, ie Spotify data isn't counted against data usage.
    That is the opposite and also anti-competitive by putting other streaming services at an automatic disadvantage.

    • by quall ( 1441799 )

      Disadvantage? Unless Spotify got that advantage for free then I don't really agree there. If I subscribe to Spotify, and they supplement my service costs, then that is the opposite of anti-competitive. The money that I give Spotify is also helping to keep streaming costs low in order to enjoy that service.

      One can easily argue that it's anti-competitive to stop a deal like that. If my phone data cost is going to jump up $10-15 a month just to use Spotify, then I'd cancel Spotify and stop streaming. I would n

      • "Disadvantage? Unless Spotify got that advantage for free then I don't really agree there. If I subscribe to Spotify, and they supplement my service costs, then that is the opposite of anti-competitive. The money that I give Spotify is also helping to keep streaming costs low in order to enjoy that service."

        Anti-competitive doesn't normally mean an ineffective strategy but the opposite. It is highly unlikely any deal with Spotify is reducing your service cost, rather it is likely increasing your providers m
      • by jon3k ( 691256 ) on Monday June 28, 2021 @01:37PM (#61530462)
        Why would your cost go up $10-15? It's just data that you already paid to use. If you streamed your music from Spotify or from your own Airsonic server, what's the difference? This is just rent seeking by the last mile carriers. The converse could also be true, if Spotify didn't have to pay your mobile carrier, couldn't they charge their (paying) users less? Or play fewer ads for their users of their "free" tier? This feels an awful lot like the broken window parable. [wikipedia.org]
        • The case is for the content provider to pay the broadband provider for providing broadband to it's the broadband companys customers.

          Isn't that kind of the Broadbands sole reason for having a company ? To provide that service to its customers ? Why on earth would that ever become the content providers issue ?

          I get that a potential cost increase might come, if the content provider suddenly "gives free access to HQ streaming" or something like this. But isn't usage or quotas something the content provider shou

    • I don't think that's the case, and that's not a US thing. All over the world mobile partners exclude certain streaming services from their tariffs but that isn't a negotiation with the stream provider, is a bonus provided for customer contracts, largely to placate them about the idea of insanely low monthly caps in the first place.

      Do you have a source for the fact that Spotify negotiate this with mobile contractors? I've never heard of it, and a quick Google search didn't find anything of the sort either (t

      • by rtb61 ( 674572 ) on Monday June 28, 2021 @09:14PM (#61532006) Homepage

        Just greedy psychos trying to double dip. Charge you downloading the data from the website and then charging the web site for uploading the data, in both cases reflecting the full cost plus profit. So typical insanely greedy psychopaths trying to charge twice for the same service and spend money on PR and lawyers and of course corrupt politicians to push it through.

    • by Generic User Account ( 6782004 ) on Monday June 28, 2021 @12:23PM (#61530174)

      That's called "zero-rating" and is the exact same direction that the article is about. If the ISP distinguishes traffic based on the remote end, you end up paying three times for the same data: Once for your connection to your ISP, once as a customer for the internet connection of the service you use and once so that your ISP actually carries the data over the internet connection that you already paid for. But, you say, you're not paying for the data. Yes, you do. Because the ISP goes to the OTT service (Netflix in this case) and demands compensation for the zero-rating. You pay for it through higher prices for the OTT service. The trick is to make you think you do not pay enough to your internet service provider to actually carry data, so that paying for the amount of transmitted.data is justified. It is not.

      • Re: (Score:2, Insightful)

        by Rockoon ( 1252108 )
        There are three ways bandwidth can be billed.

        (1) The sender pays.
        (2) The receiver pays.
        (3) They both pay.

        (1) is the nature of the problem, while you insist on shoehorning in (2) instead, because you want to avoid (3)

        The receiver should never pay. A hell of a lot of traffic that is hitting your IP isnt something you asked for. The receiver is not in control over who or what sends data at them.

        The typical home monthly internet bill should be quite low with (1) because few people are running servers
        • I'm fine with that as long as I'm only charged for the data I send. I have a 1gbps internet connection down and a 20mbps internet connection up. Comcast constant says I 'hit my cap' but they are talking about traffic I received, not traffic I sent.

          They want me to pay more to receive unlimited traffic, they don't seem to care what I send.

