Information from the Commission - Status of voice communications on Internet under Community law and, in particular, pursuant to Directive 90/388/EEC
Date: 1998-01-10
Institutions: European Commission
Subjects: freedom to provide services, restriction on competition, telephone, trade licence, transmission network

C  6/4

EN

Official  Journal  of  the  European  Communities

10.  1.  98

Status  of  voice  communications  on  Internet  under  Community  law  and,  in  particular,  pursuant
to  Directive  90/388/EEC

(98/C  6/04)

(Text  with  EEA  relevance)

Regulatory  position  of  voice  communications  on  Internet

Directive  90/388/EEC  on  competition  in  the  markets  for
telecommunications  services  (OJ  L  192,  24.  7.  1990,
p.(cid:216)10)  defines  in  detail  the  service  which  the  Member
States  may  continue  to  reserve  to  their  telecommuni(cid:220)
cations  organisations.

According  to  Article  1  of  Directive  90/388/EEC  "voice
telephony  means  the  commercial  provision  for  the  public
of  the  direct  transport  and  switching  of  speech 
in
real(cid:220)time  between  public  switched  network  termination
points,  enabling  any  user  to  use  equipment  connected  to
to
such  a  network 
communicate  with  another  termination  point’.

termination  point 

in  order 

set  out 

On  20  October  1995 
the  Commission  published  a
communication  to  the  European  Parliament  and  the
Council  on  the  status  and  implementation  of  Directive
90/388/EEC  on  competition  in  the  markets  for  telecom(cid:220)
munications  services  (95/C  275/02,  OJ  C  275,  p.  2)  (the
the  Commission’s
communication).  This 
approach  on  the  implementation  of  the  definition  in
Article  1  of  Directive  90/388/EEC.  Since  then  due  to
the  development  of  specific  software 
it  has  become
possible  to  code,  compress  and  transmit  voice  communi(cid:220)
cations  in  such  a  way  that  it  has  become  viable  to  send
them  via  the  Internet  to  other  Internet  subscribers  using
the  same  or  interoperable  software  and  via  gateways  to
standard 
the
Commission  should  therefore  adopt  a  supplement  to  the
communication  on  these  services,  often  described  as
"Internet  telephony’.

telephones.  This 

is  a  new 

issue  and 

The  present  notice,  which  concerns 
exchange 
voice 
Internet(cid:216)(˛)(cid:216)(ˇ),  adresses  two  key  regulatory  questions:

communications 

two(cid:220)way
the
via 

the 

of 

(˛)(cid:217)Applications  which  allow,  for  example,  stored  data  (such  as
Web  pages,  e(cid:220)mails  or  voice  mails)  to  be  retrieved  in  spoken
form  are  not  considered  by 
they  are
considered  to  be  new  multimedia  services,  notwithstanding
the  voice  element  within  the  overall  service.

this  notice,  as 

(ˇ)(cid:217)This  notice  does  not  consider  the  situations’  where  the
Internet  is  only  used  to  dial  up  a  call(cid:220)back  operator  in  order
to  set  up  a  telephone  call  via  the  public  switched  telephone
network  (PSTN).  The  service  provided  by  the  call(cid:220)back
operator  would  however  be 
separate
assessment  under  the  voice  telephony  definition.  If  that
call(cid:220)back  operator  also  provided,  in  addition  to  switching,
direct  transport  of  speech  on  own  or  leased  infrastructure,
then  it  would  fall  within  the  category  of  voice  telephony
providers.

subjected 

to  a 

-(cid:217)firstly,  whether  such  services  in  the  run  up  to  the  full
liberalisation  of  voice  telephony  services  and  telecom(cid:220)
munications  infrastructure  from  1998  are  already  in
the  liberalised  area,  following  an  assessment  under
the 
in  Directive
90/388/EEC,

telephony 

definition 

voice 

-(cid:217)secondly,  to  what  extent  should  those  elements  of  the
for  1998(cid:216)(—),  which  are
regulatory 
applicable 
telephony
services,  be  applied  to  voice  communications  services
provided  over  the  Internet.

