Opinion of the Economic and Social Committee on the "Proposal for a Directive of the European Parliament and the Council on universal service and users' rights relating to electronic communications networks and services"

(2001/C 139/05)

On 25 October 2000, the Council decided to consult the Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 30 January 2001. The rapporteur was Mr Hernández Bataller.

At its 379th plenary session of 28 February and 1 March 2001 (meeting of 1 March 2001), the Economic and Social Committee adopted the following opinion by 41 votes to three, with one abstention.

1. Introduction

1.1. One of the ESC's express conditions for lending its support to the current process of liberalising the telecommunications sector has always been that consumers and users must have access to good quality essential services at an affordable price, taking into account the technology available on the market.

1.2. As part of a universal service in telecommunications, it is crucial that consumers have access to networks and services that meet the standard of the technologies currently available on the market if an information society that offers everyone the same opportunities is to evolve.

1.3. The essential elements of the universal service are not created simply by opening up competition, as competition alone cannot guarantee a universal service. However, while it is hoped that the free play of market forces and competition will lead to a better allocation of resources, to a mobilisation of considerable investment capital and to better prices for the user, these instruments have their limits. There is a risk that only some of the population will benefit and social and territorial cohesion will therefore be weakened.

1.4. The European Community has addressed the issue of universal service in the following Directives and Communications:

- Commission Directive 96/19/EC, of 13 March 1996, amending Directive 90/388/EC ("Full competition Directive")(1), which provides, in particular, that Members States must, no later than 1 January 1997, notify the Commission of financial obligations with regard to universal service and publish them no later than 1 July 1997.

- European Parliament and Council Directive 97/33/EC 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)(2).

- European Parliament and Council Directive 97/51/EC 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(3).

- European Parliament and Council Directive 98/10/EC 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(4).

- Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions, "Towards a new framework for Electronic Communications infrastructure and associated services - The 1999 Communications Review"(5).

- Communication from the Commission on the results of the public consultation on the 1999 communications review and orientations for the new regulatory framework(6).

The Committee has expressed its views on these documents in various opinions, which basically state that the priority of universal service should be to encourage citizens to participate in community life and thereby strengthen social and economic cohesion(7).

1.5. Following public consultation on the new legal framework, the purpose of which is to create greater stability over time, the Commission has presented a series of proposals concerning the common regulatory framework, the processing of personal data and protection of privacy, authorisation, the radio spectrum, unbundled access to the local loop, universal service and users' rights, all in the context of electronic communications networks and services.

1.5.1. The aim is to bring the regulations into line with the technological innovation and economic impetus that has radically transformed the world of telecommunications, without losing sight of the protection and promotion of certain social objectives, such as improving the overall quality and benefits of telecommunications or ensuring that they are within people's reach. This must be the purpose of regulatory intervention.

1.5.2. According to the US 1996 Telecommunications Act(8), universal service means access to telecommunications services as a basic social right of all citizens and essential for their full participation in the community, constituting an essential element in the freedom of expression. The concept of universal service as laid down in this Law may be broken down into a series of subsidiary concepts: availability (provision of service on demand), accessibility (all users to be treated equally in terms of price and quality of service), and affordability (relation between the cost of the service and the users' purchasing power).

1.5.3. The Communication from the Commission on Services of General Interest in Europe(9) defines universal service, within an environment of open and competitive telecommunications markets, as the minimum set of services of specified quality to which all users and consumers have access in the light of specific national conditions, at an affordable price.

1.5.4. For the ESC, the risk of individuals, groups or entire regions being excluded from the overall initiative is great and manifold as non-computer access to universal services will gradually fall into disuse as increasingly services are provided electronically(10).

2. The Commission proposal

2.1. Aims of the proposal

2.1.1. The aims of the proposal for a Directive are listed in paragraph II of the explanatory memorandum and summarised in Article 1(2). They are:

- to ensure the availability throughout the European Union of good quality electronic communications services at an affordable price;

- to deal with circumstances in which users' and consumers' needs are not satisfactorily met by commercial means;

- to ensure interoperability of consumer digital television equipment.

2.1.2. In attaining these objectives the Directive aims to:

- safeguard competition and real choice;

- when this is not sufficient, to impose universal service obligations.

2.1.3. The proposal should be seen in the context of the proposed framework Directive on a common regulatory framework for electronic communications networks and services, and the Directive on the processing of personal data and the protection of privacy in the electronic communications sector.

