Proposal for a COUNCIL RESOLUTION on universal service principles in the telecommunications sector
Date: 1993-11-15
Institutions: European Commission
Subjects: financing, harmonisation of standards, interactive network, telecommunications, telephone charges, trans-European network

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

COM(93) 543 final 

Brussels,  15 November  1993 

if'  ^feCgfr-

COMMUNICATION  FROM  THE  COMMISSION 

TO THE COUNCIL. THE  EUROPEAN  PARLIAMENT  AND THE  ECONOMIC AND  SOCIAL  COMMITTEE 

Developing  universal  service  for telecommunications  in a competitive  environment 

wm 

on  universal  service  principles  in  the  telecommunications  sector 

Proposal  for a 
COUNCIL  RESOLUTION 

(presented by the  Commission) 

TABLE OF CONTENTS 

— Communication  from  the  Commission 

Introduction 

The concept of universal service 

The need for universal service principles 

Main elements of universal service 

Financing universal service 

The framework  for adjustment 

Conclusions 

3 

4 

5 

7 

8 

10 

11 

PROPOSAL FOR A COUNCIL RESOLUTION  ON UNIVERSAL SERVICE 
PRINCIPLES  IN THE FIELD OF TELECOMMUNICATIONS 

INTRODUCTION 

On 28 April  1993 the Commission adopted a Communication  to the Council and the 

liuropcan Parliament on the consultation on the review of the situation  in the 
telecommunications services sector1.  This Communication  presented  the outcome of the 

wide-ranging public consultation  launched by the Commission as part of the  1992 
Telecommunications Review2. 

In the context of the Review the Commission had organised public hearings for the 

Telecommunications Organisations (TOs), Users, Service Providers, Equipment 

Manufacturers  and the Trade Unions.  The Joint Telecommunications  Committee also gave 
its opinion on the Review3.  More than  130 organisations and associations participated  in the 

hearings and the Commission  received more than 80 written contributions on the Review. 

The Commission worked closely with the High Level Committee of National  Regulatory 
Authorities established  by the Council of Ministers in its Resolution of  17 December  19924. 

A key theme in the consultation  and in the Commission's subsequent Communication  was the 

priority attached to the maintenance and  further  development of universal service throughout 

the Community, as a cornerstone of a more liberalised  environment. 

On 22 July  1993 the Council adopted  Resolution 93/C2I3/0P which confirmed  the results of 

the consultation and the conclusions of the  Commission's  Communication. 

Communication to the Council  am) the  I'uropean  I'ailiamcnl  on tlu- consultation  on tlu" review  of tlu-  situation  in  the  telecommunications  services  sector, 

COM(9"*)l W. 2«  April  IW1 

Communication  of  the  Commission  to  the  Com in I  ami  the  I-.UM>|H-.HI  l'ai I lament  on  the  .situation  in  the  maikcl  loi  telecommunications  scivices. 

SI*.C{«2)I'»4X, 21  October  W2 

\ 

4 

S 

Opinion  of  the Joint  Telecommunications  Committee  on  the Commission  Communication  to the  Council  an J the  1'ioposal  tor a Council  Resolution  on 

the Review  of the Situation  in the Télécommunications Sccloi.  Id June  l')'M 

Council  Résolution 9VCX/0I  ni* 17 I  fcccmltei  1992 on the assessment  ol  the situation  in the C.immunity Telecommunications  Sector. ( )J C2. ». 1  '**t. 

Council  Resolution 9.VC2I1/01  of  22  July on  the  Review  o|  the  situation  in the  telecommunications  secloi  and the  need  tor  furthei  development  in that 

market. OJ C2I  VI.  (. X'H 

T HE  CONCEPT  OF  UNIVERSAL  SERVICE 

In the Communication  of 28  April  1993, the  political goal  of universal  service  was  identified 

as: 

"making  available  a defined  minimum  service  of specified  quality  to all  users  at  an 

affordable  price". 

As was  broadly  recognised  during  Uic consultation  on the Review,  the  main elements  for  a 
Community-wide definition  of universal  service principles6 have been  developed  within  the 

framework  of the Open Network  Provision  (ONP)  Rules. 

ONP  is concerned  with ensuring  both  fair,  non-discriminatory access  to networks  and 

services, as well as ensuring that a defined  minimum  set of telecommunications  services  is 

available on a  Community-wide  basis, in particular  the basic voice telephony  offering. 

ONP  is not, however, exclusively  focused  on  the provision  of a  basic  service.  ONP  also 

requires the development of certain  advanced  services  (such  as direct  dialling-  in, call-

forwarding  and  Community-wide  'Green Numbers') and the non-mandatory  application  of 

ONP  principles  to certain  services such as data  communications  and  to  ISDN  (integrated 

services digital  networks). 

