A call for regulation in digital technologies and Over-the-Top (OTT) services

The explosion of digital services delivered via telecommunication networks is creating a challenge for the old regulatory framework. Voice, text, photos and videos are offered by OTT (Over-the-Top) services via the availability of connectivity services by network operators on the Internet. We are talking about Skype, WhatsApp and Google on our smart phones, which can offer communication systems to costumers at a very low cost with extremely handling software.

Some problems arise by confusing terms and conditions, a lack of availability concerning emergency services and blurred personal data protection for users and end-users. This regulatory asymmetry is causing a significant distortion in market competition because Electronic Communication Providers are bearing the cost of this conflicting regulation. Our key question is: how should the regulation of Over-The-Top (OTT) digital services be managed in the Internet age?

Over-the-Top Services (OTT): Definition and Market Perspective

With Over-the-Top (OTT) we define an application or service that provides content over the internet distributing streaming media, meanwhile bypassing telecommunication services or broadcasting television platforms.

To have a broader idea, VoIP (Voice over the Internet Protocol) services across devices are constantly growing worldwide from 572 million in 2013 to over 1.5 billion at the end of 2018. For instance, WhatsApp is expected to increase VoIP to allow use for its 500 million active users.

Overall, it is a big threat for telecom operators by lowering their income from calls and SMS services; nevertheless, this is very convenient for users and consumers by expanding their product choice. In the EU, legislation to engage appropriate market regulation are almost obsolete, threatening the public interest as well failing to adequately protect consumers in a framework of distorted competition (Walden, 2013, Chapter No.4).

Regulation and Legislation in EU: State of the Art

For telecommunications regulation in EU, we can start by mentioning the New Regulatory Framework (NRF) 2002/21/EC. This formula is required for all forms of communication or transmission technology. The old concept of telecommunication has become obsolete, so we are approaching new definitions such as:
  • Electronic Communication Services (ECS);
  • Audiovisual media services (AMS);
  • Information society services (ISS); and
  • Electronic Commerce Directive (ECD) which includes services that are more than ‘wholly or mainly in the conveyance of signals’.
Based on the above, OTTs do not consist in a ‘conveyance of signals’ which requires a transmission service that users must subscribe or have access to. To use a real example to explain this paradox, e-mail services provided by telecommunication operators belong to ECS, whilst email services supplied by OTT providers belong to ISS. From a consumer’s point of view, however, this service is the same.

As we can observe, the current state of the art is quite complicated, and the EU has the responsibility to shed light on the current scenario (it’s out of the scope of this article to discuss international regulation with OTT. To investigate this further I recommend the reading ‘An Over-The-Top Approach to Internet Regulation in Developing Countries’).

How Should the Regulation of Over-the-Top (OTT) Digital Services Be Managed in the Internet Age? Proposed Solutions

In seeking a solution to this we can identify three main steps:
  • The assumption ‘conveyance of signals’ in ECS from the Framework Directive should either be modified or deleted. We should pursue a new definition that includes services with OTT, digital services provided for free as well as traditional calls with SMS/MMS messaging;
  • The General Data Protection Regulation (GDPR) should represent an alternative to resolve this challenge by introducing several obligations described in the E-Privacy Directive (EDP). To be precise, the GDPR does not exclude ECS from its scope, so both the GDPR and EDP are referring to ECS. This double regime causes overlaps, uncertainty and a lack of transparency for operators and users.
  • Security obligations and guarantees (e.g. emergency calls, sector specific privacy rules, number portability, etc.) provided by the Framework Directive to telecom operators should be maintained and incorporated into a new horizontal instrument. Providing horizontal guarantees to consumers and preventing regulatory arbitrage might be fundamental to restore fair competition between telecom operators and OTTs.
Finally, some scholars sustain that if network operators are suffering financial losses due to consumers switching from traditional services to OTTs – in absence of an immediate and proportionate measure to fix this situation – they could invest in market opportunities such as network sharing and making partnerships with providers.

A recent development with the proposal for an e-Privacy Regulation

With this proposal the European Commission has provided an updated perspective through the Privacy and Electronic Communications Regulations with the aim to reinforce trust and security in the Digital Single Market and provide more structure to the legal framework on e-Privacy.

The main scope of this proposal is to keep up with the dramatic development of IT services in the last few years alongside the recent modernization culmination in the adoption of the GDPR in 2016 which became effective in May 2018. Some key points of the Commission’s proposal include: a) new players such as WhatsApp and Skype shall guarantee the same level of confidentiality as traditional operators; b) stronger rules in electronic communications through directly applicable regulation; c) privacy to be guaranteed both for communications content and metadata (e.g. time of call); d) once consent is given for data to be processed the operators can create additional services; e) a more friendly approach with non-privacy intrusive cookies; and f) increasing protection against spam and more effective enforcement.

In recent times we have also experienced serious security breaches for WhatsApp’s users because a spyware used infected phone calls to take over the functions of operating systems. The company is addressing this issue and has alerted the government authorities; nevertheless, year by year we experience a primary necessity for a call for regulation in OTT services to protect its users.

Marco is postgraduate in Law (cum laude) from the University of Turin (Italy). He holds an Advanced LL.M. in Law and Digital Technologies at Leiden University (The Netherlands) awarded LExS Scholarship 2014. He is now based in Bristol working in finance. He's currently attending the second year of the GDL with a part-time course at the University of Law in London Bloomsbury, with the aim of becoming a commercial lawyer in the field of IT and Data protection.

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