European Court Rules ‘OTTs’ And ‘VoIP Services’ Are Subject To European Telecom Regulations

In a landmark ruling, the European Court of Justice ruled that Internet-based, commonly known as “over-the-top” (OTT) services are subjected to the European law and telecommunications regulations, a court document reveals.

The fourth chamber court made the ruling of the ECJ composed of M. Vilaras (Rapporteur), President of the Chamber, K. Jürimäe, D. Šváby, S. Rodin and N. Piçarra, and Judges. The issuance of the ruling on June 5th marks an essential clarification in the field of VoIP and Internet-based communication.

The ruling revolves around the complaint made by Skype Communications, a global phone messaging and calling tech giant, a subsidiary of Microsoft, against Belgian Institute of Postal Services and Telecommunications (IBPT) concerning its decision to impose an administrative fine on Skype Communications for providing an electronic communications service without first having given the required notification.

Skype Communications runs Skype, “which allows users who have installed that software on a terminal, namely a computer, a tablet, or even a smartphone, to enjoy a device-to-device voice-telephony and teleconference service.”

As an added service, Skype also offers SkypeOut, a way for users to call outside users without skype using their mobile numbers. This feature allows users to make calls from a terminal to a fixed or mobile telephone line using the Internet Protocol (IP) and, more specifically, the technique called ‘Voice over IP’ (VoIP).

But SkypeOut does not receive calls from users using Belgian telephone numbers. This kind of service is called an “over-the-top” service or OTT — a service that is available on the Internet but does not require any form of traditional communications operator.

SkypeOut. Photo: Skype

Back in 2011, the IBPT requested for Skype to notify it of its services by Article 9(1) of the LCE. However, Skype refused to do so, citing that they did not carry out any activities in Belgium.

Furthermore, Skype argues that in any event, the company does not have any electronic communications services since they don’t transmit signals themselves. Instead, the company said, it used international operators who sent the signals themselves.

Nonetheless, the IBPT was persistent, sending Skype another request citing that SkypeOut was indeed part of an “electronic communications service” within the meaning of Article 2(5) of the LCE.

“First, the fact that a numbering plan was used revealed that the service was more than a web application and was not covered by the content exception referred to in the definition of an electronic communications service. Second, the fact that Skype Communications did not transmit signals over electronic communications networks did not prevent it from, in fact, offering such services. Lastly, the SkypeOut service was aimed at users resident in Belgium,” reads the court document obtained by Z6Mag.

The tit-and-tat between Skype Communications and the IBPT continued until October 2017 when Skype said that there are significant technical differences between the PSTN Calling service and SkypeOut which justify the former’s notification as an electronic communications service.

However, the court sided with IBPT’s case and ruled that, since Skype is offering services to residents of Belgium, it follows that it also provides SkypeOut to Belgians.

“It notes, in this regard, that the Court ruled, in its judgment of 30 April 2014, UPC DTH (C‑475/12, EU:C:2014:285, paragraph 43), that ‘the fact that the transmission of signals is by means of an infrastructure that does not belong to [the applicant] is of no relevance to the classification of the nature of the service. All that matters in that regard is that [the applicant] is responsible vis-à-vis the end-users for transmission of the signal which ensures that they are supplied with the service to which they have subscribed’,” read the court’s ruling.

In a comment, law firm Mason, Hayes, and Curran said that the ruling carries a lot of implications, especially on how the law will be applied to telecommunication service providers and VoIP vendors.

“Looking forward, one could say that the ruling merely hastens the inevitable, given the significant widening of the scope of ECS under the upcoming European Electronic Communications Code,” they said.

“However, the ruling still potentially has far-reaching implications. These services could now be subject to a broad range of regulatory obligations in each Member State where the services are received. Also, the ruling raises interesting questions around sanctions for past non-compliance and recoupment of past levies given that the law has arguably been settled in this area since the ECJ’s 2014 ruling in UPC DTH.”

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