        • The vast majority of traffic is sent on request. Typical internet access routers are not configured to sustain unsolicited incoming data streams. If you plot the typical inbound traffic which appears without being explicitly requested (other than DDoS attacks), you'll see an average that is best expressed in kBytes per second.

          Everybody pays for their own internet access. You do not get to charge someone who isn't your customer. That's how the internet works.

        • home internet is shared at the local level and some ISP don't really upgrade the plant to hand full speed by all user at the same time.

        • by suutar ( 1860506 )

          I disagree. I'm receiving the data because I asked for it to be sent. That traffic exists by my decision; I am responsible for it. Comcast charges me to get it to me, and that's fair, because I control that. Comcast has no good reason to charge Netflix for my bits.

          • by suutar ( 1860506 )

            Now, I do see your point that e.g. a ddos is not my fault, and a sender pays model would alleviate that. But since Comcast isn't going to charge me less, I don't see it happening, and you're right, I think 3 is just frigging stupid; it gives Comcast way too much opportunity to gouge.

  • by Ecuador ( 740021 ) on Monday June 28, 2021 @11:58AM (#61530060) Homepage

    Don't pay anything to ISPs that want to get it both ways. Will their customers keep paying for their internet if they can't get Netflix or whatever else they'd like to use the service THEY ARE ALREADY PAYING FOR?

  • If they download man, many GB (eg lots of films from Netflix) then the should pay more to their ISP than someone who downloads less. Much the same as if you use more electricity then you pay more to the electric company. I know that some will not agree as they will believe that Internet usage should be completely unmetered - but it does cost [broadbandnow.com], what the consumer pays can be much more than it costs the ISP - but that is a different matter.

    • What the hell have you smoked?

      I pay for a SPEED and you talk about GB?

      Why should I pay for that? Unless you're stupid enough thinking multimedia in the HQ era is measured in kB....

      • I pay for a SPEED and you talk about GB?

        You pay for both. GB costs as the ISP needs to get bytes from the content generator (eg Netflix); speed also costs - the faster you want bytes moved the better equipment that is needed.

        You might want to look at:

        * What is an Internet IP Transit Provider? [thousandeyes.com]

        * How UK ISPs are charged for broadband - the cost of IPStream [plus.net]

        * How the ‘Net works: an introduction to peering and transit [arstechnica.com]

        • This is somewhat misleading. At the end of the day, there is nothing stopping the major carriers from allowing everyone to peer with them for just the cost of the equipment. The actual underlying technology is not metered, the metering is an artificial business construct to increase profitability.

          The major players often have peering agreements due to MAD (mutually assured destruction) and only pay for the equipment. Where there are transit agreements between the carriers they charge each other so the charge
          • Transit is the most expensive traffic you can have. It's the upper bound for the cost of external traffic to an ISP. I don't know what Alain Williams is trying to prove there, but the article linked in his first comment is the more recent one and even that is still far off from current prices. The Plus.net article is from 2008 and quotes $20/Mbps. The more recent article quotes $0.63/Gbps, although if you go to the actual source, it says $0.63/Mbps. A factor of 1000 may be what a big ISP uses for a contenti

      • > I pay for a SPEED and you talk about GB?

        You don't. Marketing people sell you speed. Everybody else transiting data in the supply chain is paying for bits.

        You may occasionally download an ISO faster but unless you're hosting torrents nobody cares most about speed beyond some reasonable limits. And ISP's don't like torrenters.

        Many ISP's also run a scam where to get reasonable uploads you must buy absurd downloads. But don't be fooled into believing that the MBA perspective represents reality.

        • ISPs don't like torrenters because if there's a model of peer oriented communication they don't have anyone to double dip from. They might also have to start caring about using an internet connection for more than simply consuming things and have enough bi-directional support to allow for publishing and the like.

          As much as the ISPs love to hate on streamers and torrenters there's been more policy changes to punish people who do a very moderate amount of upload due to weekly zoom calls than ever before. Th

        • I'm fine with that, stop artificially rate limiting my connection in 'tiers' and charge me a reasonable rate per bit. When you sell me a 1gbps connection with a 1TB limit per month or a 200MB connection with a 1TB limit per month you are creating an artificial constraint where that 1TB a month costs more if I get it faster or slower. Instead just charge me for 1TB a month and let the speed go as fast as I can handle.

        • Marketing people sell you speed. Everybody else transiting data in the supply chain is paying for bits.

