International Journal of Communications Law and Policy

Workshop "Internet Telephony" at Marburg (Germany), June 5 to 6, 1998

 

Internet telephony in German and U.S. telecommunications law
by Till Huenermund, Julian Dominik Schraub & Michael Treviranus

 

Neither German nor American telecommunications law contains explicit regulations on Internet telephony. So there is the general question of whether the existing law is applicable to Internet telephony or not. German telecommunications law mainly consists of the Telekommunikationsgesetz (TKG) of 1996, while U.S. telecommunications law is laid down in the Telecommunications Act of 1996 (TCA), which amends the Communications Act of 1934. Although both acts are federal law, the German TKG contains the entire telecommunications law, leaving no regulatory competence to the Länder, whereas in the U.S. the TCA is only applicable in interstate matters.

Compared to the TKG, the TCA is more adaptable to new developments while the German law sticks to some rather narrow definitions. Furthermore, the U.S. regulations authority, the Federal Communications Commission (FCC) has more freedom in the application of the law than the "Regulierungsbehörde für Telekommunikation und Post" (RegTP), e.g. the FCC has the power to forbear from applying certain provisions of the TCA it deems unnecessary (Section 10), which would be hard to imagine under German law.

It is an important question whether an Internet telephony service provider (ITSP) needs a licence from the regulations authority. In the U.S. a license is usually not required. A certificate only needs to be obtained from the FCC for the construction or operation of lines (Section 214). There is a similar provision in Germany (§ 6 TKG, class 1 licence), but in addition to that, a special licence (a class 4 licence) is required for speech telephony services on the basis of self-operated telecommunications networks ("Anbieten von Sprachtelefondienst auf der Basis selbst betriebener Telekommunikationsnetze").

While it is clear that an ITSP running its own lines needs a certificate according to Section 214 TCA or a class 1 licence according to the TKG, the necessity of a class 4 licence depends on the interpretation of the terms mentioned above. In § 3 no. 15 the TKG defines speech telephony services as:

gewerbliche Bereitstellung für die Öffentlichkeit des direkten Transports und der Vermittlung von Sprache in Echtzeit von und zu den Netzabschlußpunkten des öffentlichen, vermittelnden Netzes, wobei jeder Benutzer das an solch einem Netzabschlußpunkt angeschlossene Endgerät zur Kommunikation mit einem anderen Netzabschlußpunkt verwenden kann.

A simplified translation of this term is:

commercial provision of the direct transmission of speech in real-time which allows every user to route a call to any other user via the public telecommunications network.

The only crucial point in this definition could be the term "real-time". Because of the low quality of speech transmission via the Internet, Internet has not been considered real-time transmission until now. However, since the Internet is constantly expanding and transmission speed increasing, real-time may have already been accomplished (or will be in the near future). After all, a completely instantaneous transmission is physically impossible, which is why the term real-time in this context can only mean that the users can communicate as if they were in the same room.

Another problem is that a class 4 licence is only needed if the carrier provides its service on the basis of a self-operated telecommunications network. According to § 3 no. TKG, a telecommunications network is all the technical facilities required for telecommunications services. The crucial point here is that an ITSP providing phone-to-phone Internet telephony only requires special Internet gateways, but does not need to operate lines of his own because he makes use of the Internet. Therefore you might argue that an ITSP does not run a network. However, according to the definition, even a single Internet server is the only facility an ITSP needs for his services. This point is still being discussed.

Therefore, in our opinion, a German ITSP needs at least a class 4 licence.

This has consequences for other topics, as well. According to § 19 TKG, only a class 4 licensee may be obliged to provide universal services in a certain area. Since, in addition to that, the licensee must have a market share of about one-third according to § 22 GWB (Gesetz gegen Wettbewerbsbeschränkungen), it seems unlikely that these provisions may become relevant for any ITSP in the future. However, an ITSP with a market share of more than 4% would have to contribute to the compensation paid to the provider of universal services. In the USA, an ITSP may be obliged to provide universal services regardless of its market share (Sections 214, 254) because the only condition is that a carrier has the capability to provide the requested universal service.

The next important question is whether local exchange carriers are obliged to interconnect with ITSPs, which is a vital point for the latter. The American TCA states very clearly that "all telecommunications carriers have the duty to interconnect" (Section 251). Since an ITSP quite naturally is a telecommunications carrier, there can be no doubt that ITSPs and local telephone companies must interconnect. The TKG also contains provisions (§ 36) for interconnection, but there is a duty to interconnect only for such persons that operate a telecommunications network. The question whether an ITSP operates a telecommunications network has been discussed above, and according to our results there, should be answered in the affirmative. Therefore there is a duty to interconnect with ITSPs for German telephone companies as well.

On the whole, both laws are not exactly designed to apply to ITSPs. Due to the flexibility of the TCA and the FCC's flexibility in its interpretation and application, the American telecommunications law is much better prepared to deal with new technologies in general, and Internet telephony in particular. Moreover, both laws pursue different models of regulation in general. While in Germany, new services may only be introduced after long and possibly expensive proceedings, the American policy is that new services shall be tried out in the first place, and the FCC intervenes only if problems occur. Naturally, the American policy also encourages rapid introduction of new technologies. Nonetheless, the German telecommunications law is also suitable to be applied to Internet telephony, so long as the special requirements of the Internet telephony are properly regarded. In conclusion, there is still room for improvement.