ECJ rules VoIP service is an "electronic communications service"

On 5 June 2019 the European Court of Justice (ECJ) clarified that a voice-over-internet protocol (VoIP) service is an "electronic communications service" (ECS) for the purpose of the Framework Directive (2002/21/EC) and is therefore subject to the applicable regulatory framework.

In light of rapid technological change and continued convergence across the TMT sector, the case of Skype Communications Sàrl v Institut belge des services postaux et des télécommunications (IBPT) (Case C-142/18) EU:C:2019:460 (5 June 2019) provides much needed guidance, particular for over-the-top services, on which services fall within the remit of the Framework Directive.

The EU telecoms regulatory framework is principally derived from four key directives - the Framework Directive creates the framework within which these directives sit and, in particular, defines the principle concepts of electronic communications networks (ECNs) and ECSs.

 What is an "electronic communications service"?

Under Article 2(c) of the Framework Directive, an ECS is defined as a service normally provided for remuneration that consists wholly or mainly in the conveyance of signals on ECNs. The definition excludes content services and information society services (ISSs) that do not consist wholly or mainly in the conveyance of signals on ECNs.

 Background to the case

Under Belgian law, providers of ECSs are required to notify the Belgian regulatory authority for telecoms (the IBPT) before providing their services in Belgium. The IBPT asked Skype Communications (Skype) to provide such a notification in respect of the 'SkypeOut' feature. This feature allows users to make VoIP calls from their device to fixed or mobile telephone lines on the public switched telephone network (PSTN), facilitated by agreements between Skype and the relevant PSTN providers.

Skype refused to make such a notification on the basis that it was not supplying an ECS because SkypeOut was merely a feature of software that did not consist wholly or mainly of the conveyance of signals on ECNs. Following several hearings before the Belgian courts, Skype applied to the ECJ, among other things, to rule that SkypeOut was not an ECS.

 Key lessons learnt from the ECJ's ruling

The ECJ held that the provision by a software publisher of a feature offering a VoIP service via the PSTN does constitute an ECS, provided that:

1. the software publisher is remunerated for the service; and
2. that there are agreements in place between the software publisher and the relevant telecoms services providers operating on the PSTN.

Other key points to note include that:

• the fact that SkypeOut was merely a feature of the Skype software (a bundle of services including some services that were not ECSs) did not of itself prevent SkypeOut from being an ECS.
• neither did the fact that:
  • users accessed SkypeOut via an internet access service, which was an ECS – i.e. it did not mean that the VoIP service itself could not also be an ECS;
  • the VoIP service was also an ISS - the carve out for ISSs (see above) only applies to those that do not consist "wholly or mainly" in the conveyance of signals on ECNs; and
  • Skype disclaimed responsibility for the transmission of signals via SkypeOut in its terms and conditions.
• the ECJ had previously ruled that the fact that the transmission of signals was by means of infrastructure that did not belong to the service provider was of no relevance to the classification of the service (UPC DTH (Case C-475) EU: C:2014:285)) – all that mattered was that the provider was responsible to the end users for transmission of the signal which ensured that the users were supplied with the service. In this case, Skype assumed responsibility to the users of SkypeOut who had subscribed to it for the transmission of voice signals on the PSTN.

Comment

The rise in uptake of new technologies and less "traditional" communications entrants, such as over-the-top services, has given rise to some uncertainty around the extent to which these new entrants may fall within the scope of the Framework Directive.

The guidance set out in the Skype case provides some much needed clarity on this point, a point that will continue to require consideration going forwards given the increasing amount of overlap between telecommunications, media and information technology services.

The decision will no doubt be closely considered by future cases - in particular, the ECJ's decision in Google LLC v Bundesrepublik Deutschland (Case C-193/18) which is expected on 13 June 2019, where the court is due to consider whether web-based email services should be deemed ECSs.

The ECJ ruling also aligns with the technology neutral approach to key definitions and concepts set out in the new European Electronic Communications Code (Directive (EU) (2018/1972).  This helps to keep pace with technological developments and ensure that end-user rights are effectively and equally protected (given that from an end-user's perspective it is not relevant whether a provider conveys signals itself or whether the communication is delivered via an internet access service). The Code reforms and refined the four main directives that comprise the EU telecoms regulatory framework for our current digital age. EU member states are required to implement the Code by 21 December 2020.

One thing is for sure, over-the-top service providers ought to carefully consider their existing analysis as to whether they fall within the remit of the Framework Directive and therefore the regulatory regime to which they are subject.