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2020 | OriginalPaper | Chapter

5. Universal Service Obligation in Telecommunications

Author : Lei Zhu

Published in: Services of General Economic Interest in EU Competition Law

Publisher: T.M.C. Asser Press

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Abstract

The chapter studies service of general economic interest (SGEI) in the telecommunications sector, which has been translated as universal service obligations (USO). The ideal of universal service was deeply rooted in the organisation of the sector under the traditional public service model. The EU liberalisation process transformed this sector from state monopolies to competitive markets. It was in this process that USO provision began to be regulated at the EU level. It finds that SGEI was largely a by-product of the liberalisation process. It was defined very narrowly during the market liberalisation process, limited to physical access to telephony network. It remained largely unchanged until now. It is submitted that USO as defined by EU law has become obsolete and meaningless, as is shown by the steady decline in the subscription rate to fixed telephone. Instead, the focus of EU law has been on ensuring that USO funding is competition neutral.

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Rapp 1996.

Larouche 2000.

Bauer 1999.

Eliassen and From 2009.

Larouche 1999.

Leith 2012.

Commission of European Communities, Towards a Dynamic European Economy: Green Paper on the Development of the Common Market for Telecommunication Services and Equipment, COM (87) 290 final, 30.06.1987 (hereafter 1987 Telecommunications Green Paper).

The EU adopted a piecemeal approach by abolishing monopoly rights gradually. These Directives included:

(1)

Commission Directive 88/301/EEC of 16 May 1988 on competition in the markets in telecommunications terminal equipment [1988] OJ L131/73 (hereafter 1988 Terminal Equipment Directive);

(2)

Commission Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services [1990] OJ L192/10 (hereafter 1990 Telecommunications Services Directive);

(3)

Commission Directive 94/46/EC of 13 October 1994 amending Directive 88/301/EEC and Directive 90/388/EEC in particular with regard to satellite communications [1994] OJ L268/15 (hereafter 1994 Satellite Communication Directive);

(4)

Commission Directive 95/51/EC of 18 October 1995 amending Directive 90/388/EEC with regard to the abolition of the restrictions on the use of cable television networks for the provision of already liberalised telecommunications services [1995] OJ L256/49 (hereafter 1995 Television Cable Directive);

(5)

Commission Directive 96/2/EC of 16 January 1996 amending Directive 90/388/EEC with regard to mobile and personal communications [1996] OJ L20/59 (hereafter 1996 Mobile Communications Directive);

(6)

Commission Directive 96/19/EC of 13 March 1996 amending Directive 90/388/EEC with regard to the Implementation of full competition in Telecommunications Markets [1996] OJ L74/13 (hereafter 1996 Full Competition Directive).

For a list of these Directive and their latest amendments, see ‘Regulatory Framework for Electronic Communications’ on the EU’s legislation summary website:

http://europa.eu/legislation_summaries/information_society/legislative_framework/l24216a_en.htm accessed 9 October 2014.

Rapp 1996.

Blackman 1995, p. 172.

Nenova 2007.

This issue is discussed in Sect. 3.2 of Chap. 3. In 1991, the Court delivered a series of Judgments that ruled that the grant of monopoly rights by the Member State was incompatible with the Treaty. These Judgments include:

(1)

Case C-41/90 Klaus Höfner and Fritz Elser v Macrotron GmbH [1991] ECR I-1979;

(2)

Case C-260/89 Elliniki Radiophonia Tileorassi AE (Ert) (Panellinia Omospondia Syllogon Prossopikou Ert intervening) v Dimotiki Étairia Pliroforissis (Dep) and Sotirios Kouvelas (Nicolaos Avdellas and Others intervening) [1991] ECR I-02925;

(3)

Case C-18/88 Régie des Télégraphes et des Téléphones v GB-Inno-BM SA [1991] ECR I-5941;

(4)

Case C-179/90 Merci Convenzionali Porto di Genova SpA v Siderurgica Gabrielli SpA [1991] ECR I-05889.

Directive 95/62/EC of the European Parliament and of the Council of 13 December 1995 on the application of Open Network Provision (ONP) to voice telephony [1995] OJ L321/6 (hereafter 1995 Telephony ONP Directive).

