radiobruxelleslibera
Innocenzo Genna's blog on European telecom and Internet regulation & policies – @InnoGenna
What will change for European telecom networks: from copper based-networks to fiber revolution
Whether the new Electronic Code for electronic communications will encourage or frustrate network investments (you will soon read different opinions about), there is something fundamentally new in the telecom reform politically agreed today by the European Trilogue: for the first time in the history of European telecom regulation, investments in very high capacity networks will become a binding target for national regulators (together with competition, single market and consumer benefits):
“promote access to, and take-up of, very high capacity data connectivity, both fixed and mobile, by all Union citizens and businesses”.
The new Code, proposed by the European Commission in September 2016, marks a radical change compared to the previous regulatory framework in that it radically addresses the urgent need for enhanced infrastructure investments. It could appear something obvious considering the public ambition for more sophisticated connectivity but, in reality, you should remind that few years ago the European Commission took a different approach: in July 2012 the former Commissioner Neelie Kroes, in order to protect financial viability of traditional European telcos, intervened publicly to protect the access price of copper networks (i.e. the traditional telephony networks used for ADSL) causing the sector to continue to stay on these obsolete networks rather than massively investing into fibres. Kroes’ scope was to keep constant the cash flow of incumbents in times of financial crises and eventually encourage altnets to roll-out their own new network, but the consequence of such choice was dramatic in terms of industrial policy: European incumbents felt encouraged to continue to exploit old-fashioned copper networks as cash machines, while being less incentivised to roll-out new full fiber networks. It follows that various FTTH industrial plan were abandoned or downsized to FTTC (where fibers are extend only to the cabinets, and not up to the premises of users as in the case of FTTH). This trend was particularly evident in some countries where the local incumbent wanted to keep alive, as long as possible, the old copper networks (see Germany and Italy for instance). Kroes’ move was maybe understandable in terms of financial stability, also considering the fear that extra-UE telcos could take over European incumbent, but caused a delay in the roll-out of European fibers which is still reflected in the different figures of fiber deployment between EU and other regional areas (US, Japan and Korea).
To make more remarkable this policy change, today’s Code’s parameters defining very-high capacity networks are defined taking into account the characteristics of optical fibers:
‘very high capacity network’ means either an electronic communications network which either consists wholly of optical fibre elements at least up to the distribution point at the serving location or any type of an electronic communications network which is capable of delivering under usual peak-time conditions similar network performance in terms of available down- and uplink bandwidth, resilience, error-related parameters, and latency and its variation. Network performance can be considered similar regardless of whether the end-user experience varies due to the inherently different characteristics of the medium by which the network ultimately connects with the network termination point”.
The aim is to favor investments in networks entirely in fiber optics up to buildings (FTTH and FTTB), thus accelerating the replacement of old and obsolete copper networks. Needless to say, the drafting of such definition has been the target of furious counter-lobbying by that telco industry that preferred more vague terms in order to include back copper upgraded networks (FTTC and vectoring).
When will this fiber devolution take place? Despite today’s agreement in the Trilogue, further formal steps are still required: some parts of the Code are still agreed in principles, while details and recitals need to be defined. The formal approval by Council and Parliament may take place only after summer and then Member States will have 24 months to implement the directive’s provisions into national law. This means that the new rule will become effective only at the end of 2020. However, since we are talking of long-term investments, it is clear that investors have already got the right signal and therefore they will immediately favor full fiber investments right now.
How Mr. Zuckerberg avoided the trap of the European Parliament
Mr. Zuckerberg may have been surprised about how much complex the European political system is. Invited by the Chairman Antonio Tajani to meet the European Parliament in Brussels, he ended up confronting a very large number of MEPs of various parties and nationalities (many Germans, however) and an avalanche of questions, with many overlaps and repetitions. By participating to this collective interview, he had the opportunity to understand complexity, greatness and weakness of Europe, since the fragmentation of the questions submitted to him showed how much Europe is attentively looking at such issues, but at the same time it made impossibile a proper reply to every MEP of the panel. This situation allowed Zuckerberg to aggregate all questions into clusters so as to reply in generic way and to “cherry picking” the subject for which he was more prepared. At the end of the hearing some MEPs complaining for this result, but it was difficult to put the shame on the Facebook’s CEO – he had to escape and catch a flight, apparently, like an ordinary traveller. At the end of the meeting, it was decided that all questions submitted by the MEPs will be answered in writing – not an issue for Zuckerberg, legions of lawyers exist for this purpose.
