Although every owner of a smartphone uses them many do not know what an OTT communications service is and what its qualification as such implies. The term is hardly used outside the scope of specialized lawyers and regulators and even among stakeholders in the industry a comprehensive understanding of its characteristics may often be missing. The explanation that OTT stands for “over-the-top” hardly creates any further insight.
The following article explains the emergence of the term, shows how EU regulation addresses OTT providers, and illustrates the boundaries of regulation using a number of prominent examples.
The term OTT service is not a legally defined term but has emerged fairly recently to describe services that bypass traditional distributors and instead reach their users directly via the Internet. Insofar, it describes a large variety of services that may have little in common besides their channel of distribution. “Over-the-top” shall illustrate that the services ride over-the-top of the internet connection without the access provider being able to control their dissemination.
For example, traditionally, providers of television shows or movies were required to conclude a distribution agreement with a cable or satellite network to gain access to consumers. These consumers had little choice but to accept the decisions that its network provider (albeit probably bound by certain regulatory requirements) made. By contrast, today, television content can simply be offered to anybody with a sufficiently powerful Internet connection without any gatekeeper in place. Similarly, the emergence of Internet telephony – at least in theory – has made the need for number-based telephone contracts obsolete (although a lack of interoperability between apps, amongst other factors, still inhibits complete substitutability).
This brings us to a first important distinction: This homepage is dedicated exclusively to OTT communications services, i.e., the latter of the two examples mentioned above. This variety of services is also referred to as OTT-1 services. They allow users to communicate with each other and, thus, are always interpersonal in character. Being purely Internet-based services, communication takes place from app to app only. Examples are messaging, emailing, and Internet (video) telephony. Insofar, these services are in competition with traditional telecommunications services such as number-based telephony and SMS.
In contrast to this, OTT-2 services are characterized by the centralized provision of content to an indefinite and theoretically unlimited number of consumers. They include blogs, streaming, and website such as this one you are reading right now. While OTT-2 services may be subject to special regulation, European telecommunications law addresses exclusively OTT-1 (communications) services. Where this website refers to OTT services in general, it means the latter.
In the European Electronic Communications Code (EECC), OTT communications services are defined as so-called number-independent interpersonal communications services (see EECC Art. 2(no. 7)), which in turn represent a subgroup of interpersonal and, thus, also electronic communications services (see EECC Art. 2(no. 4)). This systematic classification should not be overlooked, especially when identifying the regulatory provisions relevant for OTT providers. The national laws are obliged to adopt this classification although their terminology may slightly differ. Please note: As OTT services now qualify as electronic communications services, they are not merely subject to the EECC but all laws that address such services.
Classic examples of OTT services are (video) telephony services and messengers such as Skype or WhatsApp, but also e-mail providers such as GMX or Gmail. In contrast, pure content providers (e.g., news portals, blogs, and other websites) or communication portals via which either no interactive communication takes place, or the communicator cannot specifically select his addressees continue to fall outside the scope of regulation under EU telecommunications law. Forum operators are therefore still not regulated insofar, nor are Twitter or other (micro-)blogging services.
However, there is a considerable grey area in between. Many social networks offer individual communications solutions in a package with other services. These are not likely to constitute a merely “subordinate ancillary function”, which would exempt them from regulation (see EECC Art. 2(no. 5)). In our estimation, service providers such as Facebook, LinkedIn, or Tinder will thus find themselves subject to regulation under telecommunications law in the EU. Furthermore, a wide variety of communications services can also be found in the ecosystems of the gaming industry: While Twitch chat is probably excluded from regulation due to its open character, which fails the criterion of interpersonality, private channels of the online service Discord are basically no different from a WhatsApp group. Gaming platforms such as Steam also offer individualised communications options that are in principle subject to regulation.
OTT communications services must be distinguished from content-related services. They are characterized by:
Whether a certain service falls under the new EU regulation, however, is not always a clear case. Statements by regulators and court decisions specifying the scope of regulation will need to be monitored closely in the next years.