Opinion of the Committee of the Regions on the 'Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions: Universal service for telecommunications in the perspective of a fully liberalized environment - An essential element of the information society` (97/C 116/04)

THE COMMITTEE OF THE REGIONS,

having regard to the Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on universal service for telecommunications in the perspective of a fully liberalized environment (COM(96) 73 final);

having regard to the decision taken by the Commission on 13 March 1996, under the first paragraph of Article 198c of the Treaty establishing the European Community, to consult the Committee of the Regions on the matter;

having regard to its decision of 8 March 1996 to direct Subcommission 3 'Telecommunications` to draw up the relevant opinion;

having regard to the draft opinion (CdR 371/96 rev.) adopted by Subcommission 3 on 11 December 1996 (rapporteur: Mr Nash),

adopted the following opinion at its 16th plenary session on 15 and 16 January 1997 (meeting of 15 January).

1. Introduction

1.1. This communication relates to the EU policy of fully opening the telecommunications markets to competition with effect from 1 January 1998. The EU institutions have recognized that this liberalization should go hand in hand with the establishment of a regulatory framework to guarantee the provision of a universal service.

1.2. The policy of the European Commission towards the information society has taken into account the need to avoid a 'two-tier` society, divided between those who have access to the new possibilities and are comfortable using them and those who are excluded from fully enjoying their benefits.

1.3. In the light of the political agreements of 1993 and 1994 resulting from the Commission's 1992 telecommunications review in favour of the full liberalization in the sector, the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions () have all recognized that liberalization goes hand in hand with parallel action to create a regulatory framework which secures the delivery of universal service.

1.4. Therefore, having regard to these foregoing Opinions, the aims of the Communication are threefold:

- firstly to describe the current concept of universal service in telecommunications, both in terms of the regulatory framework and in terms of the current level of universal service provision in the Member States;

- secondly to address practical issues and proper solutions and action for the future development of universal service;

- thirdly, to place the universal service in the broader context of the information society.

2. The need for a concept of universal service at a European level and why a universal service obligation is being put in place in the European Community

2.1. In this regard the Communication makes the following points:

- In the past there was no harmonization at a European level of universal service in the telecommunications sector. Priorities were set at national level and this produced mixed results.

- Failure to address these different levels of development would undermine the goal of strengthening economic and social cohesion set out in the Treaty.

- The existence of a certain minimum set of services is essential for the development of the internal market.

- The Maastricht Treaty obliges the Community to maintain a high standard of consumer protection and it believes that the competitive forces unleashed by the liberalization process will be a major factor in improving consumer choice and service quality.

2.2. The Committee of the Regions welcomes the concept of a universal service, particularly the aim of achieving a minimum set of services for all users, but would urge that consumer protection be given the highest priority in the liberalized market.

2.3. The Committee of the Regions welcomes the decision of the Commission to create obligations on the part of suppliers of telecommunications services to guarantee a defined level of service to all users.

3. Scope of the proposals

3.1. The scope of the proposals are based on the voice telephone Directive (95/62/EC) () and comprise the provision of voice telephone service via a fixed connection which will also allow a FAX and a modem to operate, as well as the provision of operator assistance, emergency and directory enquiry services, including the provision of subscriber directories and the provision of public pay-phones.

3.2. Further, users are given the possibility of accessing not only the defined voice telephone service but all services that can be provided over today's telecommunications networks.

3.3. The Committee of the Regions welcomes these obligations and the guarantee that users will have access to published information about the cost and prices of services, about the quality of service levels and whether targets of quality are being met.

3.4. Further it accepts the assurance in the Communication that users should have an efficient, reliable and affordable service, with defined (and monitored) levels of service, in respect of the time taken to get a telephone connection installed, the quality of transmission and reception of calls and time taken to repair faults.

3.5. However, noting the speed with which the telecommunications industry is developing, the Committee of the Regions feels that a broader definition of universal service should be introduced as quickly as possible. While understanding the need to balance the introduction of a universal service with the need to attract investment into the liberalized market, the Committee of the Regions feels that the broader the concept of the universal service is, the less regional disparities will have a chance of occurring.

3.6. There is a grave danger that in the rush into the liberalized market private service providers will concentrate the introduction of advanced telecommunication services in the high centres of population and wealth, while providing the minimum services to the poorer and less populated regions.