the  provision  of  voice 

framework 
to 

Categories  of  Internet  telephony

In  examining  issues  associated  with  Internet  telephony,
this  notice  considers  in  particular  situations  where  users
are  connected  to  the  Internet  via  public  switched  (fixed)
network  termination  points  in  order  to  communicate  as
opposed  to,  for  example,  dedicated  connections  or  other
means  not  using  such  termination  points.  Within  this
focus,  three  distinct  categories  of  voice  communications
making  use  of  Internet  can  be  distinguished  from  the
point  of  view  of  the  user:

-(cid:217)computer  to  computer  voice  services:  voice  communi(cid:220)
cations  transmitted  via  the  Internet  between  the  PC
of  one  user  and  the  PC  of  another  (both  users  using
modems,  compatible 
loudspeakers  and
microphones  to  communicate),

software, 

-(cid:217)computer/phone  voice 

services:  voice  communi(cid:220)
cations  transmitted  via  the  Internet  between  a  PC  of
one  user  (with  modem,  software,  loudspeaker  and
microphone)  and  another  user  using  a  traditional
telephone  connected  to  the  public  switched  telephone
network  (PSTN),  and

(—)(cid:217)In  addition  to  Directive  90/388/EC  (the  Services  Directive)
as  amended  in  particular  by  Directive  96/19/EC  (the  Full
Competition  Directive),  this  regulatory  framework  is  set  out
in  three  harmonising  measures,  namely,  Directive  97/13/EC
(the  Licensing  Directive);  Directive  97/33/EC  (the  Inter(cid:220)
connection  Directive);  and  Directive  95/62/EC  as  amended
by  Directive  97/.(cid:216).(cid:216)./EC  (the  Voice  Telephony  Directive)  on
the  application  of  open  network  provision  (ONP)  to  voice
telephony.

10.  1.  98

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-(cid:217)phone(cid:220)to(cid:220)phone  voice  services:  voice  communications
transmitted  via  the  Internet,  but  between  users  who
both  are  using  telephones  connected  to  the  public
switched  network.  In  this  case,  part  of  the  communi(cid:220)
cation  is  transmitted  via  packet  means  using  Internet
protocols  instead  of  fully  via  the  national  and  inter(cid:220)
national  public  switched  networks.

Assessment  under 
Directive  90/388/EEC

the  voice 

telephony  definition 

in

voice  service  is  ancillary  to  other  elements  of  the
Internet  service  (just  as  video 
is  not
considered  as  voice  telephony  today).  Internet  voice
will  as  a  general  rule  not  match  this  first  element  of
the  Community  voice  telephony  definition.

telephony 

Only  where  phone(cid:220)to(cid:220)phone  Internet  telephony 
is
marketed  in  the  European  Union  as  an  alternative
form  of  voice  telephony  service,  would  the  organi(cid:220)
sation  concerned  be  considered  to  be  making  a
commercial  offer.

Under  the  definition  of  voice  telephony  in  Directive
90/388/EEC,  voice  communications  via  the  Internet
could  only  be  considered  as  voice  telephony  if  each  of
the  following  criteria  are  met:

Similarly,  in  the  case  of  PC(cid:220)based  voice  communi(cid:220)
cations,  if  the  provision  of  a  dial(cid:220)out  facility  to  any
telephone  number  became  a  decisive  element 
in
service  providers  commercial  strategies,  they  could  be
considered  commercially  the  transport  of  voice,

- such  communications  are  the  subject  of  a  commercial

offer

- for  the  public

"commercial’  should  be  understood  in  the  common
sense  of  the  word,  i.e.  that  the  transport  of  voice  is
provided  as  a  separate  commercial  activity  with  the
intention  of  making  a  profit.  Consequently,  it  does
not  cover 
technical  non(cid:220)commercial
provision  of  a  telephone  connection  between  two
users.