The provision of such additional  services, as  well as the mandatory  provision  of a  minimum 

set of leased  line offerings,  is a key element  in reinforcing  the international  competitiveness  of 

business  in the Community,  as well as promoting the development  of new services, such  as 

cross-border  direct marketing and audiotex  services and meeting  market  demands  for 

innovation  in service  offerings. 

Such  additional  services are generally provided  according to commercial  criteria  to meet 

demand  from  specific groups of customers,  in contrast to the basic  voice telephony  offering 

which  must  be generally  provided,  on the basis of a uniform  charge  not  directly  linked  in 

every case to the actual  cost  incurred, to all  customers  reasonably  requesting  it. 

Universal  service obligations  imposed  by national  legislation  or authorisation  regimes 

generally  oblige market  participants  to provide  a certain  basic service  to customers  whom 

they  may otherwise  have  insufficient  economic  incentive to serve.  Such  operators  may  in 

certain  cases  therefore  be required  to act differently  to the way  that  normal  commercial 

practice  would  dictate.  The  so-called 'economic cost' of universal  service  results  from  any 

6 

These  are set  out  in the  annex to the attached  proposal  for a Council  Resolution 

additional expense incurred in serving such customers, where the needs of those customers 

would not be met by market forces alone. 

THE  NEED  FOR  UNIVERSAL  SERVICE  PRINCIPLES 

Within the Community all Member States place a variety of obligations on TOs and service 

providers which arc aimed at ensuring the provision of a minimum  level of service in their 

territory. 

All Member States but one have in the past,  in conformity  with Commission  Directive 
388/90/TvF,C ("the Services  Directive"7), allowed  monopoly  rights over the establishment  and 
operation of a network  to be extended  to the provision  by the  TOs of the basic voice telephony 

service.  This situation has allowed the TOs to finance  the provision of universal  service out 

of internal  revenue transfers, without  it being necessary to define either the precise scope or 

cost of such universal service. 

As indicated above, action at a Community  level has been confined  to harmonisation  within 

the ONP rules. 

These initiatives have now been given new impetus by the Telecommunications Council of 16 

June  1993, which has established the timetable for the future  development of the 

telecommunications  sector. 

In Council  Resolution  93/C2I3/OI  agreed at that meeting, and formally  adopted on 22 July 

1993, the Council identified  as one of the principal  objectives of Community 

Telecommunications  Policy, the liberalisation  of all voice telephony services "whilst 

maintaining universal service". 

The Council set the overall date of  I January  1998 for the full  liberalisation  of voice 

telephony services, with additional transition  periods of up to five years for  Member States 

with less developed networks (i.e. Spain,  Ireland, Greece, and  Portugal) and a possible period 

of up to two years for very small networks (i.e. Luxembourg). 

In a parallel development, the European Court of Justice has recently held that the 

maintenance of exclusive rights is only justified  to the extent that  the resulting restrictions on 

competition, or even the complete exclusion of competition, are necessary to ensure the 

Commis'tion  I Jiici.livc  9ti/tKX/KI-'(  "  ol  .'X  June  I ' l ' X i, 

, , „ l ii 

i  tin-  n u i k cl  loi  t e l e,  . m i n i u m,  alu.iis  -..-i v i . e s.  Ol  I  l ' / . V | l l.  2-1  /  ' "' 

performance  of a  task  of general  economic  interest  which  has  been  entrusted  to  the 

undertaking  enjoying  those exclusive  rights*. 

It is clear  that  the creation  of a  fully  competitive  environment  now  makes  it essential  to 

provide for  a  common  definition  of universal  service  principles,  as  well  as  the  mechanism  to 

be put  in place to ensure  its continuation  and  development.  Such  a  step, aimed  in the  first 

place at  ensuring  that  liberalisation  does  not  lead  to a  fall  in  the quality  of services  which 

users  receive,  is necessary  for  the  following  reasons: 

-> As  long as  telecommunications  services  were  provided  under  direct  State  authority 

and  as  long  as  the TO,  in dealing  with  users, benefited  from  certain  legal 

immunities  under  national  law, a  definition  in general  terms, even  though 

imprecise,  of the  notion  of  universal  service could  appear  to have  been  sufficient. 

As  the traditional  operators  become  increasingly  independent  and  once  the  market 

is opened  on  the  basis  of  free  competition  to new  operators,  it  is necessary  to 

determine  the principles  according  to which  the cost  of  universal  service 

obligations  can  be shared  amongst  market  participants.  A clearer  definition  of 

universal  service  principles  is  vital  to this  process. 