2.1.4. Furthermore, the proposal maintains and incorporates in its articles all the obligations regarding:

- retail tariff regulation for provision of access to and use of the telephone network at fixed locations, as laid down by Article 17 of Directive 98/10/EC(11) (Art. 16 of the proposal);

- availability of leased lines, as laid down by Articles 3, 4, 5, 6, 7, 8 and 10 of Directive 92/44/EC (Art. 27 of the proposal)

until, in accordance with the market analysis procedure provided for in Article 14 of the proposed framework directive, the national regulatory authorities (NRA) decide that such obligations shall be maintained, changed or withdrawn.

2.2. Scope of the universal service

2.2.1. The proposal defines the universal service concepts applicable to electronic communications networks and services, in accordance with the criteria already established in the Communication on universal service for telecommunications in the perspective of a fully liberalised environment(12).

2.2.2. It should be borne in mind that in some language versions (e.g. the Portuguese version) of the draft directive the obligation to provide users on request with a connection to the public network at a fixed location and at an affordable price is not qualified by the addition of the adjective "reasonable" before "requests for connection" in Article 4(1). All language versions of the proposal therefore need to be harmonised.

2.2.3. The guidelines on the availability of the universal service are based on the principles of transparency, objectivity, non-discrimination and minimum distortion of the market and on the criteria of availability, reasonable access and interconnection.

2.3. Definition of universal service

2.3.1. In the proposed Directive, universal service is defined as a series of obligations imposed in the Member States by the NRAs.

2.3.2. As part of the universal service, it is the express obligation of the Member States to ensure:

a) that the connection to the public telephone network from a fixed local number allows users to make and receive national and international telephone calls, fax and data communications, including Internet access [Art. 4(2)];

b) that users have access to a subscriber directory, in printed or electronic form, or both, and the directory enquiry service (Arts. 5 and 21);

c) that there are public pay telephones to meet the reasonable needs of users (Art. 6);

d) free access to the European emergency call number "112" and other national emergency numbers (Arts. 6(3) and 22);

e) equivalent access for disabled users and users with special needs (Art. 7);

f) clear differentiation of tariffs for additional facilities and services [Art. 10(1)];

g) that the main service is not disconnected unjustifiably for non-payment of the additional services [Art. 10(2)];

h) that the contributions made by undertakings to finance universal service obligations be shown on users' bills [Art. 14(3)];

i) that telephone service providers conclude contracts with users and consumers for the direct supply of telephone services covered by Directives 93/13/EC and 97/7/EC (Art. 17);

j) that the general public and users and consumers in particular be informed about the applicable prices and tariffs and about the other terms and general conditions for access to the service (Art. 18);

k) the interoperability of consumer digital television equipment (Art. 20);

l) that all subscribers to telephone services, including mobile services, can retain their number, independently of the undertaking providing the service [Art. 25(1)];

m) that undertakings under their jurisdiction may be obliged to carry specified radio and television programmes (Art. 26) in return for appropriate compensation.

2.3.3. In particular the NRAs are to be given express powers to:

a) require undertakings, as a universal service obligation, to provide tariff options or packages which differ from those provided under normal commercial conditions for consumers on low incomes or with specific social needs [Art. 9(1)];

b) designate which undertakings are obliged to provide the universal service and to ensure that they publish information on their performance in the provision of access and services [Art. 11(1)];

c) assess whether the provision of universal service represents an unfair burden [Art. 12(1)];

d) ensure that details of the mechanism for financing the universal service are publicly available and that an annual report is published giving the calculated cost of the universal service obligations [Art. 14(1) and (2)];

e) require undertakings that provide electronic communications services to publish comparable, adequate and up-to-date information on the quality of their services [Art. 19(1)];

f) require undertakings with significant market power to enable their subscribers to access the services of any interconnected provider of publicly available telephone services [Art. 25(2)].

2.4. Consultation and dispute resolution arrangements

2.4.1. The proposed Directive stipulates that the NRAs must provide for the consultation and participation of interested parties in all matters relating to user and consumer rights and the quality of service (Art. 29).

2.4.2. The proposal also stipulates that the Member States have to ensure that responsibilities are met by means of transparent, simple and inexpensive procedures for dealing with users' and consumers' complaints, following the principles set out in Recommendation 98/257/EC (Art. 30).

2.4.3. Finally, in the case of trans-border disputes the proposal states that the system enshrined in Article 18 of the draft framework Directive [Art. 30(2)] shall apply.

2.5. Review

2.5.1. The proposal provides for a notification and monitoring procedure, to be implemented by the NRAs at national level and the Commission, Parliament and Council at Community level. In this, the Commission is assisted by the Communications Committee set up in Article 19 of the framework Directive.

2.5.2. The proposal instructs the Commission to periodically review, for the first time not later than two years after entry into force of the Directive, the scope of universal service in the light of social, commercial and technological developments (Art. 15).

2.6. Final provisions

Articles 34, 35 and 36 contain standard provisions on transposition, entry into force and addressees.