simple 

the 

In  the  case  of  the  Internet,  while  the  provision  of
software  and  browsers  enabling  users  of 
such
software  to  send  and  receive  voice  communications  is
subject  to  commercial  offer  (often  pre(cid:220)installed  on
new  PCs),  in  most  cases  the  commercial  provision  of
the  transport  of  voice  is,  at  least  for  the  time  being,
not  the  principal  aim  of  access  providers(cid:216)((cid:209)),  and
Internet 
is  only  an  additional  feature
offered  by  Internet  access  which  is  chosen  by  the
customer  for  a  number  of  reasons,  sich  as  browsing,
e(cid:220)mail,  and  downloading  of  files  and  data,  etc.  In
other  cases,  the  necessary  software  has  been  acquired
by  the  user  rather  than  obtained  from  the  access
provider  to  which  they  subscribe.

telephony 

Given  that 
in  most  cases,  the  facility  for  voice
communications  is  only  one  part  of  an  integrated
Internet  service  offered  to  the  customer,  where  the

(ISP)  providing  access 

in  the  case  of  computer(cid:220)to(cid:220)computer  voice  services,
although  only  users  who  subscribed  to  an  Internet
the
service  provider 
Internet  and  who  use  compatible  software  would  be
able  to  use  the  Internet  for  calling  each  other,  it
could  be  argued  that  computer(cid:220)to(cid:220)computer  Internet
voice  is  provided  "for  the  public’  since  the  service
would  be  available  to  all  members  of  the  public  on
the  same  basis.

to 

However  computer(cid:220)to(cid:220)computer  and  phone(cid:220)to(cid:220)phone
voice  communications  transmitted  via  the  Internet,
whereby  any  necessary  conversion  of  the  signal  is
taken  care  of  by  the  organisation  offering  the  service,
would  meet  this  criteria,  since  such  services  are
available  to  all  members  of  the  public,  subject  to
them 
commercial
arrangement  with  the  organisation  concerned,

the  necessary 

entering 

into 

- to  and  from  public  switched  network  termination  points

"between  public  switched  network  termination  points’
means  that,  to  fall  within  the  reserved  area  up  to  the
dates  set  for  liberalisation,  the  voice  communication
service  not  only  has  to  be  offered  commercially  and
to  the  public,  but  also  it  has  to  connect  two  network
termination  points  on  the  PSTN(cid:216)((cid:210))  at  the  same

((cid:209))(cid:217)for  example:  America  On(cid:220)Line,  CompuServe,  Skynet,  Ping,
Atlas/Global  One.  Certain  service  providers  like  Globallink
do  not  essentially  offer  access  to  Internet,  but  specifically
offer  a  product  principally  focused  on  voice  communications
which  facilitates  their  transmission  via  the  Internet  from  a
telephone  as  well  as  from  a  PC,  and  are  not  to  be
considered  as  access  providers.

((cid:210))(cid:217)The  public  switched  network  is  not  formally  defined  in  the
Directive.  It  must  be  given  its  common  meaning,  i.e.  the
public  switched  telephone  network  (PSTN)  which  is  the
collection  of  switching  and  transmission  facilities  used  by  the
telecommunications  organisation 
the  normal
telephony  service.

to  provide 

C  6/6

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Official  Journal  of  the  European  Communities

10.  1.  98

from 

the  national 

time.  These  termination  points  are  those  defined  by
telephone
subscriber  numbers 
numbering  plan.  Consequently, 
the
to 
Internet  is  obtained  via  leased  circuits,  the  service
could  never  be  considered  as  voice  telephony,  even  if
the  call  terminates  on  the  public  switched  network.
This  would  be  true  whether  connecting  a  telephone
or  a  computer.

if  access 

If  the  Internet  user  can  only  call  other  Internet
subscribers  whose  computers  are  connected  via  a
modem  and  who  are  using  compatible  software,  then
this  is  also  not  "voice  telephony’  because  it  is  not
"enabling  any  user  .(cid:216).(cid:216).  to  communicate  with  another
termination  point’  in  the  sense  of  "any  user  to  any
user’.  However,  in  the  cases  of  computer(cid:220)to(cid:220)phone  or
phone(cid:220)to(cid:220)phone  Internet  voice  this  element  would  be
satisfied,