          That's exactly backwards. Data caps are a marketing trick ("market segmentation"). The only real cost is bandwidth ("speed"). Nobody pays for "bits", except small-time end users on both ends of the connection and people who think being nickle-and-dimed to death by the cloud is a good idea. ISPs pay for fully dedicated bandwidth or burstable bandwidth. Nobody cares how much they transfer.

        • by Bert64 ( 520050 )

          ISPs should actually love torrenters and other p2p because it keeps the traffic local or even internal (cheap) instead of pulling it over international transit links multiple times which costs them considerably more.

      • The cost to the ISP, the cost of equipment, transit, etc is mostly proportional to a) how much data is transferred and b) how many customers you have. Typical speed per customer is #3 on the list, affecting costs less than the other two factors.

        To get B out of the way, number of customers, each customer needs a physical line and equipment, which may occasionally need maintenance - whether they transfer 1 bit or a zillion. So there are per-customer costs.

        The primary costs are proportional to the amount of

        • That's bandwidth, not data volume. Unless you expect your customers to accept that their downloads slow down at peak times, you need to provide the bandwidth that customers want to use during those times. There is a stochastic aspect to it, but the amount of data they transfer is just a bad proxy for the metric that actually matters. Data volume is particularly deceptive because people who advocate for data caps don't distinguish between peak and off-peak times. 100 Gbytes at night cost the ISP nothing at a

          • > That's bandwidth, not data volume.

            Let me put it this way. All that matters to the ISP is that between 6PM and 7PM they need to deliver 10,000 GB.

            It DOES NOT MATTER to them if they deliver your 1 MB web page in 0.1 seconds, then service the next customer, then the next, or of they service 100 customers in parallel at 1/100th the speed. The speed at which you get your 1MB web page doesn't effect their cost. You're going to need that 1MB either way.

            It doesn't matter if you take up 1/1000th of the bandwidt

            • You're an ISP.

              You have 1,000 customers in this neighborhood

              You need to deliver 3,600 GB to your customers in the next hour.

              What speed of upstream connection do you need from the neighborhood?

              You can calculate that answer, using the information given.
              I highly encourage you to try calculating it now, before reading further.

              Have you calculated how many Mbps you need to deliver 3,600 GB over the next hour?

              Really, you should.

              You probably have the answer now.

              You should have calculated that 3,600 GB in an hour is

            • All that matters to the ISP is that between 6PM and 7PM they need to deliver 10,000 GB.

              No, you cannot deliver those 10000 GB any time you want in that hour. You need to deliver the arriving data within fractions of a second or you're a very bad ISP. And at those timescales we call it bandwidth, not "how much data is transferred". It doesn't matter how much data your customers download. The only thing that matters is how much bandwidth they all use at most at about the same time. As I said, there is a stochastic aspect to it, but that just elevates "how much data is transferred" from completel

              • > The bandwidth the ISP needs to provide is the correct metric. How much data is transferred is a very bad proxy for it.

                How much data (in a given period of time) *is* bandwidth.
                That's what the word "bandwidth" means.

                How much data in certain time == bandwidth.
                It's the definition of the word.

                Where you're getting confused is that you're thinking the PORT SPEED *for a given customer* matters. I have many thousands of users and I'm telling you the port speed for a given user does not and cannot affect the up

                • The tldr; of all that is the following.

                  My upstream needs to be at least as far as:

                  A. the port speed of my ONE fastest customer (Because I can't send it out faster than I get it)

                  B. the total combined *actual data transfer* of ALL my users together, during peak time

                  The actual data transfer of ALL USERS COMBINED will be greater than the port speed of any one user. Therefore it's actual usage that controls.

                • I sincerely hope your customers have other options, but thanks for giving an insight into why ISPs suck so much. Maybe some day you can understand that measuring "data transferred" on a long enough time scale to call it that instead of bandwidth is useless for predicting the bandwidth demand. As an increasing number of ISPs had to find out in recent years, the access bandwidth you promise actually matters, even if people do not download much more. It may not matter whether you wait one second or 600 seconds

                  • > It may not matter whether you wait one second or 600 seconds for a burger, but it does matter if a VoIP call or a game lags by seconds instead of milliseconds.

                    Now you're starting to get it! That's what I've spent the last three days explaining to you repeatedly, while you kept arguing the opposite. Having you wait in line for 60 seconds wouldn't reduce the number of bytes I need to get over the pipe.

