Is Skype Illegal in France?

Skype’s VOIP free telephony service used by millions around the world to make free business and personal calls via the Internet, appears to be illegal in France.

Skype-Out … literally, ‘shock’, ‘horror’ say millions of users. Illustration: acknowledgements to l’Express

The headline on a piece by Emmanuel Paquette, a technology writer with the weekly magazine l’Express February 22 says: “Skype the Internet telephony service, does not comply with French law and operates illegally.”

Paquette writes on his blog that the company, whose European subsidiary is now based in Luxembourg, had “not deigned to respond” when formally asked by the regulator, for a mandatory declaration required of all telecom operators offering service in France.

Arcep-Autorité de Régulation des Communications Électroniques et des Postes, the French telecoms regulator, had requested Skype to confirm that it complied with three requirements: arrangements for the interception of calls for security reasons (phone-tapping), provisions for the routing of emergency calls ( in a prominent notice Skype’s website makes it very clear that its service cannot be used for emergency calls), and compliance with local and mobile number portability (SkypeIn).

(LNP – fixed lines and FMNP – mobile phone lines, is the ability of a telephone customer to retain their local number if they switch to another local supplier.)

VOIP services are provided by more than just Skype and in France this list includes at least 26 others. The VOIP Service Providers list suggests that the local regulator may have bitten off more than it can chew in this fight.

By its nature Internet users are not restricted to VOIP from a service provider in their country of residence but in theory can access those offered by others.

This means the regulatory problem has, in Europe anyway, become an EU one. The present European telecoms authority is the European Telecom Market Authority (more properly known as the European Electronic Communications Market(s) Authority or EECMA)

Until now there has been only loose cooperation between national regulators grouped in the “European Regulators Group”, which in turn was a hangover from the days of the legacy, state-owned, posts and telecoms authorities.

Skype, which hastened to close down its French office in 2007, may be betting on the fact that the embryo EU body designed to regulate for all EU member states – the new package framework must be implemented by June 2011 – will effectively inhibit any ongoing national investigations. So that by the time the new body is fully operational and its directives incorporated by all member states, the threat to its VOIP business in France will have passed.

The l’Express report comes ahead of plans by Skype to make an IPO in the US, a move that requires the company to lodge a prospectus disclosing among other aspects, opportunities and threats to its future business.

Skype S.à r.l filed such a prospectus with the US Securities and Exchange Commission on August 9, 2010 noting that: “Some Internet access providers have additionally, or alternatively, contractually restricted their customers’ access to Internet communications products (which would include Skype) through their terms of service. For example, SFR in France and Vodafone in Germany contractually prohibit their customers from using voice over the Internet protocol services on the Apple iPad 3G. T-Mobile in Germany and Vodafone in France and the United Kingdom have established special additional tariffs for voice over the Internet protocol…”

Furthermore and referring to the Universal Service Fund Skype’s filing said: “In certain countries, including the United States, France, Spain, Canada, Australia, India, Hong Kong, Taiwan, South Korea and Japan as well as in several states within the United States, the telecommunications regulations allow the authorities to require telecommunications providers to contribute to a universal service fund, or USF, that is imposed by law and applied through regulation to facilitate access to telecommunications services by all potential users…From time to time we have received, and may continue to receive, inquiries from regulators relating to the applicability of the USF to our paid products. If we were required to contribute directly to any USFs due to a change in laws or regulations or a change in interpretation of current laws or regulations, the cost of providing our products would increase.”

According to Emmanuel Paquette’s report, the French telecoms authority earlier notified Skype of its obligations under the Universal Service Fund in France at the same time that it raised the issue of compliance with the phone-tapping and other points mentioned above.

Skype reportedly did not react and Arcep in 2007 laid a complaint with the State Prosecutor. Formal investigations however were not completed because Skype decided to close its individual European offices, including that in France, and move control of all operations to its Luxembourg headquarters.

At the time ARCEP made clear it was not amused and warned Skype of the criminal sanctions that apply under French law.

According to Paquette’s report Arcep’s letter to Skype: “stressed that the penalty for any one ‘providing or planning to provide a public telecommunications service or market such service without first completing the formalities required is one-year imprisonment and a fine of 75,000 euros’ . The prosecutor’s office may now decide to resume investigations , interrupted until now, given Skype’s plan to seek a stockmarket listing (– more properly issue tradeable ADRs –) in H2 2011”.

However in late January 2011 Skype announced it would hold off on the IPO (reportedly expected to be worth between $750 million and $1 billion) until the second half of the year.

If the date is confirmed this would neatly coincide with the June 2011 deadline for the EU to begin setting the EU-wide framework for telecoms operations. This of course may mean that French prosecutor’s investigations will again be thwarted.

However Skype highlights another potential hazard it faces on the French market and one that applies in other countries such as Italy, Spain, Canada as well…. “As an operator, the Company could be required to finance the universal service. This service has three basic demands: provision of connections to a fixed telephone network at an affordable price, supply of a universal telephone directory and distribution of a printed phone directory, installation and maintenance of payphones on public property.”

The universal service is funded by contributions from all telecommunications operators but Skype has so far not participated, l’Express notes.

When the news of a threat to Skype broke February 22 Twitter users were quick to jump on it.

One Twitter user @Sandreene wrote: “Skype: Arcep has just confirmed to me that the referral of the matter was made in 2007 and it was archived after the service moved out of France . NO EVENT”

However in response Emmanuel Paquette, @empaquette the l’Express writer noted: “@Sandreene the risk still exists. It was recorded in the prospectus filed with the SEC in the US and dated November 2009”

Skype could not immediately be reached for a comment on the threat.

Story: Ken Pottinger (@FrenchNewsonlin)!

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