3.7. Even though greater services may be provided under the universal service at a later date, it may well be too late for these poorer regions to catch up and find a place in the market. Failure to act on a broader scale than that already envisaged, may well acerbate the already grave economic disparities that exist amongst the regions of the Union.

3.8. Therefore, in the light of the foregoing, the Committee of the Regions urges the Commission to expand the universal service requirements to provide leased lines or ISDN (integrated services digital network) where suitable. In addition, the universal service concept should not exclude the possibility of being able to provide compensatory measures for service providers in rural areas who offer more than the minimum universal service.

4. Affordability: costs to the consumer

4.1. On the question of affordability the Commission points out that while costs have fallen dramatically for operators, these have not often been passed on in the form of lower prices for users.

4.2. For instance, in Denmark installation charges cost ECU 212, while Luxembourg charges ECU 65. Again, for the two countries bi-monthly rental charges are respectively ECU 27 in Denmark and just ECU 11 in Luxembourg. Similar disparities exist between most of the member countries of the Union.

4.3. In this regard the report voices its concern over these and similar discrepancies in warning that 'it is essential to ensure that further progressive and necessary rebalancing does not adversely affect users, particularly residential consumers`.

4.4. The Committee of the Regions shares this concern and at a minimum calls on the Commission to impose explicit obligations for services to be provided at affordable prices.

4.5. Furthermore, the Committee of the Regions concurs with the view of the Commission that, as regards vulnerable groups of users and residential users in general, the national regulators should adopt, where necessary, special tariff packages, price caps and other mechanisms in order to moderate the effects of the rebalancing process on connection charges, monthly rental and tariffs. This, as the Communication points out, is particularly important as far as the less favoured and less populated regions of the Community are concerned.

4.6. In addition to the above, the Committee of the Regions calls on the Commission to intervene, where necessary, between now and the publication of the Monitoring Report on 1 January 1998, in cases where major disparities in affordability of services occur. This is vital to prevent unjustifiable increases in charges between now and 1 January 1998.

4.7. In the opinion of the Committee of the Regions, it is vital that, as part of the universal service, operators should be obliged to supply itemized bills and flexible ways of paying, such as spreading connecting charges over a series of instalments, to all users.

5. Uniform National Prices

5.1. Rightfully, the Communication points out that a fundamental responsibility for national regulatory authorities will be to ensure that universal service is affordable for all groups of users and further that 'in a liberalized environment, any approach to uniform pricing must guarantee and improve affordability`.

5.2. There is a fear that, as competition establishes itself, particularly in cities, new players may concentrate on customers there and offer lower prices than the incumbent operator.

5.3. The Committee of the Regions would be most concerned about this as the incumbent operator may be forced to operate a two-tier system: i.e. low prices in the cities, higher prices in the rural and less populated regions.

5.4. On addressing this problem the Commission states that 'the issues of scope and affordability of universal service, and of telecommunications services in general, are of critical importance to the Community's less favoured regions`. Further, the Commission states that it will continue to work to ensure that a combination of liberalization and new technologies reduces rather than widens existing regional differences within the European Community.

5.5. For its part, the Commission admits that it is difficult to assess the full impact that liberalization will have on the less favoured regions of the Union and states that the Commission must be vigilant against the danger that the different speeds at which the territories of the Community equip themselves with the various services needed for the emerging information society may contribute to sustaining a time-gap and to further the widening of social and economic disparities amongst the regions of Europe.

5.6. The Committee of the Regions shares these concerns of the Commission but feels that a much more 'hands on` approach must be instituted to prevent a 'time-gap` emerging in the less developed regions.

5.7. The use of the Structural Fund and other initiatives is a useful device in upgrading the telecommunications service in Ireland, Greece, Portugal, Spain and southern Italy and the Committee of the Regions welcomes their continuous use in this up-grading process.

5.8. However, the Committee of the Regions feels that similar programmes may be needed in other regions of the Union.

5.9. To this end it requests the Commission to draw up a report, at the earliest opportunity, aimed at discovering other regions of the Community that may be severely lagging behind in telecommunications infrastructures; and, where necessary, making funding available to these regions for the purpose of up-grading these services.