                    > And still: Bandwidth is dirt cheap, so none of this should matter either way, but you know ISPs: I

    • Unused bandwidth cannot be stored and is lost irrecoverably. This distinction between data and electricity is crucial. If you wanted to make the analogy work, you'd have to have the ISPs pay the Netflixes of the world for the data that their customers consume, because a data network without data is as useless as an electricity network without electricity.

      The article you linked quotes a transit price of $0.63/gbps in 2015. The article makes the argument that those are just technical costs, but ISPs also need

    • maybe both consumer and content providers should share the cost, that will keep internet affordable to the consumer if those cost was shared by both consumer and content provider, since the content provider is already spamming consumers with advertising it is only fair that both share in the cost
      • They do: consumer pays their ISP (often for some XX GB/month), content provider pays the hosting company (again some YY GB/month, or if they are big enough: their transit fees). The price of XX and YY can vary a lot - but still has to be paid.

    • Sorry, but that's a terrible idea when some of that data that we'd end up paying for will be for ads, videos that auto play in the background, and other crap (e.g. spyware).

      It's already annoying that on top of the subscription fee I pay for the WSJ that they also run ads (double dipping).

      Sure, we can use an ad and script blocker (and I do), but sometimes they mess up web pages.

      With electricity, I'm charged (and pay) for whatever amount I consume. With the internet, I don't have that control because some thi

  • IANAL (Score:5, Insightful)

    by argStyopa ( 232550 ) on Monday June 28, 2021 @12:04PM (#61530088) Journal

    And I'm no defender of netflix, but this does seem like double dipping by the ISPs?

    I mean, I pay my provider for the bandwidth I ostensibly use. That provider is OBVIOUSLY not internally generating the content. It has to come from somewhere.

    What's next? If slashdot is super popular, ISPs will go back and demand slashdot pay to 'use their network' so people can access them? Huh?

    • by Bodie1 ( 1347679 )

      Yes. That is what's next.

    • Re:IANAL (Score:4, Informative)

      by EvilSS ( 557649 ) on Monday June 28, 2021 @12:37PM (#61530220)
      That is exactly what it is. See, the ISPs sell you the high speed on the assumption you won't actually have the audacity to try to use it. So they can drastically oversubscribe their backbone interconnects. Then those pesky users started not only streaming their entertainment, putting stress on those interconnects, they also started cutting back on TV services the ISPs also provided. In the US this has resulted in the word "unlimited" being spelled with and asterisk at the end and data caps being put in place. But the idea of forcing large data providers like Netflix to pay has been floated in the past (which was part of the reason net neutrality got pushed through, until it was killed). I think the reason it's not being pushed hard in the US is that if they tried it and cut off Netflix for their customers, their customers would riot. Not like most have any real choice in ISPs so maybe that won't matter much in the long run.

      Now, of course they could just invest in increasing their backbone, but that costs money and no one wants to do that! Easier to club the users into submission.
    • That provider is OBVIOUSLY notsometing the content. It has to come from somewhere.

      Netflix actually has content servers located at the ISP's datacenters. The ISP only pays for the electricity and saves a lot of upstream bandwidth.

  • by lsllll ( 830002 ) on Monday June 28, 2021 @12:09PM (#61530126)
    ... the court just told Netflix they have to pay extra to the ISP for the ISP to carry their traffic. This is a seriously bad decision on the court's side and I hope an appeal is filed by Netflix and the decision overturned. I wonder if this is a case of the court trying to play favoritism with a locally owned ISP vs. a multinational corporation, and while I hate large corporations with a passion, this unfortunately could set a precedent for other, unforeseen traffic.
    • by AmiMoJo ( 196126 )

      Well no, the court said they have to negotiate. Must be some aspect of Korean law, probably because Netflix is reliant on the ISP to reach its customers.

    • This is a seriously bad decision on the court's side

      If the law is clear about this and there is little room for interpretation then this is a good decision given that the court's job is to uphold the law. If there are out-of-date laws that result in bad outcomes that's the government's fault, not the court's.

      • by Ichijo ( 607641 )

        this is a good decision given that the court's job is to uphold the law.

        The court's job is also to be the last line of defense against unjust laws. If the court upholds an unjust law, that's a bad decision no matter how the law was written.

        If there are out-of-date laws that result in bad outcomes that's the government's fault, not the court's.

        The court is not part of the government?

