This article appeared in the September, 2005 edition of Business Communications Review
It has been a couple of rough months for the EU: The French and Dutch citizenry shunned their governments’ pleas and voted against the adoption of the EU Constitution in numbers that surprised most observers. The Berlin/Paris alliance is weakened with Germany facing early federal elections in September, which incumbent Chancellor Gerhardt Schroeder will most likely lose. On the other side of the Rhine River, President Jacques Chirac is weakened; the new French government caused an outcry when it announced the sale of some of its shares in the telecommunications incumbent France Télécom to cut state debt. Meanwhile, Britain suspended legislation to set up a referendum on the new EU Constitution, putting it at odds with Germany and France, who have called for the ratification process to continue.
Need For EU-wide Rules
What does this uncertainty mean to the telecommunications industry? It remains to be seen whether the anti-EU Constitution trend will slow the EU’s economic growth. Some European experts argue that it won’t. After the referenda, many European bureaucrats behaved as if nothing had happened, stating that the French and Dutch voters "got it wrong." Similarly, some maintain that EU skepticism, as it was voiced in France and the Netherlands, is "throwing the baby out with the bathwater."
Of course, the European Commission has been at the center of criticism, rejection and ridicule for years--in an almost time-honored fashion by now, particularly in Britain. This has, over time, created an anti-Commission groundswell that has taken its toll on concerns unique to the Commission: the drafting of legislation and the policing of legislative implementation, i.e., acting as "guardian of the [EU] treaty."
Today, telecommunications is an industry in dire need of the kind of legislative resolve that marked the climate of the early 1990s and created a liberalized and almost single European telecommunications market. Legislative initiatives are now not being taken, or are being shelved because of political pressure. National and EU officials frequently argue that certain member states’ attitudes do not allow "strong [pan]-European visibility" at this time.
This boiling of national interest and fears could prevent necessary actions from the European Commission. Telecommunications is an area in which it is to Europe’s economic advantage to adopt common approaches to new technologies, much as it did with the mobile standard GSM. In the 1980s and 1990s, the European Commission, first and foremost, drove the issues and the agenda, as well as the legislation. And it was a decade in which the United States was most supportive and benevolent towards Europe--expressed in breakthrough agreements in trade and competition law.
One example of a potential missed opportunity in today’s regulatory environment is the voice over IP (VoIP) initiative of the European Commission, which has been lingering for months. While the wheels of the EU bureaucracy spin, others are seizing the initiative and passing rules that will shape the VoIP industry globally for years to come.
For example, the FCC’s recent E-911 decision will have a serious impact on 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 U.S. and those in Europe--both are covered by the regulations.
In practice, this could affect European carriers who have VOIP clients in use in the U.S., or "nomadic" clients from Europe who are using VOIP in the U.S. Presumably, these clients must comply with the FCC’s E-911 decision. The same is true for the FCC standards for VOIP under US "Communications Assistance for Law Enforcement Act" (CALEA) that apply to all VoIP providers. Meanwhile, there is no "European" FCC in sight that can step in and develop EU-wide standards for emergency services over VoIP or law enforcement assistance.
Traffic Data Retention
At the same time, the European Commission is losing its grip on another issue, namely mandatory traffic data retention. In an effort to appease law enforcement, the EU Ministers of Justice and Home Affairs are on the way to reaching a compromise on the EU-wide retention of traffic data to fight crimes.
Undoubtedly, retention of traffic data is an invasive activity that interferes with the private life of all 450 million people in the European Union countries. Carriers, service providers and ISPs must store vast amounts of data, just in case law enforcement needs it. So far, only two among the 25 EU Member States have actual traffic data retention legislation as the law of the land: Ireland and Italy. General data retention legislation has been adopted, but not implemented, due to diverging interests and political tugs-of-war, in France, Denmark and Spain.
The debate on the mandatory data retention issue has gained an unforeseen momentum since the terrorist bombings in London. Now, with the UK in the chair of the EU Presidency, the European Commission is hastily stitching together a proposal on EU-wide traffic data retention to keep the EU Presidency happy and to counter lingering arguments that the European Commission is not doing enough to fight terrorism.
Hardest hit by the new proposal will be mobile telephony operators. If the proposal is adopted, they must store all SMS traffic data for one whole year and keep detailed location data for the same time period, including mapping cell IDs to the geographical location of the caller.
The Commission also would require ISPs to store all IP addresses, the MAC address, username, e-mail addresses and a log file of every sent and received e-mail for six months. Public fixed telephony providers are not much better off. They must store "the calling telephone number," "name and address of the subscriber or registered user," "the date and time of the start and end of the communication," and "the telephone service used" ("voice, conference call, Short Message Service, Enhanced Media Service or Multi Media Service") for 12 months.
A host of questions remain open: for instance, whether incomplete calls – i.e., ring/no answer - must be stored and how. On a more general level, it remains to be seen how these requirements will mesh with individuals’ rights and each country’s laws on data protection, which are so much cherished in the EU and are promoted by it as a model for the world (see BCR, September 2003, pp. 56-57).
Finally the compensation rule in the proposal contains another bone of contention. It states that "service and network providers offering public communications will receive an appropriate compensation for demonstrated additional cost they have incurred in order to comply with the obligations imposed on them as a consequence of this Directive." It is anyone’s guess what "appropriate compensation" is and who will benefit from it. Who knows--maybe some EU member states deem it "appropriate" to pay nothing to the carriers who, under the retention rules, must play deputy sheriff and store the traffic data to serve the needs of law enforcement.
Harmonization Efforts May Fizzle Out
What we will probably see is a turf battle between the EC, the EU Council (the body representing the national governments), 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 flex their muscles.
The French and Dutch votes could also lead to a split between those countries seeking a harmonized approach to telecom policy and those wanting to go their own ways (or "Europe at different speeds"). The data retention proposal of the Commission is a good example of this potential development. All EU Member States must transfer the retention requirements into their national laws within 15 months. This means that, if (optimistically speaking), the Directive is adopted next month, the implementation deadline would be March 31, 2007. If the proposal is bogged down at the European Parliament, it could be much longer.
Until then--and probably even longer if Member States are lagging behind with the implementation, or EU or national courts get involved--there won't be any EU-wide data retention standard in Europe. A "Europe at different speeds" could make it difficult for service providers to delivers innovative services, such as VoIP, that cross national boundaries.
Dr. Axel Spies is a German attorney at Swidler Berlin LLP, Washington DC, focusing on international telecommunications and data protection issues.
This article merely summarizes the law or rules discussed and should not be relied upon as legal advice.
©2005 Swidler Berlin LLP
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.