Zuckerberg repeatedly apologized for the Cambridge Analytics scandal but he was very clear in affirming that Facebook’s policies have changed and that such leaks and unlawful data treatments will not happen again. He further dedicated quite much time to fake-news and political elections, an area where the European Union does not know what exactly to do and desperately needs Zuckerberg’s’ help. The questions submitted by the MEPs confirmed this fragmented scenario: while some MEPs were asking Facebook to take more responsibility on the subject, another (ECR) was rejecting the idea that the company should take decisions on that and it should instead be regulated! Zuckerberg made clear that the mistakes of the past (US elections and Russian influences) will not happen again and that a team of people is working on that, while making some important comments: Facebook can work on spam and fake accounts, but it cannot decide what is politically true or wrong: for this purpose, a network of external facts-checkers is needed.
Time was also dedicated to inappropriate content on Facebook (hate speech, racism content, bullying ecc). Zuckerberg rivendicate the improvements made in detecting and removing such content firstly by professional teams and more recently by AI technologies. “We’ll never be perfect but we can improve”. This means that legions of robots will be soon checking and evaluating what we post on Facebook, not sure if this is a good news.
Zuckerberg was evasive, also thanks to the little time left, about competition, taxation, platform regulation and compliance with GDPR. Too many complex questions requiring different conditions and context for an appropriate answer. At the end, the overall impression is that the European Parliament made its show, while Zuckerberg escaped the trap. Nothing really impressive happened, in Italy we would say: “La montagna ha partorito un topolino” that si to say “so much promise, so little delivery”.
The Vodafone-Liberty Global merger in Germany: the antitrust chances, pro & contra
The antitrust decision about the acquisition of several assets of Liberty Global by Vodafone will be a real dilemma for the competent offices of the European Commission, aka the Competition Directorate (“DG COMP”) lead by the Danish commissioner Margaret Vestager. During the current mandate, DG COMP offices have been religiously clear in setting the principles of their merger policy for the telecom sector: while consolidation is more than welcomed amongst business operating in different European countries, so has they may create pan-European players, by contrast sole-domestic mergers are attentively scrutinized and in several cases even prohibited or subject to heavy remedies.
The Vodafone-Liberty Global transaction is a dilemma because both features, domestic and cross-border consolidation, are present in the same transaction and you may look at it from different point of view: Vodafone will acquire Liberty Global’s assets in Germany and various Eastern countries (Czech Republic, Hungary and Romania), however it is in Germany that the transaction really matters and will need the highest antitrust scrutiny. This is the reason why Deutsche Telekom, the main opposer to the transaction, will fiercely sustain the view that this transaction is a domestic merger disguised by pan-European consolidation.
Where is the true and what could be the final result of the antitrust procedure?
Firstly, let’s consider how much Germany count for the biggest contenders, Vodafone and Deutsche Telekom: it is the biggest telecom market for both operators with respect to their global turnover, namely 32% for Deutsche Telekom and 24% for Vodafone (sources: FT). Beyond such figures, Germany will be a central market for anyone wanting to launch in the future connected cars and IoT business: no-one is likely to be able to launch such business at European level without having a strong feet in Germany and with its industry (not only cars). This is why the 2 companies are fighting for the domestic German supremacy.
This scenario is complicated by the incoming reform of the European Electronic Communications Framework, due to be finalized in June 2018 (with entry into force in 2020) which is expected to play in favor of Deutsche Telekom: the German incumbent will get the possibility to ask for deregulation of new fibers network (so-called coinvestment rules) while getting the possibility to regulate, and get access to, competitors networks thanks to the new rules on symmetric regulation. It is a nightmare scenario for Vodafone (as well as for other German new entrants) and therefore the merger with Liberty Global is the last chance to be able to compete with Deutsche Telekom at almost equal feet.