-> The  introduction  of competition  is one of the preconditions  to the creation  of  an 

open  Community-wide  market  for  telecommunications  services  The  creation  of 

an  environment  in which  operators  can  compete  on an  equal  basis  presupposes  a 

comparable  level  of  universal  service obligations  throughout  the  Community.  All 

the same, consistent  with  the  principle of subsidiarity,  this does  not  prejudge  the 

possibility  of  Member  States  imposing  complementary  obligations  on  the  basis  of 

their  specific  national  situations,  as  long as  such  obligations  do  not  create  barriers 

to  market  entry. 

Council  Resolution  93/C2I3/0I  recognised  that  "the application  of  ONP  measures 

...constitutes  the  basis  for  the definition  of  universal  service" and  emphasised  "the  importance. 

for  the  individual  consumer,  and  for  the competitiveness  of Community  industry  and 

commercial  users, of a  Community  telecommunications  system  offering  to all  users,  including 

specific  social  groups,  reasonable  and  affordable  charges  for  access  and  use. high  qualitv oi' 

service and  technological  innovation".  It also  called  for,  "where  necessary,  the adaptation,  in 

the light  of  further  liberalisation,  of  ONP  principles  in  respect  of  the entities  covered  and  of 

such  issues  as  universal  service.." 

(  a-..- Ct.'tl/'M. Cm  l»;„i  y.  H.yu- 

tl,s  /V;.\/e.v. Jinlf.cmci.l  ..I  |'(  May  f 'M 

At this stage, the Commission docs not envisage further  measures beyond those set out in 

Council  Resolution 93/C213/01 in relation to the provision of universal service. 

It is, however, appropriate for the Commission to assist through this Communication in 

establishing a political consensus around certain universal service principles.  These 

principles will provide guidance to the Member States in maintaining and developing 

universal service; firstly, by bringing together basic elements of universal service provision 

found  in Community legislation and current proposals, and, secondly, by addressing the 

financing  of universal service.  In particular, it should assist them in carrying out at a national 

level the progressive rebalancing of tariffs  called for in Council  Resolution  93/C213/01. 

In the absence of such common principles, divergent national  measures, (for example, in the 

form of divergent licence obligations or access charge regimes), taken to ensure the provision 

and financing of universal service would be likely to create real barriers to the provision of 

telecommunications services both nationally and on a pan-European  basis, and distort 

competition between market participants.  Additionally, there would be a real risk of 

consumers and other users of telecommunications services being unaware of the extent of 

universal service which they can expect under Community law. 

MAIN  ELEMENTS  OF UNIVERSAL SERVICE 

On the basis of ONP, the universal service concept includes: 

-> 

-> 

-> 

-> 

-> 

the basic provision of service; 

quality of service ; 

tariff principles i.e. cost-orientation of tariffs,  combined with tariff  flexibility 

(which allows, for example, specially targeted tariff  schemes for  low income 

groups) ; 

dispute resolution  mechanisms ; 

special public service features (for example, operator assistance and emergency 

services) ; 

-> 

certain Community-wide service features. 

Universal service obligations must be developed  in line with the basic principles of ONP. in 

particular the principles of transparency, non-discrimination  and proportionality, as well as 

being fully compatible with Community law, in particular the competition  rules.  Such 

obligations must also promote social and economic cohesion of the Community.  The balance 

between  the definition  of such  obligations  at  a  Community  level  and  their  practical  application 

at a  national  level  must  be consistent  with  the principle of  subsidiarity 

As a  first  step, the  major  elements  of universal  service  in  telecommunications  whose  provision 

each  Member  State  must  ensure, either  through  binding  obligations  or  by  the operation  of 

market  forces,  have  to be  defined. 

In this  respect,  the Commission  considers  that  the principles  provided  for  in the context  of 

ONP are sufficient  at  this stage  to  form  the basis  of universal  service conditions, whilst  being 

open  to further  evolution  on  the  basis  of technological  and  market  developments,  as  well  as  in 

the  light  of  practical  experience. 

The  first  major  objective  of  this  Communication  is therefoie  to diaw  togethei  from  the 

various  ONP  measures  these elements,  in order  to  present  them  as  one coherent  set,  and  thus 

facilitate  their  implementation. 

FINANCING  UNIVERSAL  SERVICE 

In developing  universal  service  in the context  of services  liberalisation,  a  number  of  principles 

with  regard  to  financing  universal  service  must  be agreed  with  both  National  Regulator) 

Authorities  and  operators  on  the  basis  of  consultation. 

Initiating  this  process  is the second  major  objective  of this  Communication. 

The  introduction  of  liberalisation  in the telecommunications  sector  will  move  tariff  structures 

towards  underlying  costs. 