- it  involves  direct  transport  and  switching  of  speech  in

real  time

in 

to 

of 

Internet 

realtime(cid:216)((cid:211)).  According 

technology 
techniques) 

given  the  technique  used  for  the  first  voice  communi(cid:220)
cations  between  Internet  users  and  the  early  state  of
development 
(mainly
Internet
bandwidth  and  compression 
telephony  could  not,  originally  be  considered  to  take
place 
this  basic
technique,  the  voice  is  digitally  encoded,  packed  and
sent  by  a  user  from  a  termination  point  to  a  server
and  on  to  the  reception  server  which  in  turn  sends  it
to  the  receiver  equipment,  connected  to  a  termination
point,  which  assembles  the  packets  to  be  delivered  as
voice  via  the  loudspeaker.  The  time  period  required
for  processing  and  transmission  from  one  termination
point  to  the  other  is  generally  still  such  that  it  cannot
be  considered  as  of  the  same  quality  as  a  standard
real(cid:220)time  service.

This  would  be  true  whether  the  voice  communication
transmitted  via  the  Internet  is  between  two  PCs,
between  a  PC  and  a  telephone  on  the  public  switched
network  or  between  two  telephones.  Although  voice
communications  via  Internet  between  two  telephones
involve  two  conversion  stages,  these  communications
can  often  be  subject  to  less  delays  than  between  two
PCs.  However,  given  the  fact  that  part  of  the  trans(cid:220)
mission  is  over  the  Internet  (which  currently  has  only
one  class  of  services),  it  is  subject  to  unpredictable

((cid:211))(cid:217)Voice  mail  applications  accessed  via  the  Internet  would  fall
outside  the  definition  because  the  nature  of  such  services  is
that  the  voice  communication  effectively  does  not  occur  in
real  time.

congestion  risk,  making  it  difficult  or  impossible  to
guarantee  the  same  level  of  reliability  and  speech
quality  as  produced  by  the  PSTNs.

In 
cases  where  organisations  offering  phone(cid:220)
to(cid:220)phone  Internet  voice  are  guaranteeing  quality  of
speech  by  bandwidth  reservation  and  claim  them(cid:220)
selves  that  the  quality  of  the  service  is  the  same  as
circuit(cid:220)switched  PSTN  voice,  this  element  of  the
voice  telephony  definition  will  obviously  already  be
met.

voice 

In  summary  therefore,  the  Commission  considers  that
the  definition  of 
in  Directive
90/388/EEC  taken  together  with  existing  precedents
provides  good  guidance  for  assessing  the  regulatory
position  of  voice  communications  services  on  the  Internet
in  the  pre(cid:220)liberalisation  situation.

telephony 

These  services  cannot  for  the  time  being  be  considered  as
voice  telephony  in  the  sense  of  this  Directive  and  they
therefore  fall  already  within  the  liberalised  area,  before
the  deadlines 
full
the 
competition.  There  are  nevertheless  already  new  voice
communications  services  offered  to  the  public  making
use  of  Internet  technology.  The  situation  must  therefore
be  kept  under  review  in  the  light  of  technological  and
market  developments.

implementation  of 

for 

set 

Regulatory  consequences

Current  situation

- L i c e n s i n g

Internet  access  providers  now  typically  operate  under
a  data  transmission  or  value(cid:220)added  service  author(cid:220)
isation.