Thus, it seems to me that, beside the international footprint of the entire transaction, what really matters for Vodafone is the German market and not the other countries where Liberty Global assets will be acquired.
Considering the above, it is not strange that Deutsche Telekom will use its immense fire power to block the deal in Brussels – being very unlikely to get the German authorities to have jurisdiction on the case: see the competence rules of Regulation 2004/139. Truly speaking, Deutsche Telekom will not be alone: other German players, from fixed altnets to MVNO and IoT players will probably try to intervene to have a say, although they may have an interest in regulating some aspects of the transaction rather than blocking it.
The offices of DG COMP will likely welcome the transaction because the strengthening of a paneuropea fixed-mobile network fall well within their vision of the European telecom market. However, the impact of the merger onto the German market may be important and this is why the arguments of the opposers, Deutsche Telekom in primis, will be attentively taken into consideration and may bring to corrective measures which may even make the deal to derail.
Deutsche Telekom’s gold argument will be the impact of the transaction on various content markets, such as licensing/acquisition of broadcasting rights for TV content; wholesale/ acquisition of TV channels and wholesale TV signal transmission; retail supply of signal transmission and TV services. Because of the transaction, the aggregate market power of Vodafone/Liberty Global will be considerably increased and, in some of the above mentioned content markets, may be regarded as dominant. Deutsche Telekom will have various arguments to play: firstly, a previous acquisition by Vodafone in the same cable market (Kabel Deutschland, in 2013) was cleared on the assumption that Vodafone was entering the content markets for the first time and there was a strong competition, especially by Liberty Global; now, with the acquisition of Liberty Global itself by Vodafone all such previous arguments may be play against; secondly, the content markets are much more sensitive than connectivity because pluralism of media can be invoked and one can presume that Deutsche Telekom will be advocating political arguments against the transaction.
Considering the above, it is quite likely that DG COMP may decide to impose some interesting remedies upon the merged Vodafone entity with regard the content market, although it is unclear at the present stages whether such remedies may be so strong to make the deal to derail. It is unlikely, however, that Dg COMP may act unreasonably because both the reinforcement of a strong competitor in Germany and the enlargement of a pan-european player are honey for their eyes.
However, there are other areas which may create troubles to the good completion of the transaction.
The creation of a cable national champion may provoke in Germany a debate which already occurred in other countries, such as Belgium and the Netherlands: should a cable operator be regulated such as a telco in order to allow others telecom operators to get connectivity access to? Traditionally, cable operators have not been regulated because their footprint (nationally fragmented and mainly focussing on consumers) is not adapt for a national retail offers, while the switching costs were too high (since altnets are normally interconnected with telcos and not with coaxial networks). However, in Belgium and the Netherlands the national regulators took a different view due to the fact that the consolidation of cable operators have created in these countries a nationwide cable player forming a national duopoly with the local telco incumbent. BIPT, the Belgian regulator, has recently notified this decision with regard to Telenet (i.e. Liberty Global in Belgium) and the Connect directorate of the European Commission is examining the case. But DG COMP could impose access remedies on the German cable which would override regulatory decisions in the sector and Vodafone has good reasons to be worried about.
In addition, DG COMP may take the present transaction as an opportunity to revise the implementation of the 2014 decision which authorized the merger between E-Plus and Telefonica, bringing down the German mobile network operators from 4 to 3. This authorization was given in the Almunia’s age and there are reasons to believe that the offices of DG COMP would have treated the case differently, if the could at that time. Now that they have Vestager as a commissioner, it is likely that they may find the political support to investigate whether the German mobile market is functioning well, especially with regard to competition for MVNOs and IoT providers. Since the Vodafone-Liberty Global marge is eliminating an important MVNO from the market, a review of the mobile market may be possible.