These Directives respected the monopoly right over the telephony network; meanwhile, it required the network operators to give access to third parties. They are the so-called ONP (Open Network Provision) Directives, including:

(1)

Council Directive 90/387/EEC of 28 June 1990 on the establishment of the Internal Market for telecommunications services through the implementation of Open Network Provision [1990] OJ L192/1;

(2)

Council Directive 92/44/EEC of 5 June 1992 on the application of Open Network Provision to leased lines [1992] OJ L165/27;

(3)

Directive 95/62/EC of the European Parliament and of the Council of 13 December 1995 on the application of Open Network Provision (ONP) to voice telephony [1995] OJ L321/6.

The focus of the Commission has been to ensure that USO providers do not gain any financial advantages from the Member States because of the provision of USO.

Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services [2002] OJ L108/51, Recital 4. The Directive was amended by Directive 2009/136. Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009 amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services, Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector and Regulation (EC) No 2006/2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws [2009] OJ L337/11. A consolidated version of Directive 2002/22 can be found on the EU’s website:

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02002L0022-20091219&from=En accessed 9 October 2014 (hereafter 2002 Universal Service Directive).

European Regulators for Electronic Communications, ‘BEREC Report on Universal Service—Reflection for the Future’ (June 2010). http://berec.europa.eu/eng/document_register/subject_matter/berec/download/0/187-berec-report-on-universal-service-reflec_0.pdf.

For a brief introduction of the early development of telephone industry, see Verhoest 2000.

Wu 2007.

Cassidy 1999.

Verhoest 2000.

Millward 2008, p. 546.

Millward 2005, p. 244.

Mueller 1993.

Wu 2007.

Cassidy 1999, p. 138; Nenova 2007.

Jayakar and Sawhney 2003.

Young 2005; Nagy 2013.

Verhoest 2000, p. 596; Nenova 2007.

Bauer 1999; Reiss 2011.

Millward 2005, Chap. 4.

Bauer 2010.

OECD, ‘Universal Service and Rate Restructuring in Telecommunications’ (OECD Digital Economy Papers, No. 4, 1991) http://dx.doi.org/10.1787/237454868255; Prosser 2000.

European Parliament, ‘Public Undertakings and Public Service Activities in the European Union’ (Economic Working Paper Series W-21, May 1996) http://www.europarl.europa.eu/workingpapers/econ/pdf/w21_en.pdf, Sect. VII.

Lando 1994.

Eliassen and From 2009, p. 242; Nenova 2007.

Millward 2008, p. 546.

International Telecommunication Union 2012; Nenova 2007.

Milne 1998.

Millward 2005.

Verhoest 2000.

Economides 2004, p. 9; Sawhney 1994; Verhoest 2000.

Young 2005; Nagy 2013.

Milgrom 1996.

Verhoest 2000; Nenova 2007.

Bauer 1999, p. 332.

The cases are not concerned with the telecommunications sector directly, but with the interpretation of the scope of ‘public service’ as used in the postal and railway sectors. Case 107/84 Commission of the European Communities v Federal Republic of Germany [1985] ECR-2655; Case 149/79 Commission of the European Communities v Kingdom of Belgium [1982] ECR-1845.

Nenova 2007.

International Telecommunication Union (2012), Sect. 3.1.1.

Nenova 2007.

Prosser 2000.

Thatcher 1999.

Leith 2012; Nenova 2007; De Minico 2011.

For example, Cassidy 1999.

West 1996; Regan 2008.

Gautier and Wauthy 2012.

The monopoly structure allowed the public operator to finance the provision of universal service out of internal revenue transfer, without it being necessary to define either the precise scope or the cost of such universal service: Commission of the European Communities, Developing Universal Service for Telecommunications in a Competitive Environment (Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee), COM (93) 543 final, 15.11.1993, 5; Nett 1998.

Rapp 1996, p. 392.

An exception was the British telecommunications operator in 1973 and 1974, when it incurred a loss in its operation: Millward 2005, p. 248.

Rapp 1996, p. 392.

Naftel 1992, p. 451; Cassidy 1999.

This was the very case in Europe by the late 1990s.

Blackman 1995.

Affordability is a vague and subjective concept that is closely associated with the income level of a particular individual. That means that it is practically impossible to decide a price level that could be affordable by everyone in a particular society.

1988 Terminal Equipment Directive; 1990 Telecommunications Service Directive; 1994 Satellite Communication Directive; 1995 Television Cable Directive; 1996 Mobile Communications Directive; 1996 Full Competition Directive.

Thatcher 1999.

1987 Telecommunications Green Paper.

Ibid., part (2), 12.