        • by lsllll ( 830002 )
          True. Lower court decisions are often overridden by higher courts. In the U.S., the high court can even rule as such that the law is wrong according to the constitution and thus the law is no more law. Funny how that works!
        • The court's job is also to be the last line of defense against unjust laws.

          On what basis does a court decide whether a law is unjust? There is no absolute standard for justice and judges are appointed, not elected - at least in most countries because having politically motivated judges leads to really serious problems - so they are not answerable to the people, only the law. The way you make sure that laws are just is by voting for a party to form the government who will pass laws you believe are just because I can guarantee that no matter how just you think a particular law is t

  • Comment removed (Score:5, Insightful)

    by account_deleted ( 4530225 ) on Monday June 28, 2021 @12:26PM (#61530182)
    Comment removed based on user account deletion
    • It is worse because the "store" in your analogy ALREADY pays for the cars which enter and exit their parking lot from the public streets. In addition to paying for the roads via property tax, the consumers also pay hoa fees which cover a gate guard and in some cases pay based on how many times they pass the gate. Now the court is ruling that each store can also be made to pay the HOA for the gate guard letting you go to that store.
    • by Ichijo ( 607641 )

      This is akin to the city charging a retail store per customer that drives to their store a fee for using the road that connects them.

      Do you mean like the sales tax that pays for the roads [taxfoundation.org]?

  • Sorry, but they traffic request originated from these networks.
    Netflix is simply fulfilling the request.
    If these networks don't like it, BLOCK NETFLIX.
    Then explain to your customers why they can't use their Netflix account on their mis-managed network.

  • What exactly does an ISP in South Korea provide? What exactly do subscribers to this ISP pay for?

    The entire concept of being an over-the-top service is bad framing. Netflix is an internet service like every other internet service.

    Fuck ISPs that want to get paid on both ends.

  • I see everyone bringing out the pitchforks before asking the right questions. In America, most broadband does not have a data cap, but instead, a speed cap. Some contracts, especially in phones, will be unlimited until X data usage, and then speed is throttled from that point on until the next month. If other OTT's in Korea pay a similar fee, it's likely that the general billing / pricing / data / speed / limits in Korea are a bit different than what we're used to. I'd like to know a bit more about how the
    • by caseih ( 160668 )

      Sounds like a data cap to me. You can't possibly exceed your speed cap, since the upstream hardware is enforcing it. The low speeds come when you've exceeded your data cap. So sure I suppose you can argue your data isn't capped since they just throttle, not cut you off entirely. But the effect is still the same. They limit you to so many GB a month.

  • Seems like the next step would be Netflix putting pressure on the ISP to offer transit by some type of advertising campaign. Essentially, "SK Broadband" wants you to pay extra for your Netflix in SK -- so they can take a cut. Do you want SK to be able to force Netflix and other providers to extract this money and drive up subscription fees? Or do you want to voice your feelings to SK Broadband?

  • I used to think this was double dipping by the ISPs. On reflection, however:

    - Regardless of where they get the money, the remaining cost will get passed down to the consumer, regardless. Either by higher Netflix subscription costs or by higher connection fees to cover the network load.

    - It costs more to transit traffic than it does to dump it directly to a peer. Netflix has the ability to stream movies from a node directly next to the ISP's peering connection. This means the ISP has the full burden of carry

    • by lsllll ( 830002 )

      This means the ISP has the full burden of carrying the traffic cross-country even though it benefits Netflix's business.

      You make it sound like the ISP is doing this for free. The ISP is already getting paid by the customers to provide internet service. If the ISP is undercharging the customer, then it's the customers the ISP needs to turn to for more money, not the content providers. The content is, after all, requested by the customer. Netflix doesn't "shove" its content over the ISPs network without the customer requesting it.

    • by dryeo ( 100693 )

      Simple fix is for the ISP to charge by the GB. Heavy Netflix and other streaming services users pay more as they use more. This method still leaves Amazon, Disney or whatever they have in S. Korea having an advantage.

  • With government on your side, why should ISPs use their own money for investments? They obviously need content to go down to their customers, but that requires building larger pipes, or hosting Netflix cache servers on their "edge" datacenters.

    Instead of using the money paid by customers for the service they advertise to those paying customers, they can use the force of the government to extort... sorry... nicely ask Netflix with "an offer they cannot refuse".

    If they could also win some tax exemption, it wo

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