In a seminal test case for over-the-top (OTT) regulation – the ECJ has been asked by a German court to decide whether internet-based email services, provided via the open internet, constitute regulated telecommunications services.

What happened?

In 2012, the German telecommunications regulator (Bundesnetzagentur, "BNetzA") called on Google to notify its Gmail (webmail) service as a regulated telecommunications service. Google refused to do so. After years of dispute, the Administrative Court of Cologne confirmed BNetzA's demand in November 2015. Upon appeal by Google, the Higher Administrative Court of North Rhine-Westphalia recently decided to refer the case to the ECJ for a preliminary ruling citing the authority of European law.

What is the issue?

OTT services such as webmail, pure peer-to-peer VoIP or messaging services which are provided over the open Internet (but do not consist mainly in the transmission of signals) were until recently not subject to telecommunication regulation under German regulatory practice. In contrast, services aimed at enabling communications that consist at least mainly in the transmission of signals are generally qualified as regulated services under the German legal framework for telecommunications. As a result, such services are subject to a number of (often burdensome) regulatory obligations. This includes, inter alia, a notification requirement as well as obligations concerning assistance to law enforcement, network and information security, telecoms-specific data protection, and consumer protection.

Given the growing importance of OTT services, BNetzA has changed its regulatory practice and qualifies certain OTT services as regulated "telecommunications services". The dispute between BNetzA and Google regarding the regulatory classification of the Gmail service is widely seen as a test case in this regard. Google argues that Gmail is provided over the open internet, does not itself facilitate Internet access, and does not control the transmission of signals in any way. Also, webmail services such as Gmail are generally offered free of charge. As a result, Google claims that Gmail should not be treated as a regulated telecommunication service. BNetzA, on the other hand, claims that Gmail consists in the transmission of signals over telecommunications lines due to the fact that Google operates mail servers (which are required, inter alia, for providing the sender/recipient information necessary for the routing of the mails) which constitute telecommunications systems.

The Administrative Court of Cologne sided with BNetzA. On appeal, the Higher Administrative Court of North Rhine-Westphalia has now decided to refer the case to the ECJ for a preliminary ruling. The court justifies this referral by the fact that the relevant definitions set out in the German Telecommunications Act are almost identical to those under EU law (Directive 2002/21/EC). As a result, the ECJ has the authority to interpret the relevant provisions.

The ECJ now has to decide whether internet-based email services, which are provided via the open internet and which themselves do not facilitate internet access, are to be considered as conveyance of signals on electronic communications networks as defined in Directive 2002/21/EC. In addition, the German court asked for clarification of the phrase "normally provided for remuneration".

What will happen next?

Given the heavy workload of the ECJ, it may take until early or even mid-2019 before a preliminary ruling is issued. Once this happens, the case will be referred back to the Higher Administrative Court of North Rhine-Westphalia which will– on the basis of the ECJ's opinion – pass its judgment. This judgment could then be appealed to the German Federal Administrative Court.

What is the impact of this case?

The Gmail case is widely seen as a seminal test case for the regulatory fate of OTT services. Webmail services are only a small fraction of the broad range of OTT services (eg instant messaging, video streaming , voice calling, etc.). As the courts are examining the applicability of the existing telecommunications regulatory regime to OTT services, the European legislators are working on an overhaul of the legal framework for electronic communications services. The proposed "European Communications Code" subjects OTT services to sector-specific regulation provided they qualify as "interpersonal" communication services.