The ECJ has handed down an important ruling in the field of telecoms regulation. The Court has confirmed that Internet-based services, commonly known as “over-the-top” (OTT) services, can be subject to EU telecoms regulation. We examine the ruling and its implications for OTT service providers.

Background

Following a referral from the Brussels Court of Appeal, on 5 June 2019 the ECJ confirmed that a voice over internet protocol (or VoIP) service known as SkypeOut is an ‘electronic communications service’ (ECS) and therefore subject to EU telecoms regulation. This ruling could have important implications for similar “over-the-top” (OTT) service providers across Europe.

What we already knew

• When interpreting EU law, the ECJ pays particular attention to the aim, purpose and context of EU law rather than focusing exclusively on the wording of provisions. EU telecoms law is no exception.
• Services provided by resellers are within scope. A service provider does not have to own the underlying infrastructure for the service to be classified as an ECS. All that matters is that the service provider is responsible vis-à-vis the end-users for transmission of the signal which ensures that they are supplied with the service.
• There is no one-stop-shop principle under EU telecoms law. ECS can be regulated by the authorities in each Member State in which the recipients of those services are resident.
• The Body of European Regulators for Electronic Communications (BEREC) has for many years expressed the view that OTT services, such as VoIP, which permit inward and/or outward connections to the public switched telephone network (PSTN), should be considered ECS and subject to regulation.

What we now also know

• An OTT service can be considered an ECS where the service provider assumes responsibility for any part of the underlying conveyance. This will be the case where the service provider enters into interconnection agreements without which the service could not be provided.
• BEREC was right. The ECJ’s ruling specifically addresses VoIP services which permit outward connections to fixed or mobile numbers on the PSTN.
• It is not necessary for the service provider to assume contractual responsibility vis-à-vis its customers for that conveyance. Instead, it must be assessed whether a service provider assumes responsibility in practical terms, e.g. via interconnection agreements without which the service could not be provided. This means that one cannot simply contract out of the scope of EU telecoms regulation by excluding liability for conveyance, and closes a potential loophole.
• A service bundled with non-ECS can still be considered an ECS where it is “clearly distinct in its purpose and remains entirely autonomous in its operation”. This is the case even if provision of that service is dependent on prior-installation of other non-ECS.

Comment

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. 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. In addition, 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.

We also eagerly await the ECJ’s imminent ruling in the Gmail case which is due on 13 June and similarly raises a number of interesting questions.

For more information on the likely impact of this ruling on OTT service providers, contact a member of our Media & Telecoms team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.