The time for saying “if the service is free, you are the Product” is running out
With the entry into force of the famous European regulation 2016/679, the so-called GDPR (which stands for “General Data Protection Regulation) it will become difficult for socials and online platforms to force users to deliver their personal data in exchange of “free” services. While this new principle was somehow already enshrined in the regulation, yesterday the Article 29 Working Group, that is to say the committee grouping together the European data protection authorities, has made clear the rule, without possibility of different interpretation or nuances.
The statement is contained, amongst other things, in the “Guidelines on consent” adopted yesterday April 16, 2018. European regulators have reiterated that the consent, to be valid, must be released by individuals freely, that is to say individuala are offered a genuine choice with regard to accepting or declining the terms offered or declining them without detriment. A bit the opposite of what happens today. Fact is, until now people have been used to consent to the processing of their personal data without considering all implications, and sometimes without even realizing that a consent was given. This is the case with most apps, surveys and Facebook games, but things will have now to change.
Will such habits change with the GDPR and the new consent Guidelines? Probably yes, because operators will do their best to demonstrate that users have effectively given a proper consent. Fact is, should a national authority, on the basis of an ex-post judgment on a specific case, consider that – with certain modalities – the consent has been released in an invalid way, they may impose very heavy penalties, up to 4% of the turnover of the concerned company. Therefore, it is likely that the terms of consent will become, with the GDPR, a technological choice inherent to the business model of the operator, rather than a piece of paper elaborated by the legal department, as had happened since now. This is what we call “privacy by design”.
But what will happen in practice? The Guidelines of 16 April contain numerous examples which show how the practical application of the GDPR will change the concept of consent. Indeed, the most important example is that concerning the “do ut des” between services and privacy, that is to say the practice – very frequent – by which users exchange (more or less consciously) data with platforms and apps in order to benefit from “free” service. It has been rightly said that “if the service is free, then you are the product” and this is, frankly, the way big online platforms work, from Facebook to Google, as well as many start-ups.
Here a clear example:
a mobile app for photo editing (could be whatever in this category: creating flags, writing “Je Suis Charlie” on your fourfold picture or showing which animal of the savannah looks more like me) asks its users to have their GPS localization activated for the use of its services. The app also tells its users it will use the collected data for behavioral advertising purposes. Neither geo-localization or online behavioral advertising are necessary for the provision of the photo editing service and go beyond the delivery of the core service provided. Since users cannot use the app without consenting to these purposes, the consent cannot be considered as being freely given.
Therefore, if users do not have a way out, i.e. the ability to use the app/service even without giving consent to the use of their data, the consent will be considered invalid and will trigger penalties.
As mentioned above, such interpretation of “free” consent was already present in the principles laid down by GDPR, however some operators were hoping the Art. 29 Working Group to provide a more relaxed interpretation. This has not happen and now most online platforms and app developers will now have to think about new business models.
For sure, it will be necessary to aim at new trusting relationship between platforms and users. The latter have accumulated, in recent months, hate and paranoia against certain platforms and applications in a way that goes far beyond concrete responsibilities of online operators. To tell the truth, everyone is pleased to have free social platforms for entertainment, marketing and contacts opportunities, but to continue to do so we have to recover the the trust which went lost in many scandals, starting with Cambridge Analytica. Users could still agree to supply the digital economy with his own data, but now they will want to do it under different conditions. This is the challenge for online platforms, big and small. The proven ability to protect value of personal data will likely mark the difference between winners and losers.
The GDPR regulation constitutes, given its global applicability a huge novelty, destined to shape the global economy, before the European one. Its global reach is comparable to the American laws on banking and finance, the Bretton Woods agreements, and the practices developed by Florentine bankers in the Renaissance. This is an impressive affirmation of European sovereignty at the international level which which perhaps not everyone has yet realized.
The Facebook dilemma, after #CambridgeAnalytica
Facebook Inc is going to pay a price from the Cambridge Analityca’s affair that it much higher and different from potential reprimands or sanctions. The real issue is whether users will continue to share their data and accept monetization by Facebook itself and its customers, as it was so far.