5.10. Furthermore, the Committee of the Regions feels that in the light of the liberalization process private investment must play its part, through the legislative process if necessary, in ensuring that proper and equitable investment is directed to the less populated and less favoured regions of the Union.

6. Users with disabilities and special needs

6.1. Those with disabilities and special needs form a special group within our society and their needs and aspirations must be catered for.

6.2. Therefore the Committee of the Regions welcomes the statement from the Commission that such users should benefit from an equivalent level of service at an affordable price to that offered to users without disabilities and special needs.

6.3. However, the Committee of the Regions feels that more progress would be made in the provision of these services if certain basic services were guaranteed. Examples of this would be textphones for the deaf, both at home and in public places; other examples would be the provision of free rental and reduced tariffs for the elderly, the unemployed and the retired. Special freephone facilities should be allowed to voluntary charitable groups such as the Samaritans, rape crises centres, etc.

Low user scheme

6.4. Furthermore the Committee of the Regions recognizes that for some people, particularly the elderly and those with disabilities or special needs, the provision of a telephone is an essential facility, even if it is not often used, and urges the Commission to encourage the extension of the low user schemes currently operating in some Member States to be extended to all states.

7. Quality of service standards

7.1. The Committee of the Regions agrees with the standards already set out in the Voice Telephone Directive and it further agrees that service standards results of the operator must be published on a regular basis.

7.2. Moreover it fully endorses the view of the Commission that sanctions should be imposed on operators who fail consistently to meet service targets, including the possible withdrawal of licences.

7.3. In addition, the Committee of the Regions agrees that minimum service targets should be defined at European Community level against which national targets would be set.

8. The role of the user in the monitoring of service levels, prices and affordability

8.1. In the overall context of the monitoring of service levels, prices and affordability the Committee of the Regions sees, along with consumer groups, a role for regional and local authorities in the monitoring process. The fact that these authorities are those that are nearest the people, puts them in a unique position to see what is happening both on a local overall basis and on a day-to-day observation of the service.

8.2. Therefore the Committee of the Regions calls on the Commission to include local and regional authorities as partners in the monitoring system of the operators in the new liberalized environment of telecommunications.

8.3. Finally, the Committee of the Regions welcomes the proposal, and urges the setting up of a monitoring committee at European level to represent consumers, and urges also that this committee has on it representatives of local and regional authorities.

9. The evolution of universal service and advanced services

9.1. The Committee of the Regions agrees that a universal service is recognized as an essential element of the global information societies and further agrees with the G7 ministers' declaration that 'ensuring universal provision of and access to services as one of the eight core principles behind the realization of their common vision of the information society`.

9.2. In determining the evolution of universal service for telecommunications in the information society, the Commission rather than give answers at this stage, poses a number of questions such as:

9.3. Should universal service for telecommunications continue to be subsidized only by undertakings in the sector or should other means of funding (e.g. greater direct funding by the state/stimulation of private-public partnerships) be envisaged?

9.4. Should the framework being put in place at a Community level simply provide a response to the risk of that market forces alone will not provide an adequate guarantee of affordable service for every citizen or should it be something more in seeking to steer and develop the evolution of markets and/or technologies?

9.5. In answer to those two very important questions the Committee of the Regions feels, and agrees with the Commission, that user demand and technological evolution must be the principal determinants of the future evolution of universal service; but further states that in order to protect the interests of less favoured regions that Community, state and regional funding, should and must be used where necessary. To return to an earlier theme, the development of a time-gap in technological development in the less favoured regions could have serious detrimental effects on those regions from which they would find it hard to recover.

9.6. In the meantime, the Committee of the Regions supports the Commission's framework that requires Member States to set targets for Community-wide introduction of certain advanced telephone facilities (which are not currently part of the universal service).

10. Promoting the information society

10.1. The Committee of the Regions welcomes the decision of the Commission in promoting the information society. In particular it welcomes the stress on education and training in the information society and in particular in equipping the workforce with appropriate skills for the information age in helping to foster employment possibilities and overall competitiveness.

10.2. In the field of education the Committee of the Regions urges the Commission to help introduce reduced prices for those using current and advanced telecommunications services.

10.3. The funding of such reduced prices would in the main, be seen as a state responsibility and as part of an overall educational package. It is therefore the view of the Committee of the Regions that the development of educational priorities should be the task of local, regional and state organizations and that they should fund such developments.

