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Homework To Do In Europe

By William B. Wilhelm, Jr., Esq. & RA Dr. Axel Spies


There is more than mere cleanup work to be done for the thousands of EU officials who return to Brussels after their August vacation period. Politically, the EU Constitution remains in limbo after being rejected by the French and Dutch. Britain suspended legislation to set up a referendum on the new EU Constitution, putting that country at odds with Germany and France, both of whom have called for the ratification process to continue. The political axis of Berlin/Paris is weakened, with Germany facing early Federal elections in September that incumbent Chancellor Schroeder will most likely lose. France is facing the highest number of bankruptcies it has experienced in nearly 10 years and is not very keen to support the current U.K. Presidency of the EU to open the markets " l'americaine" (American style).

What does this uncertainty mean to the telecommunications industry and, in particular, to VoIP? It remains to be seen whether the anti-EU Constitution trend will actually slow the EUs economic growth. Some European experts argue that that it wont. Of course, it is the European Commission that has been the subject of criticism, rejection, and ridicule for years, particularly in Britain. That situation has created an anti-Commission groundswell that has taken its toll on performance areas that are unique to the Commission: the drafting of legislation and the policing of legislative implementation, i.e., acting as guardian of the treaty. Today, telecommunications is an industry in dire need of the same kind of legislative resolve that marked the early nineties and which created a liberalized and almost single European telecommunications market. Now, legislative initiatives are being shelved. Certain Member State attitudes, as one hears frequently from European officials, do not allow strong European visibility at this time.

This combination of national interests and fears could prevent necessary intervention from the European Commission. New areas in telecommunications that could have become gateways to new and sustained growth could, instead be squandered due to Member State resistance. Such is the case with the well-intentioned Voice over IP initiative of the European Commission that has been languishing for months. Telecom is an area in which it is to Europes economic advantage to adopt common approaches to new technologies, much as it did with the mobile standard GSM. In the 1980s and 90s the European Commission, first and foremost, drove the issues and the agenda, as well as the legislation.

Now, others seize the initiative and pass rules that will shape the VoIP industry globally for years to come. The FCCs E-911 decision will have a serious impact on many EU regulators who have not yet touched the issue of emergency access and VoIP. In its decision, the FCC does not distinguish between Interconnected VoIP Providers that are located in the United States and those that are located in Europe both are covered. At this time, there is no European FCC in sight that can take on the task of developing EU-wide standards for VoIP. Instead, the European Commission is considering expanding the European Television without Frontiers Directive that promotes European industry (and suggests production quotas) to include services provided over the Internet. What does this mean? one observer joked, Will we be required by the EU to make every second VoIP call in French?

At the same time, the European Commission is losing its grip on another issue: mandatory data retention. In an effort to appease law enforcement officials in the wake of the London bombings a few weeks ago, the EU Ministers and Justice are trying to reach a compromise on the EU-wide retention of traffic data. In fact, the compromise, if it is adopted, does not deserve this name.

It does not unify the retention regime within the EU. Since the individual EU Member States will be authorized to deviate from the general 12-month period that the Ministers of Justice suggest, there will be no EU-wide retention period. This will render it more difficult for U.S. carriers and ISPs to provide innovative EU-wide non-location-based services, such as VoIP. They must store traffic data (whatever the definition for this term will be regarding VoIP) much longer than generally needed by responsible operators for business purposes. It is also a question as to whether that as a first step only providers of telephony services will be required to store data, while later ISPs would also be covered by this obligation. This two-step approach is in contrast with the EUs principle of technology neutrality under the EU Electronic Communications Framework. It also raises several currently unresolved questions, such as if and when providers of VoIP will be classified as telephony services. In the ory, at least, the EU Council, the body representing the national Governments, could adopt a mandatory data retention measure at its meeting in October, thus bypassing the European Commission. However, if this happens, the European Parliament will likely step in, arguing that the measure needs the consent of the Parliament and cannot be adopted without it. The Parliament has argued that the Council lacks jurisdiction in the area of data retention to adopt retention periods via a Framework decision. If this conflict is not resolved by negotiations, the measure could end up at the European Court of Justice.

What we will probably see more often is a turf battle between the EC, the EU Council, the EU Parliament, and the national regulators. After the rejection of the EU Constitution in France and the Netherlands, the balance is tipping more towards the national regulators who might now see themselves in a stronger position. The rejection could also lead to a split between those countries seeking a unified approach to telecom policy and those wanting to go their own way Europe at different speeds. This could make it difficult to provide innovative services, such as VoIP, that cross the national borderlines. IT

William B. Wilhelm is a partner and Dr. Axel Spies is a Foreign Legal Consultant and Rechtsanwalt at the law firm of Swidler Berlin LLP in Washington, D.C. and New York City. For more information, please visit The preceding represents the views of the authors only and does not necessarily represent the views of Swidler Berlin or its clients.

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