An SK spokesperson said on Friday that the South Korean Internet service provider SK Broadband has sued Netflix to recover costs incurred as a result of increased network traffic and maintenance work as a result of a surge in viewers to the U.S. firm's content.
The decision comes after a Seoul court ruled that Netflix must "fairly" compensate the internet service provider for network usage, and several South Korean MPs have spoken out against video 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 ways to cooperate with SK Broadband in the meantime to ensure that users are not impacted.
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, according to SK.
Netflix's data traffic handled by SK increased by 24 times from May 2018 to 1.2 trillion bits of data processed per second in September, according to SK, thanks to the success of various Korean Netflix productions such as "Squid Game" and "D.P."
Since Netflix began using SK's dedicated line in 2018 to distribute increasingly larger volumes of data-heavy, high-definition video content to consumers in Korea from servers in Japan and Hong Kong, SK Broadband announced it had filed a lawsuit against the company.
Last year, Netflix filed its own case to determine if it was obligated to pay SK for network usage, contending that Netflix's responsibility ends with generating and making material available. According to court documents, SK's expenses were incurred while fulfilling contractual responsibilities to Internet customers, 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 given at a cost" and that it is "fair" for Netflix to be "obligated to provide something in return for the service."
According to the court statement, SK predicted that Netflix will have to pay a network usage fee of around 27.2 billion won ($22.9 million) in 2020 alone.
Netflix has filed an appeal against the decision, according to court documents, with new proceedings set to begin in late December.
Netflix stated in a statement on Wednesday that its investments in South Korea resulted in the creation of around 16,000 jobs, with an economic impact of approximately 5.6 trillion won.