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 liberalised environment - An Essential Element of the Information Society
Date: 1996-03-13
Institutions: European Commission
Subjects: communications systems, competition, market access, telecommunications, telephone

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  13.03.1996 
COM(96)  73  final 

COMMUNICATION  FROM  THE  COMMISSION 

TO  THE  COUNCIL,  THE  EUROPEAN  PARLIAMENT, 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
AND  THE  COMMITTEE  OF  THE  REGIONS 

U N I V E R S AL  S E R V I CE 

F OR  T E L E C O M M U N I C A T I O NS 

IN  T HE  P E R S P E C T I VE  OF  A  F U L LY 

L I B E R A L I S ED  E N V I R O N M E NT 

AN  E S S E N T I AL  E L E M E NT  OF  T HE 

I N F O R M A T I ON  S O C I E TY 

TABLE OF CONTENTS 

I 

INTRODUCTION 

II 

THE CURRENT CONCEPT OF UNIVERSAL SERVICE IN 
TELECOMMUNICATIONS  IN THE EUROPEAN COMMUNITY 

3 

4 

III 

ISSUES FOR THE EVOLUTION OF UNIVERSAL SERVICE IN THE 
SHORT TERM 

8 

IV 

THE EVOLUTION OF UNIVERSAL SERVICE FOR 
TELECOMMUNICATIONS AND ACCESS TO ADVANCED SERVICES IN 
17 
THE CONTEXT OF THE INFORMATION SOCIETY 

V 

CONCLUSIONS 

21 

ANNEX 1 TIMETABLE FOR ACTION IN THE SHORT TERM (1996-1998) 

ANNEX 2  UNIVERSAL SERVICE FOR TELECOMMUNICATIONS  IN 

THE EUROPEAN COMMUNITY TODAY 

QUESTIONNAIRE SENT TO MEMBER STATES 

ANNEX 3  LIST OF ORGANISATIONS  PROVIDING WRITTEN RESPONSES 

TO THE THEME PAPER ON UNIVERSAL SERVICE 

ANNEX 4  SUMMARY OF THE MAIN ISSUES RAISED 

IN THE PUBLIC CONSULTATION ON THE UNIVERSAL SERVICE 
THEME PAPER 

INTRODUCTION 

In the emerging information  society more and more people - m private life and at 
work  -  depend  on  modern  communications.  To  be  atole  to  communicate  and 
interact  whether  by  telephone,  fax,  e-mail  or  electronic  media  is  a  crucial  and 
decisive  factor  for  every  citizen  and  business.  The  policy  of  the  European 
Commission  towards  the  information  society  has  from  the  beginning  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. 

Universal  service  is  a  dynamic  and  evolving  concept, 
it  is  one  of  the  essential 
elements  of  this  information  society  and  the  priority  attached  to  it  must  be 
considered 
fully  opening 
the  Community's  policy  of 
telecommunications  markets to competition from 1  January  1998'. 

the  context  of 

in 

The  telecommunications  sector  is  an  area  of  startling  innovation  and  rapid 
technological  evolution. 
It  is  critical  for  the  overall  competitiveness  of  Europe's 
economy.  1998  is  a  central  gateway  to  the  information  society  as  effective 
competition ensures that both business  and residential  users have the  benefits in 
terms  of  choice, quality  and the best  possible  prices.  Within  this framework,  the 
current  concept  of  universal  service,  found  in  the  Voice  Telephony  Directive*, 
corresponds  to  the  obligation  to  provide  access  to  the  public  telephone 
network  and  to  deliver  an  affordable 
telephone  service  to  all  users 
reasonably  requesting  it.  This  concept  is  improving  the  level  of  service 
currently  found  in  the  Community  and  operates  as  a  guarantee  that  these 
advantages  are  widely  spread  and  that  the  interests  of  consumers  are  actively 
promoted. 

In  the  light  of  the  political  agreements  of  1993  and  1994  resulting  from  the 
Commission's  1992 Telecommunications  Review3 in favour of the full  liberalisation 
in the  sector,  the  Council  , the  European  Parliament  , the  Economic  and  Social 
Committee  and  the  Committee  of  the  Regions  have  all,  recognised  that 
liberalisation  goes  hand  in  hand  with  parallel  action  to  create  a  regulatory 
framework which secures the delivery of universal service. 

The  European  Parliament  emphasised:  "the  central  importance  of  universal 
service principles, in order to ensure the complementarity between economic and 
social goals  ... and  the  balance between liberalisation and  the need  to maintain 
basic,  affordable  services  for  all  consumers", whilst  Council  identified  universal 
service  as permitting  "access to a defined minimum service of specified quality to 
all  users  everywhere  and,  in  the  light  of  specific  national  conditions,  at  an 
affordable price". 

