Is Skype a Telephone Operator? France to Investigate

French regulators said Tuesday that they had asked prosecutors to investigate Microsoft’s Skype unit over its failure to register as a telecommunications operator in accordance with local law, raising the question of what constitutes a telephone company in the age of Internet-based communications.
The regulator, known by its French acronym Arcep, said that it had, “on several occasions," asked Skype Communications, which is based in Luxembourg, “to declare itself an electronic communications operator,” and that the company had not acted.
A company acting as a telecommunications operator incurs certain obligations, the French agency said, notably that “of routing emergency calls and putting in place a means for allowing legal wiretapping.”
Skype and other Internet phone services use a system called voice-over-Internet protocol, or VoIP, to enable conversations and video meetings over the Internet. The service, which Microsoft acquired from eBay in 2011 for $8.5 billion, says it has hundreds of millions of users worldwide.
The French action comes at a tricky time for Microsoft, which has come under pressure from digital rights groups over how data about users collected from Skype are shared with advertisers and law enforcement agencies.
Arcep noted that people could make Skype calls from a computer or smartphone. “In effect," the regulator said, “this service constitutes furnishing a telephone service to the public.”
French law does not require that a telecommunications operator obtain administrative authorization, Arcep said, but “only a prior declaration.” Failure to follow the law is a criminal offense, however, and Arcep said it was turning the matter over to Paris prosecutors.
Microsoft said that it had shared with the French authorities its view “that Skype is not a provider of electronic communications services under French law” and that it would “continue to work with Arcep in a constructive fashion.” Robin Koch, a Microsoft spokesman in Brussels, declined to comment further. The Paris prosecutor’s office did not immediately respond to a request for comment.
The regulator’s announcement was the latest in a series of actions aimed at global communications companies. On Jan. 20, a study commissioned by the government of President François Hollande proposed instituting an Internet tax on the collection of personal data. Also that month, a French court ordered Twitter to identify people who posted racist messages.
French media and telecommunications companies have also argued that they are unfairly subsidizing Internet services that use their content and bandwidth without sharing the revenue. French officials reacted sympathetically earlier this year when one Internet provider, Free, sought to put pressure on Google to pay for the bandwidth it uses by blocking ads.
Current European Union law does not consider Skype and similar Internet-based services to be telecommunications companies. The office of Neelie Kroes, the E.U. commissioner for digital issues, did not immediately respond to a request for comment.
Jean-François Hernandez, a spokesman for Arcep, said that the agency started demanding Skype’s compliance in April 2012, but that it had refused to cooperate.
Mr. Hernandez said that there were questions at the European level about the regulation of these companies, especially on data privacy and taxation, but that the agency’s dispute with Skype had nothing to do with that.
“It’s about the fact that when you act as a French operator you have to register as an operator,” he said.
Mr. Hernandez acknowledged that once a company was registered as a French operator, its French earnings would be subject to local taxes. “But you shouldn’t transform this into a tax story,” he said. “This agency has nothing to do with taxes.”
Stéphane Richard, the chief executive of France Télécom, the former state monopoly, has been critical of what he describes as an unfair advantage enjoyed by Skype and similar companies over the established companies that are required to transport rivals’ data without sharing in the revenue.
France Télécom said Tuesday: “We believe that this represents a positive first step toward a more balanced regulatory environment that encompasses the activity of over-the-top players.”
By david Jolly

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