It is difficult to foresee whether legal and political investigations about Cambridge Analytica misuse of data will ever reveal an infringement of law by Facebook. Remarkably, it seems that the way of CA’s accessing data of Facebook users was in line with common business, at least pursuant the conditions imposed by Facebook at that time. This means that many other companies have been monetizing personal data of users in the same way, and Facebook made a gain from it. This is not a scandal , this is the way Facebook and, in general, social networks function.
Facebook’s liability may eventually arise if one could prove that executives of the social network were aware about the misuse of data by CA and could stop it in time, but it was not done. This is something, however, which cannot be assessed for the time being. As far as we understand, only CA and its affiliates – and non others – misused and manipulated data against laws and contractual terms, therefore only CA will eventually pay the price for it, if any. However, recent news that Facebook may have infringed a privacy settlement signed in 2011 with the FTC may complicate the scenario.
Retaliation against Facebook may happen also by way of regularity intervention over its business, for instance in the area of algorithm transparency, data protection enforcement, increased platform liability requirements (for instance in the area of fake news). All such consequences are possible but would and should be attentively scrutinized, because regulating the Internet just to condemn Facebook will bring huge collateral damages.
This said, the real question for Facebook is not about compliance, but general responsibility. The company’s initial reactions to the scandal were clumsy and not at the standard you would expect from a company of that value (500 billion bucks). Facebook simply intervened to make clear that there was no breach of data, that their contractual terms protected rights of users and that violations, if any, were committed by somebody else. That’s it.
This was clearly a poor reaction, underestimating the shock that the CA’s affair created within people and politicians, in US and elsewhere. It would have been much more appropriate for Facebook’s founder to intervene personally* and state that the protection of data users, within and beyond the limits of applicable data protection laws, lies at the heart of the social networks business. Mr. Zuckerberg owns the rare skill to be able to speak directly to half of the mankind and to their friends of family, then it would have been a good occasion to use his superpowers. This was not done and probably now it is too late, even if the invitations to speak in London and Brussels will be finally accepted.
The blame for this inappropriate reaction is just a part of the problem. The Ca affairs revealed, again and again, how Facebook’s game and business works. If you do not have to pay it, you are the product. This is not a scandal, people are well informed about, however until now too many users have been refusing the implications of it. As a result, they continue to share data or use ridiculous apps without having a second thought on it: for what reasons there are so many stupid free apps on Facebook? Why there so free games on it? Would it worth, at least once, to read the Privacy Policy linked to such games and apps, rather than skip them in a nanosecond?
Facebook’s users may be also disappointed about the care showed by Facebook in the present case: while it is true that Facebook’s terms and conditions prohibited its customers to deliver users’ data to third parties, it is evident that without an active scrutiny by Facebook such guarantee may be useless (as it happened in the present case). Facebook should clarify if they are able to put in place a more effective supervision of their customers using personal data of people.
This, it is likely that, following the present affair, an important part of Facebook’s users will become more suspicious. They may leave the network or radically decrease their activity on it. This is an horrible news for Facebook which is already facing a stable decline of users’ traffic for other reasons.
Users’ disaffection: this is the bomb which is going to affect the main world social network and that investors have already perceived, since Facebook’s shares are going down. Unlike Apple, Amazon and Google, one could argue whether Facebook business has a bright future or, instead, it is risking the same unhappy end of MySpace.
* Nicely to see, but too late (as I mentioned), Facebook’s founder Zuckerberg finally intervened some hours after my post:
Why 5G agendas of European institutions and industry are so distant
The Mobile World Congress in Barcelona offered new occasions for European institutions and stakeholders to compete in 5G declarations and intents. There is, however, the impression that the agendas of institutions and industry are disconnected. While European institutions are eager and ambitious to create the right environment for a rapid and successful 5G roll-out, mobile industry reveals a more realistic, short-term approach.