Ibid., part (2), Figure 3 and part (3), 67.

Ibid., part (2), Figure 3.

The Court’s interpretation of Article 106 played a crucial role in this process. This issue is discussed in Chap. 3. On the one hand, in 1991 it began to rule that the grant of state monopolies by the Member States was in breach of Article 106(1). Such Judgments include: Case C-41/90 Klaus Höfner and Fritz Elser v Macrotron GmbH [1991] ECR I-1979; Case C-260/89 Elliniki Radiophonia Tileorassi AE (Ert) (Panellinia Omospondia Syllogon Prossopikou Ert intervening) v Dimotiki Étairia Pliroforissis (Dep) and Sotirios Kouvelas (Nicolaos Avdellas and Others intervening) [1991] ECR I-02925;Case C-18/88 Régie des Télégraphes et des Téléphones v GB-Inno-BM SA [1991] ECR I-5941; Case C-179/90 Merci Convenzionali Porto di Genova SpA v Siderurgica Gabrielli SpA [1991] ECR I-05889.

On the other hand, it largely expanded the Commission’s power under Article 106(3) in its Judgment: Case C-202/88 French Republic v Commission of the European Communities [1991] ECR I-1223.

Thatcher 1999.

Cassidy 1999.

For more discussion on this topic, see Hulsink 1999; Steinfield et al. 1993; Larouche 2000.

Locksley 1994; Carey 1999.

These Directives were designed to break down national monopolies and to open the telecommunications sector to competition, including: (1) 1988 Terminal Equipment Directive; (2) 1990 Telecommunications Service Directive; (3) 1994 Satellite Communication Directive; (4) 1995 Television Cable Directive; (5) 1996 Mobile Communications Directive; and (6) 1996 Full Competition Directive.

After the market was liberalised, legislation for a new regulatory framework was usually adopted by the Parliament and the Council. For example:

(1)

Directive 95/62/EC of the European Parliament and of the Council of 13 December 1995 on the application of Open Network Provision (ONP) to voice telephony [1995] OJ L321/6;

(2)

Directive 98/10/EC of the European Parliament and of the Council of 26 February 1998 on the application of Open Network Provision (ONP) to Voice Telephony and on universal service for telecommunications in a competitive environment [1998]OJ L101/24;

(3)

2002 Universal Service Directive.

Exceptions are found in early ONP Directives where Council Directives were issued, including:

(1)

Council Directive 92/44/EEC of 5 June 1992 on the application of Open Network Provision to leased lines [1992] OJ L165/27;

(2)

Council Directive 90/387/EEC of 28 June 1990 on the establishment of the Internal Market for telecommunications services through the implementation of Open Network Provision [1990] OJ L192/1.

Under Article 106(3), the Commission has the power to make Decisions and also to issue Directives. The latter one, i.e. the power to adopt Directives without the involvement of the Parliament and the Council, is regarded as undemocratic and is very controversial. In the early 1990s, the Court held that the Commission had the power to issue Directives of general application, which rendered direct support to the ongoing liberalisation process in the telecommunications sector. This issue is discussed in Sect. 3.3.3 of Chap. 3. See also Jauk 2000; De Streel 2003.

This power has been subjected to judicial review of the Court, and the Court upheld the Commission’s power to issue Directives under Article 106(3). Case C-202/88 French Republic v Commission of the European Communities [1991] ECR I-1223; Joined cases C-271/90, C-281/90 and C-289/90 Kingdom of Spain, Kingdom of Belgium and Italian Republic v Commission of the European Communities [1992] ECR I-5833. See Sect. 3.3.3 of Chap. 3.

It also referred to the rules on free movement and argued that state monopolies were in breach of such rules. See, for example, (1) 1988 Terminal Equipment Directive, Recitals 3 & 7; (2) 1990 Telecommunications Service Directive, Recital 6.

1988 Terminal Equipment Directive, Recital 13.

1990 Telecommunications Service Directive, Recital 16.

1994 Satellite Communication Directive, Recital 14.

Buendia Sierra 2000, p. 161.

Szyszczak 2007, p. 142; Lane 2001, p. 31.

Larouche 2000, p. 93.

Article 3 of the EEC Treaty prescribes the activities of the EU. Paragraph (f) of the Article provides that ‘the Institution of a system ensuring that competition in the common market is not distorted’. It was renumbered as Article 3(g) in the EC Treaty. After the Lisbon Treaty, it is contained in Protocol (No 27) on the Internal Market and Competition, TFEU.