The  maintenance  and  development  of  universal  service  must  go  hand  in hand  with  this  process 

of tariff  adjustment.  This  requires  re-examination  of  the current  methods  of  financing 

universal  service  and,  in particular,  the establishment  of clear  guidelines  to  manage  the 

transition  from  a  monopoly  to a  competitive  environment. 

A  number  of  factors  should,  to  the extent  necessary,  help  to define  this  process  : 

-> the  identification  of the cost  of  meeting  universal  service  obligations  in  relation  to 

those  customers  whose  demand  would  not  be  fully  met  if normal  commercial 

principles  were  followed  ; 

-> the capacity  should  be retained,  subject  to compliance  with  Community  law9,  to 

finance  those activities  with  an  identifiable  need  - in particular  in  local  access,  (in 

those eases  where deficit  is unavoidable)  -  via  transfers  from  more  profitable  long 

distance  and  international  telephony  ; 

->  the gradual  rebalancing  of  tariff  structures  must  be  permitted  so that  direct 

subscriber  revenue  from  connections  and  local  calls  makes  a greater  contribution 

to the cost of universal  service, whilst  bearing  in mind  the needs of  more 

vulnerable or disadvantaged  subscriber  groups,  (such  as  low  income groups  and 

handicapped  users)  ; 

-> new entrants  should  make an  appropriate  contribution  to the  provision  of  universal 

service  and  to the  transfers  required  to  finance  the  basic  elements  of  universal 

service  (in cases  where  deficit  is unavoidable)  via  a  system  of access  charges, 

provided  such  systems  and  any  universal  service  obligations  placed  on  such 

entrants are transparent,  non-discriminatory  and  proportional  and  that  they  fully 

respect  the Community's  competition  rules  ; 

-> sufficient  flexibility  is maintained  to take account  of national  situations,  in  line 

with  the principle of subsidiarity  whilst  at  the  same  time  providing  guidelines  for 

convergence  ; 

-> the  requirement  for  social  and  economic  cohesion  is taken  into account,  as  well  as 

the  maintenance  of an  adequate  investment  capability  for  rapid  development  in  the 

peripheral  regions  with  less developed  networks. 

The  interplay  between  tariff  rebalancing,  transfers  from  more  profitable  service  areas  and 

access  charges  will determine  the speed  with  which  Member  States  and  operators  can  adjust 

in preparation  for  full  liberalisation. 

At  the same  time,  internal  transfers  and  access  charges  cannot  be seen  as  an  alternative  to 

tariff  rebalancing,  which  remains  a  fundamental  requirement  within  the  time  frame  envisaged 

by  Council  Resolution  93/C2I3/1,  nor  should  access  charges  be  used  as  a  means  of 

controlling  a  competitor's  cost  structures. 

See  Communication  horn  the  Commission  "Towauls  cost  oncntalnui  and  the  a<l|uslmcnl  ot  piuitif  siiu.iuics  - 

I cle. ..milium, allons  tant!-,  in  the 

Community" (SKC(<>;>)|(iSij,  |S  ?'>?). 

10 

Internal  transfers  and  access  charges  must  also  be appropriately  structured,  so as  to prevent 

their  use to delay  necessary  improvements  in cost  efficiency  or  productivity  gains  by  shifting 

the burden  of  inefficiency  onto  new  market  entrants 

In the case of the Community's  peripheral  regions  with  less developed  networks,  network 

investment  required  to maintain  and  develop  universal  service  may  also  attract  Community 

funding,  alongside national  financial  resources,  from  the  Community's  support  framework. 

In preparing  for  liberalisation  account  must  be taken  of the  fact  that  tariff  structures,  tariff 

levels, cost  structures,  the scale of  internal  transfers  and  the  level  of network  development  all 

differ  currently  between  Member  States. 

In the  limited  period  leading  up  to  full  liberalisation  of  voice  telephony  services,  National 

Regulatory  Authorities  and  national  operators  will  rapidly  have  to establish  and  subsequently 

implement  and  monitor  the  necessary  programmes  for  adjustment,  in order  to attain  a new 

equilibrium  with  regard  to  financing  universal  service  from  direct  subscriber  revenues  and 

from  transfers 

In establishing  such  a  balance.  Menibei  States  should,  where  necessary,  establish  the 

principles  and  basis  for  determining  a  fair  system  of access  charges.  Such  a  system  must 

build  on the elements  provided  by  ONP,  be  in  line with  a  competitive  market  environment 

and  be compatible  with  both  the  maintenance  and  further  development  of universal  service. 

