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EU Court of Justice Determines that SkypeOut is an Electronic Communications Service

EU Court of Justice Determines that SkypeOut is an Electronic Communications Service

 

On 5 June 2019, the Court of Justice of the EU ("CJEU") published its ruling on the classification of SkypeOut in the EU following a request for a preliminary ruling from the Belgian Courts. Skype is a Voice over IP service ("VoIP") whereas the SkypeOut component is an interconnected VoIP service that allows the service to dial out to landline and mobile numbers.

The CJEU determined that the SkypeOut service is an electronic communications service ("ECS"), as defined in the Framework Directive (Directive 2002/21/EC, as amended). As a result, SkypeOut should be considered a regulated telecommunications service and therefore subject to various regulatory obligations in the EU, including registration/notification (depending on the national regime), payment of administrative fees, security, and consumer protection measures such as minimum contract terms and transparency requirements.

The key factors identified by the CJEU that make SkypeOut an ECS under the EU regulatory framework include the following:

  • the ability to call a fixed or mobile number covered by a national numbering plan from a terminal via the public switched telephone network ("PSTN");
  • the interconnection agreements with the Internet Service Providers ("ISPs"), which in turn means that Skype has an element of responsibility for this aspect of the service; and
  • the fact that the service is paid for.

The ruling has wider implications both under the current regime and the future EU Electronic Communications Code ("EECC"), which must be transposed into each Member State's national law by December 2020.

The main implication under the current rules is that Member States must now interpret the definition of ECS to include interconnected VoIP, similar to SkypeOut. This in turn should lead to a less fragmented approach throughout the EU. However, the flip-side of the ruling is the impact on non-interconnected VoIP services. The preliminary ruling suggests that non-interconnected VoIP, including online messaging and email services, would not constitute an ECS to the extent that it does not consist “wholly or mainly” of the conveyance of signals. Regulators across the EU have sought to classify such services as ECS in the past.

It is worth noting in particular the wording of paragraphs 42 and 43 of the ruling:

42 "It is true, as Skype Communications argues, that the Skype software provides a bundle of services, which are not at issue in the main proceedings, including, on the one hand, a service allowing users to make free audio and/or video calls between terminal equipment connected to the internet and, on the other hand, a number of services such as screen-sharing services, instant text messaging, file sharing and simultaneous translation, which cannot be classified as ‘electronic communications services’ as they do not consist wholly or mainly in the conveyance of signals.” (emphasis added)

43 “However, although the installation of the Skype Out feature on a terminal requires the prior installation of the Skype software, the fact remains, as the Belgian, German, Netherlands and Romanian Governments have noted, that the services offered, respectively, by the Skype Software itself and by its SkypeOut feature appear clearly distinct in their purpose and remain entirely autonomous in their operation.”

The text emphasised in bold seems to provide a clear indication that over-the-top ("OTT") services that do not have the ability to call landline and mobile numbers should not be considered ECS under the current regime. However, where an operator is responsible for the resale of connectivity to the PSTN or Internet, it is likely to be considered responsible for the conveyance of signals and will therefore fall within the current definition of ECS.

The question remains whether just downloading or uploading data packets from servers would also amount to being responsible for the conveyance of signals – this is the question that the CJEU will need to answer in the Gmail case, another preliminary ruling referral from the Administrative Court in Germany, the decision on which is pending and is expected to be decided in the early summer. Based on today's ruling, it would be reasonable to expect that the CJEU would not consider Gmail to constitute an ECS under the current regime.

In the future, there is likely to be little practical impact of this case on SkypeOut because the definition of ECS has changed under the new EECC to create two new categories of interpersonal communications services that specifically cover interconnected and non-interconnected VoIP services (and other OTT communication services). See our client alert about the new EECC, available here. However, today’s ruling and the Gmail case remain potentially relevant because “conveyance of signals” continues to be one of the categories of services falling under the new definition of ECS pursuant to Article 2(4)(c) of the EECC. These rulings may therefore have an impact on what category of ECS a service falls into, rather than whether it is an ECS in the first place.

Authors: Francesco Liberatore and Matthew Buckwell, Squire Patton Boggs

  • Thursday, 06 June 2019

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