European institutions believe that 5G should be roll-out quickly (within a decade) in order not to be left behind other continental powers (such as US and China). Industrial and regulatory policies are mostly focussed on the need to harmonise national legislations, allocating new spectrum and setting-up a sound, investment-friendly regulatory framework. All such things are commendable and needed but, unfortunately, they are far from being decisive to allow Europe to win, or at least to honorably take part to, the 5G race.
The problem is that the amount of cash necessary to roll-out 5G networks in Europe is enormous and the European industry does not seem able – or even really willing – to afford it. Studies have shown different figures but, at the end, the bill is always beyond the capability of European telcos. The most mentioned paper, the Boston Consulting report of November 2016, found that the required investment to fund the Gigabit Society was €660 billion (including €360bn to enable FTTH broadband for all European households, €200bn in 5G radio access networks as well as €100bn for cloud). These figures did not include the cost of spectrum and do not consider the fact the national fragmentation will make costs to rise. Whatever the final bill will be, since European telcos are spending for their networks on average 40-45 billion per year (including maintenance), it is clear that close deadlines are “mission impossibile”. The same Boston Consulting paper indicates 20/25 year to achieve the objectives, unless the European institutions deliver some concessions: what was the final, ultimate goal of the paper 🙂 .
Thus, should these amounts be credible or at least not so wrong, we can say that Europe has already lost the 5G race. A rapid coverage will eventually achieve some metropolitan areas, in which even multiple 5G networks would compete; but, for the large part of European territory and citizens, 5G will remain longtime a chimera.
In addition, it is doubtful whether the European industry is really committed to run the race and bear such enormous efforts. As regards ultra-broadband, most of traditional European telcos continue to rely on mixed solutions exploiting legacy infrastructures (copper), while the progression towards FTTH goes ahead without hurry. Mobile is experiencing a similar scenario: although the 5G rhetoric pervades every stages, one should consider that 5G may be seen, especially at beginning, as an evolution of LTE and therefore established operators may have less interest in engaging in a new investment cycle while they can still monetize 4G investments.
In other words, the ambitions of the European industry are probably more modest that the ones of European institutions. Nevertheless, 5G is a good occasion for European telcos to submit a series of requests (a kind of list of dreams) to regulators and governments that, otherwise, would be inadmissible: less competition (too many operators around!); delivering spectrum for-ever (25 years at least); reducing net neutrality (W the Trump-net!); and so on.
European institutions are resisting to most of such requests (although one should wait and see how the current Trilogue negotiations will end up), bearing the risks that they be will finally blamed by the industry for not delivering what telcos consider necessary to speed-up 5G. However, whatever the European Union will deliver – more harmonization; more spectrum; more deregulatory cherries – it is doubtful whether such results will be useful to achieve the most ambitious objectives. The reality remains that the European telcos cannot afford the financial burden necessary for a rapid roll-out 5G network. It is just a matter of math. In addition, some traditional, well-established telcos may not have that big interest.
Under such circumstances, one should consider whether 5G roll-out require a new, revolutionary copernican thinking, rather than an adjustment of the current system. New network business models are needed, rather than some occasional deregulation. Few weeks ago a leaked paper from the US administration was largely echoed because it proposed the idea of a national 5G network in order to maintain US leadership in technology and trade, in particular vis-à-vis China. The document was utterly criticized and rapidly shelved, because of too many assumptions without robust evidences. However, one of the ideas of the paper – that is to say the convenience of a unique 5G national network – was not so stupid: a seen above, 5G networks are costly and the procedure for granting spectrum long and complex, therefore in order to rapidly install the new 5G networks (by 3 years in US, according to the leaked paper) new options should be considered, including a single national mobile network, delivering connectivity to everyone on equal terms. That reasoning was even not so stupid that the Economist itself dedicated a specific analysis, rebutting the idea that the US administration was willing to nationalize the sector: what really matters is the consideration that new business models are needed, in such a case a single, national 5G network (likely owned by operators and infrastructure funds, rather then by the State) which would allow to better collect financial resources (infrastructure funds are eager to fund utility-like networks rather than risky telecom businesses) and facilitate the award of spectrum (the querelle about the length of licenses would be overcome).