T HE  FRAMEWORK  FOR  A D J U S T M E NT 

As  the  balance  between  revenues  and  costs  will  continue  to  vary  in  Member  States, 

adjustment  programmes  -  as  called  for  in  Council  Resolution  93/C2 13/01  -  will  have  to be 

worked  out  by the  National  Regulatory  Authorities  and  the operators,  building  on  agreed 

principles  The attached  proposal  for  a  Council  Resolution  should  establish  the  basis  for  this 

work  and  provide  for  a  common  framework. 

The  main  objectives  of these adjustment  programmes  should  be : 

-> the establishment  of transparent  accounting  principles  and  cost  allocation 

procedures  for  operators,  in order  to establish  real  costs  of maintaining  and 

developing  universal  service  ; 

-> the development,  on  the  basis  of  recognised  common  principles  governing  the 

future  balance  between  direct  subscriber  revenue  and  revenue  from  transfers,  of 

adjustment  targets  for  tariff  structures. 

->  in develo|)ing  adjustment  targets,  tariffs  must  be  based  on  the  principle  of cost 

orientation,  whilst  ensuring  affordable  and  reasonable  charges  for  all  users  anil 

promoting  an  open  competitive environment.  Such  an  environment  to  be  founded 

on the  principles  of transparency,  non-discrimination  and  proportionality  ; 

-> on  this  basis, to determine  access  charges, according  to common  principles. 

The  Commission  will  work  closely  with  each  Member  State  in assisting  in the preparation  and 

implementation  of these adjustment  programmes,  as  requested  by  Council  Resolution 

93/C213/01,  and  in the establishment  of common  principles  concerning  accounting,  cost 

allocation  and  transfers.  As called  for  in that  Council  Resolution,  special  attention  will  be 

given  to those  Member  States  with  less developed  networks  or  very  small  networks  in order  to 

achieve  such  adjustments  as  soon  as  possible  and  in  the  best  possible  way. 

Finally,  as  called  for  in the Council  Resolution  93/C213/01.  the  Commission  will  proceed  in 

close consultation  with  the  Hit»h  Level  Committee  of  National  Regulators* Authorities 

CONCLUSIONS 

Council  Resolution  93/C213/01  of  22  July  1993 on  the  Review  of the situation  in  the 

telecommunications  sector  emphasises  the  need  to  maintain  and  expand  universal  service 

The Commission  fully  supports  this goal  as  an  essential  condition  for  maximising  the 

contribution  of the telecommunications  sector to overall  economic  growth,  social  well  being 

and  cohesion  in the Community.  It will  pay  the  utmost  attention  to this  objective  in 

facilitating  the adjustment  of  the sector  to a  competitive  environment. 

The  Member  States  have given  in  that  Council  Resolution  an  active commitment  to 

progressive  structural  adjustment  and  to  the continued  development  of  universal  service  in the 

field of  telecommunications 

Adjustment  should  be based  on  common  principles  governing  the appropriate  balance 

between  direct  revenue,  transfers  from  profitable  activities,  and  access  charge  systems, 

through  svhich  market  participants  can  make  a  fair  contribution  to  the  transfers  required  to 

fund  universal  service.  Such  access  charge  systems  should  be  based  on  the  principles  of 

transparency,  non-discrimination  and  proportionality. 

The  progressive  adjustment  of  the  télécommunications  sector  to a competitive  environment 

will  provide  a  unique opportunity  for  the  further  development  of  universal  service  and  trans 

itu ropcan  networks,  if the appropriate  regulatory  environment  can  be  established 

12 

The  attached  proposal  for a  Council  Resolution drasvs together  the  basic  principles  of 

univcisal  service  in the  Community. 

These principles  provide a  firm  framework  for  the future  evolution  of  universal  service at 

both  a  Community  and national  level, as  svell as providing an  appropriate  basis  for  the 

process  of  adjustment  of  tariffs 

The Commission  transmits  this Communication  and  proposal  foi  a  Council  Resolution  to  the 

Council,  and  to the  European  Parliament  and  the  Economic and  Social  Committee. 

PROPOSAL FOR A COUNCIL  RESOLUTION 

ON  UNIVERSAL  SERVICE PRINCIPLES IN THE TELECOMMUNICATIONS SECTOR 

II IE COUNCIL OF Tl IE EUROPEAN  COMMUNITIES 

I laving regard to the Treaty establishing the European  Economic Community. 

I laving regard to the proposal of the Commission. 

Whereas Council  Resolution 93/C213/0110 on the review of the situation  in the telecommunications 

sector and the need for further  development in that market has established as a major goal for the 

Community's telecommunications policy the liberalisation of all public voice telephony services, 

whilst maintaining universal service. 

Whereas Council Resolution  93/C213/01 has established a firm time schedule for the transition to 

a liberalised environment and called for the initiation of necessary structural adjustments,  in 

particular, of  tariffs. 

Whereas the importance of universal service war, recognised in the Resolution of the European 

Parliament of 20 April  199311 and the Opinion of the Economic and Social Committee of...  1993 

on the  1992 Telecommunications Services Review. 

Whereas Council  Resolution 93/C213/01 identified the application of universal service as a  major 

goal. 

Council  Resolution  9VC2I3/1  of 22  July  1991 on the  Review  of the  situation  in the telecommunications  sector  and the need  for  further  development  in 

that market,  OJ C 2 H.  6  X  91 

Resolution  ol  the  Kuropcan Parliament  on  the Commission  Communication  ol  21 st October  |"W2 concerning the  P 'Ç  Review  of the  situation  in the 

telecommunications  sciviccs  sectoi  (SKC(92)I04X)  20 April  19V? and Resolution  of the  Kuiopean I'ailiament  on  the Communication  liom  the 

Commission  "Towards cost  orientation  and the  adjustment  of pricing structures  -  Telecommunications  tarills  in the Community" (SI-.< V92)l(>St>),  20 

April  1991 

nn 

Whereas this Resolution provides assistance in achieving this goal  in a competitive environment, as 

well as to the progressive rebalancing of tariff  structures, by identifying  the major elements 

constituting universal  service at a Community  level and by providing guidance as to the principles 

to be applied to the financing  of universal  service. 

Whereas Council  Resolution 93/C213/01 recognised as a key factor  in the development of  future 

regulatory policy the importance, for the individual  consumer, for the competitiveness  of 

Community and commercial  users, of a Community telecommunications  system offering  to all 

users including specific social groups, reasonable and affordable  charges for  access and use, high 

quality of service arid technological  innovation. 

Whereas Council  Resolution  93/C213/01 recognised that the application  of Open Netsvork 

Provision  (ONP) measures constitutes the basis, at a Community  level, for  the definition  of 

universal  service and whereas ONP concerns both fair,  non-discriminatory  and open access to and 

use of public telecommunications  networks and services, and also the provision of a  defined 

minimum set of offerings  to be made available on a Community-wide basis. 

Whereas the principles established  by ONP concern both the provision  of basic elements of 

universal  service, as well as the provision of additional  services and the mandatory provision of a 

minimum set of leased line  offerings. 

Whereas  in determining how best to ensure universal  service offerings  national  regulatory 

authorities  shall take full  account of the fact  that  in most cases market forces  would be expected to 

guarantee such offerings  on a commercial  basis without further  intervention. 

Whereas  in other cases this may  result  in obligations on market participants  to provide a  basic 

service to customers whom they would otherwise have insufficient  economic incentive to serve. 

Whereas this concerns, in particular, the provision of a basic voice telephony offering  at an 

affordable  price to all customers  reasonably  requesting it. 

Whereas in this case market participants should make an appropriate contribution to the provision 

of universal service and share in the financial  transfers where required. 

Whereas National  Regulatory Authorities may impose, to the extent consistent with  Community 

law, other obligations which may be required to adapt universal  service to specific  national 

situations, and  in particular, planning policies aimed at ensuring cohesion within a Member State, 

provided such the fulfilment  of such obligations  is technically feasible at a reasonable cost. 

Whereas the development of Trans-European  Networks and  Services will contribute at a 

Community  level towards universal  service;  Whereas the application  of harmonised  standards is 

essential  for  Community-wide  interconncctivity and  interoperability. 

Whereas the concept of universal  service must evolve to keep pace with technological  and  market 

progress, in particular,  in relation to digitisation and the trend towards broad band technologies. 

RECOGNISES 

a) 

the importance for the future  development of telecommunications  in the Community of the 

maintenance and further  development of universal  service, based on the objectives  of 

universality, equality and  continuity. 

b) 

that on the basis of these objectives the essence of universal  service is access to and the 

provision of a defined  minimum service of specified  quality to all users at an  affordable 

price, irrespective of their geographical  location. 

c) 

that common principles for the provision  of universal  service are useful  and necessary in 

order to achieve a balanced and fair  regulatory environment throughout the Community,  as 

ne 
well as being in the interests of consumers by establishing basic minimum service levels for 

both national and pan-European services. 

d) 

that common principles for the provision of universal service, have been defined in the 

Open Network Provision measures and that these can form the basis for the definition  of 

universal service; that these elements should, where necessary, be further developed to take 

account of the future competitive environment and on the basis of practical experience. 

