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France Investigates Skype's Telco Status

French telecom regulator Arcep launches investigation into Skype that could have broad regulatory implications for Microsoft.

What's the difference between a telco and just a fun piece of software?

French telecommunications regulator Arcep has launched an investigation into the French version of Skype to answer that question.

The news is significant because if Arcep decides Skype is a telco, a host of regulatory and fiscal requirements will apply, which could create headaches for Microsoft and cut down on Steve Ballmer's smiley icons for a spell.

Arcep seems to have lost patience with Skype France (which is actually based in neighboring francophone Luxembourg) for failing to register as a telecom operator, despite its continual requests. In its official announcement of the probe, Arcep said that under local laws, Skype has certain obligations that include the routing of emergency calls and implementing the means required to perform legally ordered interceptions (wiretaps) if it is a telco.

[ British Telecom, Verizon and others are gearing up to compete with Amazon in IaaS. Read more at Amazon, Telcos Will Battle For Cloud Customers. ]

Arcep's statement points out that "the service allows Internet users located in France to call fixed and mobile numbers in France and around the world, using their computer or smartphone" and that a provider doesn't have to a get administrative approval to become an electronic communications operator in France. However, it must declare it will operate as such before it sets out its stall in the Republic. "A failure to comply with this obligation does, however, constitute a criminal offence," the statement concludes.

At least one press report says Arcep has been trying to get Skype locally to file the appropriate paperwork since April 2012.

Arcep's chairman has "apprised the Parisian public prosecutor of these facts," and that office will now decide if an offence has been in fact committed.

Arcep's move has drawn interest from around the world. According to a recent New York Times article, the news raises the question of "what constitutes a telephone company in the age of Internet-based communications." The Times pointed out that the action comes at a tricky time for Microsoft, which has come under pressure from digital rights groups over how user data collected from Skype is shared with advertisers and law enforcement agencies.

Microsoft told the Times that it had communicated with Arcep its view that Skype is in fact not a provider of electronic communications services under French law, and that it would "continue to work with Arcep in a constructive fashion."

Arcep's muscle-flexing may be part of a wider shift of France more closely policing -- and taxing -- U.S.-based Internet firms -- and, for example, starting to levy revenue charges on the collection of citizen data.

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