While one could understand the reasons why the European mobile industry may prefer to neglect the above as a sci-fi scenario, since a slow path towards 5G would probably be more convenient (guaranteeing stable cash flow, deregulatory dividends and current market positions), it is quite curious that the European institutions have not taken the occasion offered by the US administration to reflect about other ways 5G should develop in the EU. The various European 5G documents focus on spectrum allocation and harmonization, but they do not spend words about new network business models, giving for granted that the industrial environment which roll-out the first mobile generations will automatically fit 5G. And this happens despite the fact that the debated European Code for electronic communication addresses new investments models, such as the wholesale-only model (art. 77 of the new Code) aiming at attracting long-term, infrastructure investments.
If the European institutions really wanted to secure a rapid, successful 5G roll-out for its citizens, should therefore be more ambitious, rethink the 5G industrial path and better exploit its regulatory tools, rather than leaving the industry leading this process, the same industry that, otherwise, will feel satisfied with just some regulatory carrots.
The European court stops UberPop, not Uber. A new legislation for digital start-ups is needed
According to the the court of Justice of the European Union, UberPop, i.e. the local taxi service supplied by Uber through unlicensed drivers, is not a simple digital app used by customers looking for a ride, rather an innovative transportation service subject to general transportation legislations, in particular local taxi rules. Uber therefore fails in claiming that its UberPop service could be classified as a mere Information Society service falling within the ambit of application of freedom of services and European electronic commerce directives. The key reasoning of the court is contained in §§ 37-39 of the judgement: Uber could be in theory a pure intermediation service and, as such, a pure Information Society service. However, Uber also organises the service, sets rules for drivers, checks prices and fixes cars’ quality standards. This is why Uber did not win the case.
Uber was probably expecting this judgment, since previous opinions of the European court had anticipated this position. Therefore, the Uberpop application is likely out-of-law because it will hardly resist against the lobbies of local taxi drivers, while the traditional Uber business model, based on the intermediation between professional drivers and clients will go on, although negotiations with national authorities competent for local transportation may become more complex. Therefore, Uber is expected to continue to concentrate upon value-added taxi services such as UberX, Uber Black, Uber Limo ecc (where service providers are regular taxi drivers, not private citizens) and will keep UberPop only when possible in few countries. It is however doubtful whether Uber will be able to extend its activities upon new services (such as delivery of foods and goods in general) through non licensed workers (mainly students or young people) as far as local policies and authorisation may become a barrier.
Fact is, the impact of today’s judgement may be more relevant in sharing economy sectors where the activity of non licensed workers/private citizens is prevailing (such as Airbnb, for instance, or many start-ups). The principles stated by the court may become far restrictive for innovative digital services rendered by such non professional workers, since it requires them the be subject to the general legislation of the sector (if any). In the case of Uber, as previously stated, this means the likely end of UberPop, not of other transportation services provided by licensed taxi drivers via the same platform (Uber X, Uber Limo, ecc). The situation is more complex for other popular app such as, for instance, AirBnb: one could question whether this is a nice app helping custumers to find accomodations or a true hotelling service, subject to all kind of legislation for hotels.
The same may happen for any new application intermediating innovative entrepreneurs and nonlicensed/private citizens. In the end, it is likely that the European Commission will soon intervene ad hoc with new legislation, since the ruling by the European Court does not prevent it from legislating on the matter so as to adapt the European directives applied until now. It would not be a question of liberalizing the taxi service, but of adapting existing regulations (transport, labour, etc.) to the new challenges of the sharing economy, for example by paying special attention to start-ups and SMEs. The problem is not so much Uber and the public taxi service, rather the preparation of a regulatory framework certain and adequate for new innovative companies and the digital economy.
The European court itself seems to invite the European institutions to intervene where, in §§ 46-47 of the judgement), recognizes that non-public urban transport services and services that are inherently linked to those services, such as the intermediation service provided by Uber, has not given rise to the adoption of measures based on transportation policies:
