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MEMO/05/165

Brussels, 24 May 2005

Review of the Scope of Universal Service in Electronic Communications: Frequently Asked Questions

What is universal service?

Universal servive is a safety net for achieving social inclusiveness that is to ensure that basic communications services would always be available at a determined quality and an affordable price, even if the market would not provide them under normal commercial circumstances. This set of basic services, which are already available to the great majority of citizens and considered essential for participation in society, is called ‘universal service’.

The EU law defines universal service as "minimum set of services, of specified quality to which all end-users have access, at an affordable price in the light of national conditions, without distorting competition".

The relevant EU rules are set by the Universal Service Directive (2002/22/EC), which is one of the main legislative tools of the EU regulatory framework for electronic communications that came into force in July 2002.

What is the current scope of universal service?

The current scope of universal service consists of (1) a connection to the public telephone network at a fixed location and (2) access to publicly available telephone services where the connection enables voice and data communications services - at narrowband speeds – with functional access to the Internet.

In addition, universal service provision covers services that are closely associated with basic telephony, as they are necessary for users to be able to make full use of the publicly available telephone services. These are: the provision of directories and directory enquiry services, public pay telephones and special measures for disabled users.

Does the current universal service provision only cover fixed telephone services?

No, EU rules are not based on fixed telephony only. The principle of technological neutrality allows universal service providers to use any technology, whether wired or wireless, which is capable of delivering the service at fixed location. Therefore, mobile technology could, if it satisfied the service elements, also be used as a means of meeting the universal service obligation.

What are the Member States obligations under the EU rules?

Member States must ensure that universal service, i.e. the defined set of services is made available to all users in their territory, independently of geographical location, upon reasonable request. They are also required to find the most efficient means of guaranteeing universal service obligations, including giving all undertakings an opportunity to fulfil them. Only if the market fails to deliver the defined services may obligations be imposed on undertakings to provide services at specified conditions.

How is universal service financed?

Universal service financing schemes imply a financial cross-subsidy from one group of customers to another. Member States are allowed to finance any net costs of universal service obligations either by using public funds under transparent conditions or by setting up a sector-specific fund to which all undertakings active in the market would have to contribute.

Why does the Commission review the scope of universal service?

Just like the services to which it is applied, universal service will evolve over time in response to technological change, market developments and changes in user demand. Therefore Article 15 of the Universal Service Directive requires the Commission to review the scope of universal service in 2005 and every 3 years thereafter by examining social, economic and technological developments.

What are the conditions to include new services, such as mobile and broadband, within the scope of universal service?

The Universal Service Directive sets out the criteria for deciding whether specific services, notably mobile communications and broadband access (high–speed internet access), merit inclusion within the scope. This would be warranted only if the market fails to deliver a service that has become necessary for normal participation in society - the service being available to and used by the great majority of consumers - thus implying social exclusion of a minority of consumers.

What are the main results of the review?

The review Communications examines in particular mobile and broadband communications and finds that:

  • Competitive and open markets of mobile communications in the EU have resulted in consumers already having widespread affordable access to mobile communications, in particular thanks to the affordable pre-paid packages, which allow low income consumers a basic connection to the network. Therefore there is no need to extend universal service requirements to mobile communications - as this would not benefit the consumer.
  • Member States have put comprehensive national broadband strategies in place, but as yet, the overall proportion of the population in the EU using broadband is less than 7% (the latest data, compiled since the Communication was finalised, suggests that 8.8% of the EU population now has a fixed broadband connection). Broadband has not yet become necessary for normal participation in society, such that lack of access implies social exclusion. At the present time, therefore, the conditions for including broadband services within the scope of universal service are not fulfilled - as this would result in unfair cross-substitution of a minority of consumers by the majority.

Why does the Commission launch a longer-term policy debate on universal service?

The growth of internet-based services, in particular Voice over Internet Protocol (VoIP) challenges the current concept of universal service and we must think ahead so that the EU rules and user rights keep pace with market developments as well as with technological and societal progress.

The e-communications environment is rapidly developing towards a convergent and global internet-based communications environment. We have to consider that in the future, as services traditionally carried by telephone networks become internet-based, the focus of universal service may evolve towards providing an affordable broadband access link for all. This would separate the access to infrastructure element from the service provision element so that universal service would address only access to the communications infrastructure.

For the above reasons the review Communication identifies several trends and questions with longer-term implications on universal service provision, and launches a forward-looking policy debate by seeking to elicit opening contributions from all the stakeholders. This can in particular contribute to the general regulatory review in 2006.


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