1988 Terminal Equipment Directive, Recital 13.

Case C-41/90 Klaus Höfner and Fritz Elser v Macrotron GmbH [1991] ECR I-1979; Case C-260/89 Elliniki Radiophonia Tileorassi AE (Ert) (Panellinia Omospondia Syllogon Prossopikou Ert intervening) v Dimotiki Étairia Pliroforissis (Dep) and Sotirios Kouvelas (Nicolaos Avdellas and Others intervening) [1991] ECR I-02925; Case C-260/89 Elliniki Radiophonia Tileorassi AE (Ert) (Panellinia Omospondia Syllogon Prossopikou Ert intervening) v Dimotiki Étairia Pliroforissis (Dep) and Sotirios Kouvelas (Nicolaos Avdellas and Others intervening) [1991] ECR I-02925; Case C-179/90 Merci Convenzionali Porto di Genova SpA v Siderurgica Gabrielli SpA [1991] ECR I-05889. This issue has been discussed in Sect. 3.2 of Chap. 3.

Buendia Sierra 2000.

1995 Television Cable Directive, Recital 11.

1995 Television Cable Directive, Recital 12.

It provides that:

Exclusive rights granted for the provision of telecommunications services are also incompatible with Article 106(1) of the Treaty, in conjunction with Article 102 of the Treaty, where they are granted to telecommunications organisations which also enjoy exclusive or special rights for the establishment and the provision of telecommunication networks since their grant amounts to the reinforcement or the extension of a dominant position or necessarily leads to other abuses of such position.

1996 Full Competition Directive, Recital 3.

Locksley 1994.

Jauk 2000.

Naftel 1992.

Directives were passed that required the withdrawal of monopoly rights in different sections of the telecommunications sector, from terminal equipment, to service provision and finally network operation. These Directives included: (1) 1988 Terminal Equipment Directive; (2) 1990 Telecommunications Service Directive; (3) 1994 Satellite Communication Directive; (4) 1995 Television Cable Directive; (5) 1996 Mobile Communications Directive; and (6) 1996 Full Competition Directive.

See also Larouche 1999, 2000.

Nagy 2013.

Bauer 1999.

100

1987 Telecommunications Green Paper, part (3), 66.

101

1987 Telecommunications Green Paper, part (3), 65; Naftel 1992.

102

1987 Telecommunications Green Paper, part (3), 66.

103

1988 Terminal Equipment Directive, Recital 11.

104

1990 Telecommunications Service Directive, Recital 18.

105

1996 Mobile Communications Directive, Recital 18.

106

This approach was essentially abandoned by the Commission later when it began to adopt a more stringent test regarding the funding of USO.

107

Guidelines on the Application of EEC Competition Rules in the Telecommunications Sector [1991] OJ C233/2, para103.

108

1990 Telecommunications Services Directive.

109

Lando 1994.

110

1987 Telecommunications Green Paper, part (1), 13 and part (3), 66.

111

Ibid., part (3), 66.

112

Buendia Sierra 2000, p. 309.

113

This was not changed until the 1996 Full Liberalisation Directive, where the Commission argued that ‘the continuation of the exception granted with respect of voice telephone is no longer justified’: 1996 Full Liberalisation Directive, Recital 5.

114

1990 Telecommunications Services Directive, Recital 18; 1996 Full Liberalisation Directive, Recital 4.

115

Bartosch 1999.

116

1996 Mobile Communications Directive.

117

‘As regards all services other than voice telephony, no special treatment under Article 106(2) is justified especially in view of the insignificant contribution of such services to the turnover of the telecommunications organisations’: 1994 Satellite Communication Directive, Recital 16.

118

‘Besides the case of voice telephony, no other restrictions for the provision of liberalised services is justified under Article 106(2), particularly if regard is had to the small contribution made to the turnover of the telecommunications organisations by those services, currently provided on their own networks, which could be diverted towards the cable TV networks’: 1995 Television Cable Directive, Recital 15.

119

The Commission intended to promote competition and market integration in the telecommunications sector. This was in conflict with the approach adopted by some Member States that were in favour of State intervention in the economy. This was particularly the case in France, which has a strong tradition of public services: Nenova 2007.

120

84/549/EEC: Council Recommendation of 12 November 1984 concerning the implementation of harmonisation in the field of telecommunications [1984] OJ L298/49.

121

1988 Terminal Equipment Directive.

122

1996 Full Competition Directive.

123

Telecommunications Green Paper, part (3), 65; Kiessling and Blondeel 1998.

124

1996 Full Competition Directive, Recital 5.

125

Nenova 2007.

126

2002 Universal Service Directive.

127

Carey 1999.

128

2002 Universal Service Directive.

129

De Streel 2003.

130

Nenova 2007.

131

2002 Universal Service Directive.

132

Carey 1999.

133

Council Directive 90/387/EEC of 28 June 1990 on the establishment of the Internal Market for telecommunications services through the implementation of Open Network Provision [1990] OJ L192/1.

134

Intra-community voice service represented only a small portion of the revenue (no more than 4–5%) of the telecommunications monopolists. Commission of the European Communities, 1992 Review of the Situation in the Telecommunications Services Sector, (Communication by the Commission), SEC (92) 1048 final, 21.10.1992, Sect. 4.3.1.

135

Council Directive 92/44/EEC of 5 June 1992 on the application of Open Network Provision to leased lines [1992] OJ L165/27, Recital 4.

136

Nenova 2007; Bauer 1999.

137

1995 Telephony ONP Directive, Article 12(2).

138

It did use the term ‘universal telephone service’ once but in a hidden corner and in a very reluctant way. In Article 12(1), it provided that ‘without prejudice to application of the principle of cost orientation, national regulatory authorities may impose on telecommunications organisations tariff constraints relating to the objectives of universal telephone—service accessibility, including town and county planning aspects’: 1995 Telephony ONP Directive.

139

Carey 1999.

140

1995 Telephony ONP Directive, Article 3.

141

De Streel 2003.

142

Nenova 2007.

143

1995 Telephony ONP Directive, Articles 16 and 17; Kiessling and Blondeel 1998.

144

Carey 1999; Naftel 1996.

145

Under the traditional public service model in the telecommunications sector, the public monopolist charged a uniform price across the whole country regardless of the actual costs incurred in individual cases. This was against the basic commercial principle that price should reflect the actual cost.

146

The Directive prescribes that tariff must be based on objective criteria and be transparent. It also rules that each item of the tariff should be listed separately for users: 1995 Telephony ONP Directive, Article 12.

147

However, this must be done without prejudice to the application of the principle of cost orientation.

148

This is categorised as ‘socially useful services’, which also include emergency services: 1995 Telephony ONP Directive, Article 14.

149

Ibid., Article 18.

150

Commission of the European Communities, Annex to the Review of the Scope of Universal Service in Accordance with Article 15 of Directive 2002/22/EC, (Commission Staff Working Document), SEC (2005) 660, 24.05.2005.

151

2002 Universal Service Directive, Recital 4. This definition is not new but appeared in several harmonisation Directives, including:

(1)

Directive 97/51/EC of the European Parliament and of the Council of 6 October 1997 amending Council Directives 90/387/EEC and 92/44/EEC for the purpose of adaptation to a competitive environment in telecommunications [1997] OJ L295/23;

(2)

Directive 98/10/EC of the European Parliament and of the Council of 26 February 1998 on the application of Open Network Provision (ONP) to voice Telephony and on universal service for Telecommunications in a competitive environment [1998] OJ L101/24, Article 2;

(3)

Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection in Telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision (ONP) [1997] OJ L199/32, Article 2.

152

Nenova 2007.

153

Verhoest 2000; Nagy 2013.

154

De Streel 2003.

155

Rules on the scope of USO are found in Directive 95/62, which was later amended by 97/51 and repealed by 98/10. On the other hand, rules on the funding of USO are contained in 1996 Full Competition Directive and Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection in Telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision (ONP) [1997] OJ L199/32.

De Streel 2003.

Milne 1998.

Verhoest 2000.

Commission of the European Communities, Universal Service in E-communications: Report on the Outcome of the Public Consultation and the Third Periodic Review of the Scope in Accordance with Article 15 of Directive 2002/22/EC, (Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions), COM (2011) 795 final, 23.11.2011, 8.

160

161

Commission of the European Communities, Universal Service in E-communications: Report on the Outcome of the Public Consultation and the Third Periodic Review of the Scope in Accordance with Article 15 of Directive 2002/22/EC (Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions), COM (2011) 795 final, 23.11.2011, 8.

162

Special Eurobarometer 462, E-Communications and Digital Single Market E-Communications and Digital Single Market, July 2018.

163

Leith 2012; De Minico 2011; Nagy 2013.

164

Ipsos 2004.

165

166

European Commission (2019) Connectivity: Broadband market developments in the EU 2019, https://ec.europa.eu/newsroom/dae/document.cfm?doc_id=60010, p. 5.

167

Commission of the European Communities, Universal Service in E-communications: Report on the Outcome of the Public Consultation and the Third Periodic Review of the Scope in Accordance with Article 15 of Directive 2002/22/EC (Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions), COM (2011) 795 final, 23.11.2011.

168

European Commission (2016) Review of the scope of Universal Service—SMART 2014/0011. https://publications.europa.eu/en/publication-detail/-/publication/6eee3cb7-9adf-11e6-868c-01aa75ed71a1.

169

Nenova 2007; Nagy 2013.

170

Commission of the European Communities, On the Review of the Scope of Universal Service in accordance with Article 15 of Directive 2002/22/EC, COM (2005) 203 final, 24.5.2005; Commission of the European Communities, On the Second Periodic Review of the Scope of Universal Service in Electronic Communications Networks and Services in accordance with Article 15 of Directive 2002/22/EC, COM (2008) 572 final, 25.9.2008; Commission of the European Communities, Universal Service in E-communications: Report on the Outcome of the Public Consultation and the Third Periodic Review of the Scope in accordance with Article 15 of Directive 2002/22/EC, COM (2011) 795 final, 23.11.2011; European Commission (2016) Review of the scope of Universal Service—SMART 2014/0011. https://publications.europa.eu/en/publication-detail/-/publication/6eee3cb7-9adf-11e6-868c-01aa75ed71a1.

171

Commission of the European Communities, Impact Assessment Report: Annex to the Report Regarding the Outcome of the Review of the Scope of Universal Service in accordance with Article 15(2) of Directive 2002/22/EC, (Commission Staff Working Document), SEC (2006) 445, 7.4.2006, 9.

172

The Commission states that one of the objectives of regulation is ‘to ensure that objectives of general interest are met where they are not satisfied by market forces alone’: Commission of the European Communities, Impact Assessment Report: Annex to the Report Regarding the Outcome of the Review of the Scope of Universal Service in accordance with Article 15(2) of Directive 2002/22/EC, (Commission Staff Working Document), SEC (2006) 445, 7.4.2006.

173

2002 Universal Service Directive, Article 32.

174

1996 Full Competition Directive; Bartosch 1999; Reiss 2011.

175

1995 Telephony ONP Directive; Commission of the European Communities, Universal Service for Telecommunications in the Perspective of Fully Liberalized Environment—An Essential Element of the Information Society, COM (96) 73 final, 13.03.1996; Carey 1999.

176

Commission of the European Communities, Developing Universal Service for Telecommunications in a Competitive Environment, (Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee), COM (93) 543, 15.11.1993, 6.

177

Nenova 2007.

178

Commission of the European Communities, Assessment Criteria for National Schemes for the Costing and Financing of Universal Service in Telecommunications and Guidelines for the Member States on Operation of such Schemes, COM (96) 608 final, 27.11.1996 (hereafter 1996 USO Funding Communication); Reiss 2011; Eliassen and From 2009.

179

The Body of European Regulators for Electronic Communications has produced a detailed account on USO in 2010. See European Regulators for Electronic Communications, BEREC Report on Universal Service—Reflection for the Future (June 2010). http://berec.europa.eu/eng/document_register/subject_matter/berec/download/0/187-berec-report-on-universal-service-reflec_0.pdf.

180

Seven Member States introduced USO funds, including France, Italy, Poland, Bulgaria, the Czech Republic and Romania. Among them only France, Italy and Romania actually paid out funding: Commission of the European Communities, The Commission’s 2008 Report on the Scope of the Universal Service in Telecoms: Frequently Asked Questions, MEMO/08/583, 25.09.2008; Ladcomm Corporation (2013); Cassidy 1999.

181

There are six Member States that have chosen to use open tender procedures to designate the USO provider: Cyprus, Czech Republic, Estonia, Hungary, Poland and Slovenia: Communications Alliance Ltd, ‘Telecommunications Universal Service Obligation (USO) Review’. http://www.commsalliance.com.au/__data/assets/pdf_file/0016/1960/CommsAlliance-Subsmission_USO_Final.pdf.