10.4. Notwithstanding that, the Committee of the Regions endorses the priorities established in the Communication 'Towards the information society` () and agrees that the Community's role should be focused on the stimulation of projects, through provision of information and increasing awareness of information society initiatives.

10.5. Further the Committee of the Regions endorses the provision of financial support for certain projects by the Community which either cater for the relevant infrastructure and the development of awareness, skills or services or which stimulate the necessary research and development activities, leading to new concepts which are the key to the advancement of the information society.

11. Public access to information society services

11.1. The Committee of the Regions warmly welcomes the commitment of the Commission of public access to the information society. In particular it welcomes the connection of schools, colleges, hospitals, public offices, libraries and other public access points into the information society.

11.2. In this regard the Committee of the Regions agrees with the Commission that public and 'Community` access will be of particular importance for the less favoured regions if the development of the information society is left to market forces alone, and, therefore in this context supports the Commission in the close monitoring of public, non-profit and voluntary sectors' access to the information society.

11.3. The Committee of the Regions gives full support to the Commission in its determination to keep under constant review public access to the information society and in particular within the less favoured regions of the Community.

12. Future issues

12.1. The Committee of the Regions agrees with the sentiments expressed by the Commission identifying future issues and in particular agrees that public access should go beyond promoting physical connections and include adequate training, support and investment in equipment.

12.2. On the question of low tariffs the Committee of the Regions agrees that these are essential to the widespread take up of on-line information and services and further believes that legislation may be needed to ensure that these low tariffs will be adhered to.

13. Conclusions

13.1. The Committee of the Regions welcomes and endorses the communication from the Commission. It appreciates in particular the emphasis placed by the Commission on the role of the regions of the Union in the emerging telecommunications revolution, in particular in ensuring that the less well off regions are not allowed to lag behind in new developments.

13.2. In the overall context of the Communication the Committee would summarize its Opinion with the following points:

13.2.1. In the context of the universal service the Committee of the Regions urges that the highest priority be given to consumer protection.

13.2.2. As a first step and in order to help the less developed regions the Committee of the Regions urges that the provision of leased lines or ISDN should be part of the universal service obligation where suitable.

13.2.3. The Committee of the Regions believes that the Commission should impose explicit obligations for services to be provided at affordable prices.

13.2.4. Further, the Committee of the Regions also believes and endorses the call of the Commission that as regards vulnerable groups and residential users in general, the national regulatory authorities should adopt, where necessary, special tariff packages, price caps and other mechanisms in order to moderate the effects of the rebalancing process on connection charges, monthly rental and tariffs.

13.2.5. The Committee of the Regions calls on the Commission to intervene, where necessary, between now and the publication of the monitoring report on 1 January 1998, in cases where major disparities in affordability occur.

13.2.6. The Committee of the Regions, while recognizing the invaluable contribution that the Structural Funds have made to upgrading the telecommunications networks in some countries, calls on the Commission to draw up a report to see if there are other areas of the Community lagging severely behind in telecommunications infrastructure and, where necessary, to make funding available to these regions for the purpose of upgrading their services.

13.2.7. The Committee of the Regions also believes that the Commission has a duty to ensure that equitable investment is directed, where necessary, to the less populated and less favoured regions of the Union.

13.2.8. With regard to those with disabilities and special needs the Committee of the Regions feels that services such as textphones for the deaf and low-user schemes should be made available, amongst other schemes, for these groups.

13.2.9. With regard to monitoring groups the Committee of the Regions feels that besides consumer groups, local and regional authorities should be included in this process.

13.3. Finally, the Committee of the Regions welcomes the ongoing debate on the information society in the Community and sees the establishment of the universal service as a first and vital step towards achieving equity and harmony within the Union and looks forward to participating in the debate on the evolution of the information society.

Brussels, 15 January 1997.

The Chairman of the Committee of the Regions

Pasqual MARAGALL i MIRA

() An action plan (COM(94) 347 final); OJ No C 210, 14. 8. 1995, p. 109.

() OJ No L 321, 30. 12. 1995, p. 6; OJ No L 108, 1. 5. 1996, p. 62.

() COM(95) 244 final.