Court Sides with Facebook Again, Fueling Controversy over Effectiveness of ‘Netflix Act’
The court has ruled in favor of Facebook in a suit it filed to nullify the fines imposed by the Korea Communications Commission.
Facebook has won both the first and appeal trial in an administrative lawsuit it filed against the Korea Communications Commission’s decision to impose fines on it. Controversy over the revision of the enforcement decree to the Telecommunications Business Act, which is dubbed the “NetFlix Act,” is also expected to further grow.
The Seoul High Court ruled in favor of Facebook on Sept. 11 in a lawsuit filed by Facebook to cancel a corrective order from the commission. “A change in the access route made by the plaintiff constitutes an act of restricting network use, but it was not done in a manner that significantly undermined users’ interests,” the court said. “The KCC abused its discretion.”
Earlier in March 2018, the KCC fined Facebook 396 million won and ordered it to take a corrective action, saying that it had committed an act against users’ interests, which is banned under the Telecommunications Business Act.
As the court passed the responsibility for network quality to carriers, attention is being paid to what conclusion the court will arrive in another legal battle between Netflix and SK Broadband. The first hearing for Netflix vs. SK Broadband will be held in October.
in November 2019, SK Broadband asked the KCC to arbitrate, claiming that Netflix has increased its burden to maintain the network by surging traffic. Although SK Broadband’s plan was aimed at making Netflix pay the cost of network expansion and usage fees, Netflix suddenly filed a lawsuit ahead of the KCC’s arbitration decision.
The contents industry is strongly opposed to the “Netflix Act” which imposes a duty to maintain quality of services on value added carriers in the name of protecting users. On top of that, the latest court ruling has created a public opinion that the maintenance of network quality is up to telecommunication companies, which has given the contents industry an advantageous position, industry experts say.
On the contrary, the KCC has lost a series of lawsuits that it expected to win. “Although the KCC lost in the second trial, it is meaningful that the court acknowledged damage to users,” said telecommunications industry insiders. In particular, telecommunication companies expressed their expectations, saying, “After the passage of the ‘Netflix Act,’ positive conditions have been created. For instance, the enforcement ordinance prevents access changes that cause a serious damage to consumers.”
Meanwhile, the KCC will decide whether to appeal after analyzing the court ruling on the Facebook case.