13.01.2021

The implementation of the European Electronic Communications Code and its implications for OTT service providers

Implementation of the new European regulatory framework - draft of a new TKG

The new year brings a whole series of innovations in telecommunications law, which companies in the telecommunications sector must prepare for. As early as 21 December 2020, the EU member states had to implement the requirements of the European Electronic Communications Code (EECC) – or rather: should have implemented its requirements as a brief look at the EU's legal database on the status of implementation shows that only eight of the national legislators (Denmark, Greece, France, Cyprus, Latvia, Lithuania, Luxembourg and the Netherlands) have done so to date. The Federal Republic of Germany is behind schedule. Most recently, on 16 December 2020, the Federal Cabinet adopted a draft amendment to the telecommunications act (TKG) (available in German only). Its adoption by the German legislator is now expected for the beginning of this year.

Compliance gains in importance for telecommunications providers

Telecommunications service providers and network operators thus enjoy a last grace period in most parts of the EU to adapt their processes. If not already done, the necessary measures to ensure compliance should now be urgently completed. One of the changes under the TKG amendment is the significant increase in possible fines. Companies with an average annual turnover of more than 50 million euros can be imposed fines of up to two percent of the same - a dynamic regulation already known from the GDPR.

European regulation has global reach

It is important to know for all providers, especially those from other EU countries: All providers who provide their services within an EU member state are regulated according to the so-called market location principle (now expressly included in § 1 para. 2 of the TKG amendment). A company's registered place of business is irrelevant insofar. Availability via digital distribution platforms such as Apple's App Store or Google's Play Store should be sufficient to fulfil the criterion of "provision". The EECC (or rather the respective national telecommunications law of the EU member states adopting the EECC) thus has global reach.

Telecommunications regulation of OTT providers

One of the most exciting developments for us under the new regulatory regime is the inclusion of providers of so-called over-the-top (OTT) communications services in telecommunications regulation. OTT services are purely internet-based services in which communication takes place exclusively from app to app. In the EECC, these are defined as so-called number-independent interpersonal communications services (see EECC Art. 2(no. 7)), which in turn represent a subgroup of interpersonal and thus also electronic communications services (see EECC Art. 2(no. 4)) – a systematic classification that must not be overlooked, especially when identifying the relevant regulatory provisions. The TKG amendment uses the term telecommunications service instead of electronic communications service. In all other respects, however, it has adopted the aforementioned systematics one-to-one (see § 3 of the TKG amendment).

Examples of regulated OTT services

Classic examples of OTT services are (video) telephony services and messengers such as Skype or WhatsApp, but also e-mail providers such as GMX or Gmail. In contrast, pure content providers (e.g., news portals) or communication portals via which either no interactive communication takes place, or the communicator cannot specifically select his addressees continue to fall outside the scope of regulation under EU telecommunications law. Forum operators are therefore still not regulated insofar, nor are Twitter or other (micro-)blogging services.

However, there is a considerable grey area in between. Many social networks offer individual communications solutions in a package with other services. These are not likely to constitute a merely "subordinate ancillary function" (see EECC Art. 2(no. 5) / § 3(no. 24) of the TKG amendment). In our estimation, service providers such as Facebook, LinkedIn, or Tinder will thus find themselves subject to regulation under telecommunications law in the EU. Furthermore, a wide variety of communications services can also be found in the ecosystems of the gaming industry: While Twitch chat is probably excluded from regulation due to its open character, which fails the criterion of interpersonality, private channels of the online service Discord are basically no different from a WhatsApp group. Gaming platforms such as Steam also offer individualised communications options that are in principle subject to regulation.

So: The new year is prone to bring many exciting new insights as to the scope of European telecommunications regulation. We will observe the positioning of the German regulator Bundesnetzagentur (Federal Network Agency) and other regulatory authorities with great interest and keep our readers informed of all relevant developments.

An overview of the most important regulatory topics for OTT providers will follow in the next newsletter.

Become compliant EU-wide with Schalast Rechtsanwälte

Before we conclude this article, we take the liberty of referring to our services specifically for providers of OTT communication services:

As part of the international law firm network Multilaw, Schalast Rechtsanwälte has established a globally positioned expert group of lawyers specialised exclusively in OTT regulatory issues. Through this group, we can provide our clients with compliance solutions for the entire EU while taking into account all national specificities in the sense of a one-stop shop.

Legal Tech Tool: OTT Regulation

Would you like to know whether your company is subject to telecommunications regulation? Use our free OTT Communications Tool for an initial assessment or contact us directly.