These agreed elements of universal service are set out in the Annex to this Resolution. 

e) 

that special and targeted provision for socially desirable purposes, such as low tariff 

schemes for low income groups and the handicapped should be possible. 

f) 

that in the implementation of these basic elements market participants must make a fair 

contribution to the burden of providing universal  service and that due account must be 

taken of the principles of transparency, non-discrimination, and proportionality, as well as 

ensuring compliance with the competition rules. 

g) 

that in order to promote a Community-wide telecommunications  systems, there is need for 

adequate interconnection of public nctsvorks . 

NOTES 

'  ^ 

a) 

that adequate financial provision is a key factor in the maintenance and further 

development of universal service principles. 

b) 

that Member States must take steps to ensure the establishment and maintenance of an 

adequate financial base for operators by allowing them pricing flexibility and encouraging 

tariff adjustment. 

c) 

that where the provision of certain elements of universal service at an affordable price can 

only be delivered at a loss, operators may, in certain circumstances, finance those services 

through internal transfers from revenue derived from other telecommunications services. 

d) 

that market participants should make an appropriate contribution to the provision of the 

basic elements of universal service and share in the financial transfers, where required and 

in cases where deficit is unavoidable, subject to the principles of transparency, non 

discrimination and proportionality; that such contributions may take the form of access 

charges, where justified and subject to Community law, in particular the competition rules. 

e) 

that in pursuing these objectives account is taken of the specific circumstances of the 

peripheral regions with less developed networks and of very small networks, and the role 

which the Community support framework may play in this process. 

f) 

that the concept of universal service must evolve to keep pace with advances in technology 

and changes in user demand, in particular, in the light of the development of Integrated 

Services Digital Networks and broad band technologies. 

WELCOMES THE INTENTION OF COMMISSION TO 

° 

take full account of the requirement for universal service in preparing the future adjustment of the 

regulatory framework for the telecommunications sector, in particular in applying and adapting the 

Open Network Provision principles. 

CALLS UPON THE MEMBER STATES 

to establish and maintain an appropriate regulatory framework and set appropriate targets, 

according to the objectives and principles set out in this Resolution and in conformity with 

Community law, in particular with the competition rules, in order to ensure universal service 

throughout their territory 

INVITES THE COMMISSION 

a) 

to study and consult on the issues raised by universal service and its means of financing 

and, in particular, the appropriate balance to be achieved between direct revenue and 

internal transfers from other profitable telecommunications services.  Specific account 

should be taken of the need for adjustment  in peripheral regions with less developed 

networks ; 

b) 

to work closely with Member States in assisting the preparation and monitoring of national 

adjustment programmes, particularly with regard to tariffs, accounting principles, 

transfers, and to elaborate common access charge principles, in close consultation with the 

High Level Committee of National Regulatory Authorities ; 

c) 

to report to the Council and the European Parliament on this issue by 1 January 1996. 

PUBLIC SERVICE TARGETS 
("CAHIER DES CHARGES") 

FOR UNIVERSAL SERVICE OFFERINGS IN THE FIELD OF  m 

TELECOMMUNICATIONS 

1Z> 

1.  GENERAL OBJECTIVES 

Universal service means making available a defined minimum service of specified quality to 
all users at an affordable price. 

The fundamental objectives of a public service policy are: 

universality 

i.e. access for all at an affordable  price 

equality 

i.e. access independent of geographical location 

continuity 

i.e. continuous provision, at a defined quality. 

2. 

SERVICE ELEMENTS 

According to 

Council Directive of 28 June 1990 on the establishment of die internal market for 
telecommunications services through the implementation of open network 
provision12. 

Council Directive of 5 June  1992 on the application of open network provision to 
leased lines13. 

Council Directive of |..] on the application of open network provision to voice 
telephony14 

12  Directive 90/387/EEC ; OJ L 192/1 

13  Directive 92/44/EEC ; OJ L 165/10 
14  OIL 

Vo 

Council  Recommendation  of 5 June  1992 on the harmonised provision of a minimum 

set of packet-switched data services (PSDS) in accordance with open network 

provision (ONP) principles'* ; 

Council  Recommendation  of 5 June  1992 on the provision of harmonised  integrated 

services digital network (ISDN) access arrangements and a minimum set of ISDN 
offerings  in accordance with open network  provision (ONP) principles'6. 

the following provisions apply: 

2.1 

Basic elements 

The setting of appropriate targets and their implementation are to be ensured through  the 

National  Regulatory  Authorities for the following : 

• 

Provision  of the basic  public telecommunications network  and  voice telephony 

service 

i.e. the provision throughout  the territory of the specified  service(s).  Target deliver) 
periods (waiting time for  initial provision) and achieved deliver)  periods should be 
published. 

Users should have a right of access to and use of the service  Users should  have a 
contract  specifying  the service to be provided. 

