For the past five years, Google and the German telecommunications regulator, the Federal Network Agency (Bundesnetzagentur – BNetzA), have been arguing whether Google’s email service Gmail qualifies as a telecommunications services as defined by the German Telecommunications Act (Telekommunikationsgesetz – TKG). BNetzA eventually ordered Google to notify the service (i.e., it considered it to be regulated), and now, the Administrative Court of Cologne upheld this view in a judgment of November 11, 2015, which was published only last week.
The judgment is the first time a German court dealt with the legal qualification of over-the-top (OTT) communications services. Although the court’s reasoning is disputable, and Google has the option to appeal the judgment up to the Federal Administrative Court, the decision nevertheless comes at a time when OTT services are generally attracting increased attention from regulators and policy makers, and where “traditional” telcos are lobbying hard in favor of a “level playing field” regulation for the likes of Skype, WhatsApp, or Gmail. And in particular, the case demonstrates that despite an EU-wide harmonization of telecommunications law, Member State law still allows for deviating classifications of specific services as being regulated or not. This requires providers of pan-European or even global OTT services to carefully evaluate the applicable regulatory framework not just on the EU level, but, in fact, Member State by Member State.
1. What did the German court decide?
In 2010, BNetzA first approached Google regarding the notification requirement set forth in Sec. 6 TKG, because BNetzA considered Gmail to be a telecommunications service within the meaning of Sec. 3 No. 24 TKG. In 2012, after two years of exchanging views on the regulatory qualification of Gmail, BNetzA then issued this request by way of a formal decision. Google filed an objection against BNetzA’s order which was rejected in late 2014. In early 2015, Google then filed an action against BNetzA with the Administrative Court of Cologne. The court thus had to decide whether BNetzA’s request for a notification was justified, i.e., whether Gmail does indeed qualify as a regulated telecommunications service within the meaning of the TKG. In doing so, the court upheld BNetzA’s position with the following reasoning:
2. Is this already a final verdict?
No. Google can appeal the decision to the Higher Administrative Court and/or the Federal Administrative Court, so it may take another few years for a final verdict to come down in this matter. And in fact, several aspects of the court’s reasoning seem to provide a sufficient basis for an appeal:
3. What would it mean if the court’s view prevailed?
The Gmail decision is important to OTT communications services as a whole, i.e., not just to the provision of web-based email services, but also for providing VoIP, messaging, conferencing, or unified communications solutions over the Internet. Because if the view of the German court prevails, OTT services could be subject to a wide range of regulatory obligations. And this would generally also apply to services where the provider is not even based in Germany, as long as the service addresses the German market. Just to name a few of these obligations:
Many of these obligations, however, are clearly tailored towards traditional telecommunications services and would be hard to comply with for providers of Internet communications services like Gmail. But once a particular service was qualified as a telecommunications service, these obligations apply nonetheless, and OTT providers are facing a risk of regulatory action such as monetary fines and/or an order to stop providing the service to German customers.
4. What else is happening in the OTT policy discussion?
OTT providers should closely follow the current national and EU-wide policy initiatives to determine the suitable regulatory framework for OTT services. For example, this week the European Commission closed a consultation where it had asked for industry input on whether and how to integrate such new services into the existing telecoms regime. On a national level, BNetzA had also facilitated a public discussion on this topic, e.g., by holding an international regulatory conference this October. As a starting point, these discussions deal with the categorization of OTT services within the existing definitions of a “telecommunications service” (or, respectively, an ECS). This is where the Cologne court’s decision now made an impact of its own. Furthermore, however, the even more important part of the discussion will then be on the merits of a potential OTT regulation, i.e., which elements of existing telecoms regulation can (and shall) be applied to OTT services, and which parts cannot—or, in other words: Will the telcos’ call for “level playing field” regulation be heard?