182

Nett 1998.

183

1996 USO Funding Communication, 5.

184

Commission of the European Communities, The Commission’s 2008 Report on the Scope of the Universal Service in Telecoms: Frequently Asked Questions, MEMO/08/583, 25.09.2008.

185

2002 USO Directive, Article 38.

186

The Commission’s ‘Digital Agenda for Europe’ website provides an overview of such procedures. https://ec.europa.eu/digital-agenda/en/infringements.

187

There have been a significant number of infringement procedures initiated by the Commission against the Member States. The Commission often has to refer the Member States in question to the Court. The Commission has compiled two lists of such proceedings:

(1)

Infringement Procedure Opened for Incorrect Implementation

https://ec.europa.eu/digital-agenda/sites/digital-agenda/files/Infringement%20procedures%20opened%20for%20incorrect%20implementation.pdf accessed 9 October 2014;

(2)

Infringement Procedures Opened for Non-communication of Transposition Measures

https://ec.europa.eu/digital-agenda/sites/digital-agenda/files/Infringement%20procedures%20opened%20for%20non-communication%20of%20the%20revised%20framework.pdf accessed 9 October 2014.

188

2002 Universal Service Directive, Recital 4; Bauer 1999; Mueller 1993.

Reiss 2011.

Bauer 1999.

Ibid.

Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection in telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision (ONP) [1997] OJ L199/32, Annex III.

194

2002 USO Directive.

195

In the Communication, the Commission listed four categories as examples: measures for public security; communication service outside USO to schools, hospitals and libraries; refund payments; costs for network modernisation. 1996 USO Funding Communication, 14.

This list is not exhaustive. In December 2011, the Commission sent Denmark a ‘reasoned opinion’ and requested it to remove maritime emergency services from the scope of USO. Commission of the European Communities, Digital Agenda: Commission requests Denmark to change rules on financing of universal services (Press Release, IP/11/1106) http://europa.eu/rapid/press-release_IP-11-1106_en.htm.

196

1996 USO Funding Communication, 13.

197

‘The provision of a network and services throughout a specific geographical area, including, where required, averaged price, in that geographical area for the provision of that service’: 2002 USO Directive, Annex IV.

198

‘Provision of specific tariff options for consumers with low incomes or with special social needs’: Ibid.

199

‘This category may include service element such as access to emergency telephone services, provision of certain public pay telephones, provision of certain services or equipment for disabled people, etc.’: Ibid.

200

The Directive provides two options for Member States regarding the funding of the USO, including the establishment of sectoral fund or direct financial transfer from the State: Ibid.

201

Some scholars argue that a competitive tender procedure for the allocation of USO costs could be a desirable alternative: Nett 1998; Milgrom 1996;

Some Member States have begun to use a competitive procedure to designate USO provider. International Telecommunication Union (2012), Sect. 3.1.2.

202

The calculation and allocation of the USO costs is a very difficult task that requires detailed data and relevant expertise. The controversy over French USO fund offers a very good example. Its legality has been subject to the scrutiny of the Commission, the Court and also national courts. See Reiss 2011.

203

This point has been confirmed by the Court in a Judgment concerning the French USO fund: Case C-146/00 Commission of the European Communities v French Republic [2001] ECR I-9767, 9818.

Ibid.

Ibid., para 53.

Ibid., paras 60–61.

Ibid., paras 77–78.

Case C-222/08 European Commission v Kingdom of Belgium [2010] ECR I-9017

The same issue is also the subject of a preliminary ruling procedure: Case C-389/08 Base NV and Others v Ministerraad [2010] ECR I-9073.

209

It required the Belgium government to bring the law in compliance with the Directive by sending a ‘letter of formal notice’ and ‘reasoned opinion’. Without receiving satisfactory results, it finally referred the case to the Court through the infringement procedure.

210

Case C-222/08 European Commission v Kingdom of Belgium [2010] ECR I-9017, para 49.

211

Ibid., para 50.

212

Ibid., para 59.

213

Debusschere et al. 2010, p. 11.

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Title: Universal Service Obligation in Telecommunications
Author: Lei Zhu
Publisher: T.M.C. Asser Press
Book: Services of General Economic Interest in EU Competition Law
Print ISBN: 978-94-6265-386-3

Electronic ISBN: 978-94-6265-387-0

Copyright Year: 2020
DOI: https://doi.org/10.1007/978-94-6265-387-0_5

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