Withdrawal of a service offering  should only be made with the agreement of the 
national  regulatory authority and after  public consultation. 

Quality  of service 

the publication  of quality  targets  for  users and the monitoring and publication  of 
quality levels achieved  by service providers/network  operators. 

|S 

92/.W2/Iil•:< '  , OJ I. JIM)/1 

"' 

<>2/IX</I-:I-:C  . oj  i, 2IKI/IO 

?1 

Pricing  Policy 

Alongside the principle of cost-orientation, there should be reasonable and  affordable 

prices throughout  the territory  for  initial connection, subscription, periodic rental, 

access and use of the service. 

There should also be tariff  flexibility  i.e. the possibility of special and targeted 

provision for socially desirable purposes (in particular,  for  low income groups and 

handicapped  users). 

Tariffs  should be sufficiently  unbundled to ensure that  u.sers are not required  to pay 

for  facilities  which are not required  for the service demanded. 

Publication  of information  about  the  service 

Adequate information  should  be made readily available to users concerning: supply 
and usage conditions, tariffs,  technical  characteristics, licensing, terminal  attachment. 

Dispute  resolution  procedures  for  users 

Provision of accessible and in principle inexpensive procedures  to resolve disputes 
between users and telecommunications organisations, through an  independent  body 

Subscriber  directories 

Provision  of up-to-date directories of subscribers to be made available to subscribers 
and other users.  Subscribers should  have the right  to have or not to have an entry in 
public directories.  Public directory  information  should  be available on published 
terms. 

Operator  assistance and  directory enquiry services 

^  Zs 

Operator assistance and directory enquiry services provided as part of the voice 

telephony service.  Access for users in other Member  Stales to be encouraged. 

Public  pay-telephones 

Sufficient  public pay-telephones to be provided to meet the reasonable needs of 

users, including card-phones. 

Access to emergency  services 

Access to emergency services using, inter alia, the single European emergency call 
number *•"!  12'- to be provided  free of charge. 

• 

Specific  conditions for  disabled  users and  people with  special  needs 

Special conditions where appropriate to aid disabled  users or other people who have 
special needs in relation to their use of the telephone network and/or service. 

2.2  Additional  elements 

The setting of appropriate targets and their implementation  are to be ensured  through the 
National  Regulatory Authorities for the following : 

• 

Advanced  features 

For the public telecommunications  network  and voice telephonv service the  following 
advanced  features  should  be provided : 

itemised billing ; 

DTMF  tone dialling  ("touch  tone")  ; 

<^  3 

direct-dialling-in  ; 

call  forwarding  ; 

calling  line identification  ; 

standard  connector  ('socket')  for  ISDN  network  access. 

Additionally,  the provision  of the following  features  is encouraged  as  part  of  a 

Community-wide  voice telephony  service : 

"(jreen  number"  ("freephone")  services; 

kiosk  billing ; 

call  transfer  ; 

reverse  charging  ; 

access  to directory  services  in other  Member  States  : 

access  to operator  services  in other  Member  States. 

2.3  Leased  lines 

The  following  mandator)'  minimum  set  of  leased  lines  must  be  offered: 

voice quality  analogue  lines 

Special  quality  analogue  lines 

64  kbit/s  digital  lines 

2  Mbit/s  digital  lines,  both  structured  and  unstructured 

2.4  Recommended  Offerings 

The  provision  of  the  following  offerings  within  ISDN  and  packet  switched  data  services 

(PSDS)  is  recommended  : 

• 

ISDN  (Integrated  Services  Digital  Network) 

basic  rate and  primary  rate  access 

e v 

minimum  set  of  bearer  services,  teleserviees, supplementary  services 

"Green  number"  (freephone)  services,  kiosk  billing, 

user  contracts, common  ordering  and  billing  procedures,  itemised  billing. 

• 

PSDS  (Packet  Switched  Data  Services) 

minimum  set  of X.25  core offerings  and  user  options 

"Green  number"  ("freephone")  services,  kiosk  billing, 

common  ordering and  billing  procedures 

3. 

A D J U S T M E NT  TO  TECHNOLOGICAL  DEVELOPMENT 

Provision  for  modifications  necessary  to adapt  the  provisions  of  ONP  directives  and 

recommendations  to new  technological  developments  or  changes  in  market  demand 

The  Directives  and  Recommendations  also  make  provision  for  I European  and/or 

international  standards  to be used  where  available. 

Zb 

ISSN 0254-1475 

COM(93) 543 final 

DOCUMENTS 

EN 

10 15 

Catalogue number : CB-CO-93-579-EN-C 

ISBN 92-77-60656-8 

Office  for Official  Publications of the Eurcrn^r  c^rr-