3. General comments

3.1. The ESC supports the Commission's proposal since its content is in keeping with its aims, although it could have been simplified, especially the definition in Article 4(2).

3.1.1. The ESC believes that in order to maintain economic growth and stability and prevent social illiteracy, it is necessary to encourage freedom of expression, pluralism and cultural diversity, while at the same time promoting the general interest and universal service.

3.1.2. The ESC generally agrees with the current concept of universal service based on connection to the public telephone network at a fixed location and access to publicly available telephone services at a fixed location through at least one operator. The connection provided must, however, not only allow users to make and receive local, national and international telephone calls and faxes, but also offer them rapid public Internet access.

3.1.3. The ESC therefore considers that from now on rapid public access to the Internet should be included in universal service. This would promote and foster the objectives of the eEurope initiative(13) and is also essential if people on low incomes, voluntary sectors, non profit-making organisations and users from less populated regions are to have access to advanced services and if an information society that meets the European Union's democratic and social objectives is to be created.

3.1.4. All the services that make up the universal service must be made available to all users in their territory, irrespective of geographical location, and at an affordable price, thereby ensuring that users living in rural or high cost areas can also access these services.

3.2. The ESC regrets that the proposal contains such vague concepts and terms; when it comes to transposing the Directive into national law, this may lead to distortions of competition or a failure to comply with Community legislation, as in points 3.6, 4.4, 4.5, 4.6 and 4.9, among others, of this opinion.

3.3. Member States must use transparent, objective and non-discriminatory procedures to designate undertakings to provide universal service for all or part of their territory.

3.4. The proposal contains some fundamental shortcomings, such as the criteria defining the universal service (e.g. regarding accessibility). At the same time, it does not contain harmonised common principles that would clarify the situation. The fact that the different Member States set their own criteria may lead to differences in legislation and distortions of competition. The Commission must therefore issue recommendations to the NRAs and ensure in particular that the measures adopted by the NRAs comply with the principles of causality, coherence with other EU policies and proportionality, in accordance with Community law.

3.5. While both the Commission and national regulatory authorities must act within their powers, some concepts in the proposal are a potential source of confusion, such as "reasonableness", which should be deleted or clarified, and "public pay telephone".

4. Specific comments

4.1. The ESC agrees completely with the Commission that the concept of universal service is constantly evolving and must be revised periodically to reflect advances in technology, market developments and changes in user demand. However, the proposal needs to set out clearly the criteria to be used in such a revision so as to ensure greater legal certainty and prevent the rapid growth of the information society and New Economy leading to social exclusion.

4.1.1. The Committee considers that when the concept of universal service is periodically reviewed, particular account should be taken of the following criteria:

a) technological advances;

b) the configuration of telecommunications services and information services;

c) to what extent information technologies and services

- are essential for education, telework, health or public safety and:

- subscribed to by a substantial majority of residential customers;

- provided via public communications networks;

- compatible with the public interest, useful and respond to public needs;

- allow citizens to participate more fully.

4.1.2. The ESC believes that directory enquiry services, operator assistance services and directories must be provided in a format whereby the majority of the population has practical and not merely token access to them on non-discriminatory terms. Information also needs to be centralised while protecting its commercial value for operating companies. Otherwise it could be very onerous for users to obtain information whenever several different service providers are involved.

4.1.3. The designation of undertakings to provide these information services must respect the principles of public tendering; these undertakings must abide by the rules of the single market, especially those concerning the protection of personal data.

4.1.4. The ESC shares the Commission's view that obligations may be imposed on operators so as to ensure that public pay telephones (cards and coins) meet users' needs in terms of geographical coverage, number of telephones and quality of services.

4.1.5. General speaking the Committee believes that giving a Member State the option of not applying the aforementioned requirements in all or part of its territory is excessive, as the consultation provided for in Article 29 is insufficient and could mean a reduction in the quality of life of citizens, with repercussions for economic and social cohesion. However, in accordance with the subsidiarity principle, this decision should be taken by the NRAs when it is absolutely necessary to provide the service by other means and it does not impact adversely on economic and social cohesion.

4.2. The ESC calls on the Commission to make specific measures for disabled users and users with special needs mandatory rather than optional. By taking into account their social situation and adopting satisfactory "special schemes" for their benefit, the most vulnerable users' groups will be offered the proper protection.

4.3. The ESC agrees with the Commission's criteria regarding the level and structure of tariffs, affordability and control of expenditure and the quality of service provided by designated operators. Guaranteeing all citizens all communication services at an affordable price must be a priority if they are to be able to participate in the information society.

4.4. There also needs to be a predetermined procedure for disconnecting services, of which consumers have been informed and which is based on objective criteria.