According  to  Directive  90/388/EC

-(cid:217)the  provision  of 

telecommunications 

services
other  than  voice  telephony,  the  establishment  and
provision  of  public  telecommunications  networks
and  other  telecommunications  networks  involving
the  use  of  radio  frequencies,  may  be  subjected  to
only  a  general  authorisation  or  a  declaration
procedure.  To  the  extent  that  Internet  Voice  is
considered  not  to  be  a  voice  telephony  service
a
within 
requirement 
licence  may
therefore  not  be 
imposed  on  Internet  access/
service  providers,

the  meaning  of 
for  an 

the  Directive, 

individual 

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-(cid:217)the 

or 

the 

linked 

scheme 

should, 

general 

authorisation 

(i.e. 
involved), 

specific  authorisation 

declaration
procedures  may  only  contain  conditions  which
to 
are  objective 
essential
requirement 
non(cid:220)discriminatory,
proportionate  and  transparent.  This  implies  that
no 
in
principle,  be  drafted  for  Internet  access/service
providers  which 
the  one
is  different 
applicable  to  other  data  transmission  providers.  In
any  case,  where  the  Internet  telephony  service  is
only  one  part  of  an  integrated  Internet  service
offered  to  the  customer,  where  it  is  ancillary  to
other  elements  of 
the
the 
telephony  application  would  be  subsumed  under
the  broader  authorisation  which  covers 
the
Internet  access  provider’s  operation  and  it  would
be  considered  disproportionate  to  require  Internet
access  providers  to  obtain  an  additional  author(cid:220)
isation,

Internet 

service, 

from 

-(cid:217)where  a  Member  State  wants  to  withdraw  or
refuse  to  grant  a  general  authorisation  for  the
supply  of  a  non(cid:220)reserved  service,  reasons  must  be
given  and 
for
appealing  against  such  a  decision(cid:216)((cid:212)),

there  must  be  a  procedure 

-(cid:217)the  relevant  authorisation  schemes  must  have

been  communicated  to  the  Commission.

The  Licensing  Directive,  which  enters  into  force  on  1
January  1998  further  details  which  conditions  may  be
attached  to  authorisations,  as  well  as  the  principles
licensing  procedures  should  respect.

- universal  service

To  the  extent  that  Internet  Voice  is  considered  not  to
be  a  voice  telephony  service  within  the  meaning  of
the  Directive,  no  contribution  can  be  required  from
Internet  access  providers.

Future  situation

As  shown  in  the  above  analysis,  the  regulatory  position
of  voice  communications  on  the  Internet  depends  on  an
analysis  of  the  actual  service  provided  as  regards  the
various  elements  of  the  definition  of  voice  telephony  in
Article  1  of  Directive  90/388/EEC.

The  current  position  of  voice  communications  on
Internet  under  Community  law  may  change  in  the  light
of  further 
technical  and  market  developments.  The
comments  received  by  the  Commission  show  that  at  least
to  a  limited  extent  key  elements  of  the  conditions  for

((cid:212))(cid:217)Detailed  provisions  are  found  in  Article  5  of  the  Licensing

Directive.

such  an  evolution  in  the  Community  approach  are  close
to  being  met,  namely:

-(cid:217)at  least  one  group  of  Internet  service  providers  are
starting  to  provide  a  service  whereby  an  Internet  user
can  connect  to  a  local  Internet  service,  log  on  with
his  PC  or  other  terminal  equipment,  input  the  desti(cid:220)
nation  telephone  number,  have  the  call  routed  over
the  Internet  to  any  telephone  number  (including  to
users  without  a  modem)  at  the  far  end  against
payment;

and

-(cid:217)the  use  of  the  Internet  (and  the  lower  consequent
tariffs)  are  a  decisive  driver  for  Internet  subscription
to  such  a  service  (whether  or  not  the  subscriber  is
also  taking  an  Internet  connection  to  a  PC  as  part  of
the  service  allowing  use  of  his  or  her  telephone).

Nevertheless,  additional  elements  of  quality  may  remain
to  be  satisfied.

When  all  the  criteria  of  the  voice  telephony  definition
are  satisfied,  those  Internet  service  providers  offering  a
dial(cid:220)out  service  to  any  telephone  number,  and  only
those,  could  then  be  considered  providers  of  voice
telephony 
law.  This
description  is  by  way  of  example  and  does  not  exclude
other  possible  interpretations  of  future  developments.

under  Community 

services 

This  could  have  significant  regulatory  consequences  for
the  relevant  undertakings:

- L i c e n s i n g

According  to  Article  3  of  Directive  90/388/EEC  and
Article  7(2)  of  the  Licensing  Directive,  Member
States  could  then  subject  the  operation  in  their  terri(cid:220)
tories  of  Internet  service  providers’  voice  telephony
services  to 
if  they
deemed  it  necessary.  However,  any  licensing  schemes
must  be  notified  to  the  Commission.

licensing  procedures 

individual 

In  any  case,  once 
some  voice  communications
services  on  the  Internet  can  be  considered  as  voice
telephony,  and  service  providers  be  subjected  by
certain  Member  States  to  individual  licences,  even  in
this  case,  both  Directive  90/388/EEC  and 
the
Licensing  Directive  stress  the  need  for  proportionality
regimes.
and 

non(cid:220)discrimination 

licensing 

in 

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Furthermore,  any  licensing  scheme  must  take  into
account  the  consumer  interest  to  be  able  to  choose
among  a  variety  of  services  and  operators,  notably
avoiding  disproportionate  or  discriminatory  charges,

- universal  service

the 

then 

If  in  the  future  Internet  voice  is  considered  voice
service  providers  concerned
telephony, 
would  fall  within  the  category  of  organisations  that
could  be  asked  to  contribute  to  universal  service
funding  after  markets  are  opened  to  full  competition,
in  accordance  with 
in
law  and  with  the  guidelines  on  the
Community 
costing  and  financing  of  universal  service  set  out  in
the  Commission  communication  of  27  November
1996  (COM(96)  608).

the  principles 

set  out 

In  a  majority  of  Member  States  this  issue  will  not
arise,  but  where  it  does,  Community  law(cid:216)((cid:213))  provides
a  framework  according  to  which  contributions  to
universal  service  may  be  required  from  organisations
telecommunications
available 
providing 
networks  and  publicly  available  voice 
telephony
services.

publicly 

The  imposition  of  burdens  relating  to  such  an  obli(cid:220)
gation  would  have  to  be  proportionate,  non(cid:220)discrimi(cid:220)
natory  and  transparent.  Proportionality  requires  that:

((cid:213))(cid:217)See  Directive  90/388/EEC  and  Directive  97/33/EC  of  the
European  Parliament  and  of  the  Council  of  30  June  1997  on
interconnection 
to
ensuring  universal  service  and  interoperability  through  the
application  of  the  principles  of  open  network  provision
(ONP),  OJ  L  199,  26.  7.  1997.

telecommunications  with 

regard 

in 

-(cid:217)double  contributions  to  universal  service  obli(cid:220)
gations  are  avoided.  Where  a  service  is  provided
which  relies  on  the  user  having  a  connection  to
someone  else’s  network,  care  will  be  needed  to
two
ensure 
contributions:  one  from  the  PSTN  operator  and
another  from  the  service  provider,  even  if  the
service  offered  involves  voice  telephony,

regulators  do  not  collect 

that 

elements  necessary 

-(cid:217)the  cost  and  effort  required  to 
for 

identify  the
relevant 
calculating
universal  service  contributions  do  not  represent  a
disproportionate  burden  on 
the  organisation
concerned  in  relation  to  the  impact  of  its  activities
on 
the
Member  State  concerned.  There  could  be  a  real
risk  of  substantial  barriers  being  created  to  the
provision  of  an  innovative  service,

the  provision  of  universal  service 

in 

- further  obligations  stemming  from  the  ONP

l e g i s l a t i o n

Once  some  voice  communications  services  on  the
Internet  can  be  considered  as  voice  telephony,  if
providers  of  such  services  were  to  enjoy  significant
market  power  as  defined  pursuant  to  Article  2  of  the
proposed  amendment  to  the  Article  100(a)  Voice
Telephony  Directive  now  being  discussed  before  the
European  Parliament  and  Council,  they  would  be
subject  to  the  relevant  provisions  set  out 
in  this
Directive.

The  need  for  periodic  review

The  Commission  will  review  the  scope  of  this  notice
periodically  and  at  latest  before  1  January  2000.