4.5. Quality of service must be assessed according to clear parameters that are easy to understand for the average consumer. These requirements are not met by Annex III to the proposal. It is also unacceptable that under Article 29(2) of the proposed Directive, national regulatory authorities in the Member States are not obliged to require publication of information on the quality of service provided by network operators and service providers.

4.6. Regarding calculating the costs of the universal service, the proposal does not define criteria relating to an "excessive" or "unfair burden". Annex IV defines the concept of net cost but not that of unfair burden. These criteria should be harmonised and clarified so that the national regulatory authorities can apply them or determine the amount.

4.7. Regarding the financing of universal service obligations, the ESC reiterates its view - as previously expressed in various opinions - that all telecommunications service providers using the public telephone network must contribute in a proportionate and fair way to all aspects of this service, including its financial aspects. The ESC therefore argues that the universal service should be financed by all operators in line with their market share and degree of involvement in that market in the event that a company is subject to an excessive burden.

4.8. The ESC agrees with the Commission proposal's aim to guarantee consumers a high level of protection, particularly in the following areas:

- the possibility of regulating retail tariffs so that when market conditions are not fully competitive NRAs can set maximum tariffs;

- the rules on contracts with direct telephone service providers, as greater transparency in contracts will allow consumers to make an informed choice.

4.9. The provisions on the transparency and publication of information for consumers are essential for users and for SMEs in particular. Nevertheless, the Committee considers that on this point the proposal fails to mention the following:

- the medium, format and content of information, which must be relevant and sufficient;

- quality of service, the criteria and standards for which should be published;

- accurate and transparent information about the prices of individual calls that have been made or received.

4.9.1. The ESC is particularly in favour of the proposed provisions on number portability, carrier selection and pre-selection. Neither conditional sales, technical measures or any other provisions that limit the consumer's choice of operator or service provider should prevent consumers transferring a number.

4.9.2. The Committee considers that the user should have the possibility of identifying the call when it is received through other operators (interconnection).

4.10. Consumers and users must have access to simple, inexpensive and independent complaints and disputes procedures, and clear and effective mechanisms for lodging appeals. The ESC therefore reiterates that the "European claims form" prepared by the Commission must be used and promoted for complaints to the NRAs.

4.11. The ESC considers that the provisions on the interoperability of consumer digital television equipment and the obligation to transmit specified radio and television broadcasts, as set out in the proposal, are particularly beneficial to the consumer, even if they may not have been included in the best place.

4.12. The consultation of interested parties provided for in Article 29 is insufficient as it makes no provision for consultation at European level. The ESC therefore proposes setting up, in line with the Oulu Declaration(14), a telecommunications forum or observatory at the ESC so that the views of interested sectors and parties are taken into account at Community level.

5. Conclusions

5.1. The Committee considers that the following principles must govern universal service:

a) access to high-quality services at fair, appropriate and affordable prices;

b) rapid public access to information and advanced telecommunications services in all regions;

c) access for all consumers, irrespective of their income, in rural areas and areas where providing the service is expensive, to telecommunications and information services at prices comparable to those in urban zones;

d) fair and non-discriminatory contribution by all telecommunications service providers to maintaining and advancing universal service;

e) the existence of specific, predictable and adequate mechanisms for maintaining and extending universal service;

f) any additional principles deemed necessary by the NRAs to protect the public interest;

g) the creation of a telecommunications forum or observatory.

Brussels, 1 March 2001.

The President

of the Economic and Social Committee

Göke Frerichs

(1) OJ L 74, 22.3.1996.

(2) OJ L 199, 26.7.1997.

(3) OJ L 295, 29.10.1997.

(4) OJ L 101, 1.4.1998. ESC opinion; OJ C 133, 28.4.1997.

(5) COM(1999) 539 final.

(6) COM(2000) 239 final.

(7) ESC opinion on Universal service for telecommunications in the perspective of a fully liberalized environment - OJ C 30, 30.1.1997; ESC opinion on Services of General Interest - OJ C 368, 20.12.1999.

(8) See http://www.fcc.gov/telecom.html.

(9) COM(2000) 580 final of 20 September 2000.

(10) See opinion on eEurope 2002 - An information society for all - Draft Action Plan. Rapporteur Mr Koryfidis. Opinion currently being drafted.

(11) OJ L 101, 1.4.1998.

(12) ESC opinion: OJ C 30, 30.1.1997.

(13) See opinion on eEurope 2002 - An information society for all - Draft Action Plan. Rapporteur Mr Koryfidis. Opinion currently being drafted.

(14) Conclusions of the Presidency concerning the hearing on The Information Society and Job-Creation to the minutes of the 11th meeting of the TEN Section on 6 and 7 September 1999.