To respond to these positions, the regulatory framework  for universal  service  at a 
Community  level which has been put in place identifies the scope of such service; 
addresses the notion of  affordabiiity  and is in the process of establishing rules for 
financing that service in a liberalised environment. 

that 

is  against 

this  background 

It 
this 
Communication.  It has done so in the light of the results  of  a survey  of the  level 
and quality of service found in the Member States and of a public consultation  on 
universal service issues during Autumn 19958.  (The detailed results are set out in 
the annexes two to four of the Communication).  The aims of the  Communication 
are threefold: 

the  Commission  has  prepared 

to  describe 

Firstly, 
in 
teJecommunications,  both  in terms  of the  regulatory  framework  and  in terms  of 
the current  level of  universal  service  provision  in the  Member  States; 

concept  of 

universal 

service 

current 

the 

Secondly,  to  address  practical  issues  and  propose  solutions  and  action  for  the 
future  development  of  universal  service;  and 

Thirdly,  to  place  universal  service  for  telecommunications 
context  of the  information  society. 

in  the  broader 

THE 
TELECOMMUNICATIONS  «SI  THE  EUROPEAN  COMMUNITY 

UNIVERSAL 

CURRENT 

CONCEPT 

OF 

SERVICE 

ÏN 

The need  for a concept  of universal  service  at  a European  level 

In the  past  there was  no harmonisation  at  a  European  level  of  universal  service  in 
the  telecommunications  sector.  Priorities  were  set  at  a  national  level  and  in  the 
absence  of  competitive  forces  in most  Member  States  this  produced  mixed  results; 
positive  developments  such as full  network  digitalisation  in  France  or the  very  high 
levels  of  service  penetration  in  Scandinavian  Member  States,  but  also  worrying 
failures  in  certain  countries  in  terms  of  poor  service,  long  waiting  lists  to  get  a 
phone  or long delays  in repairing faults". 

Were  such  a  pattern  of  very  different  levels  of  development,  which  characterised 
the  monopoly  environment, 
it  would  substantially 
undermine  the  goal  of  strengthening  economic  and  social  cohesion  set  out  in  the 
Treaty.  The  same  concern  to  achieve  balanced  development  within  the  different 
parts  of the  Community  must  also  apply  in a liberalised  environment. 

to  continue  unchecked, 

In addition, the  existence  of  a  certain  minimum  set  of  services  is  essential  for  the 
development  of  the  internal  market.  Different  levels  of  service  obligations  in  the 
Member  States  would  hamper  the  take-off  of  Europe-wide 
telecommunication 
services. 

The  absence  of  coherent  national  approaches  to  universal  service  could  also 
create  new  barriers to effective  competition. 

A  further  political  impetus  has  been  given  with  the  entry  into  force  of  the 
introducing  the  obligation  to  maintain  a  high  standard  of 
Maastricht  Treaty 
consumer  protection  within  the  Community's  policies 
In  this  regard,  the 
competitive  forces which  liberalisation will  unleash will  be  major  factor  in  improving 
consumer  choice  and  service  quality. 

. 

What  is  the  universal  service  obligation  being  put  in  place 
Community 

today? 

in  the  European 

With  the  adoption  by  the  European  Parliament  and  the  Council  of  the  Voice 
Telephony  Directive  in  December  1995  the  Community  has  now  for  the  first  time 
identified  the  common  scope  of  universal  service  obligations  in  the  EC. 
In  doing 
this  it  has  chosen  to  create  obligations  which  will  guarantee  a  defined  level  of 
service  in  a  liberalised  environment  and  which  will  improve  the  current  level  of 
service  in many  parts  of the  Community. 

This  detailed  description  of  universal  service  found  in  the  Voice  Telephony 
Directive  is  completed  by  the  package  of  measures,  (which  address  the  practical 

arrangements  for  universal  service),  which  have  been  tabled  as  part  of  the 
preparation for a liberalised environment11. 

The final element  in the  current  concept will be provided by guidelines which the 
Commission  w'li  use  in  assessing  the  way  Member  States  propose  to  finance 
universal service.  These will be published in September 1996. 

The  definition  of  universal  service  which  emerges  from  the  framework  outlined 
above  sets  the  maximum  scope  of  services  which  can  be  included  in  any 
calculation  of  the cost  of the  universal  service.  Only  those  costs  may  be  shared 
amongst other market players. 

telecommunications-related 

At  the  same  time,  Member  States  in  line  with  subsidiarity  remain  free  to  set 
additional 
particular 
technologies  or facilities (such as digital mobile networks or ISDN services)  and/or 
to  set  service  and  coverage  targets  at  a  national  level,  providing  these  are 
proportional, non-discriminatory,  imposed in a transparent  manner  and consistent 
with  the  competition  rules. 
Any  additional  financial  burden  associated  with 
meeting  such  obligations  must  not  funded  out  the  mechanism  established  for 
funding universal service.. 

to  provide 

obligations 

a.  Scope 

The  obligations  set  out  in  the  Voice  Telephony  Directive  comprise  the 
provision of voice telephony  service via a fixed connection which will also 
allow  a fax  and  a modem to  operate12,  as well as the  provision  of  operator 
assistance,  emergency  and  directory  enquiry  services  (including  the 
provision of subscriber directories)  and the provision of public  payphones. 

Users should also have access to published  information  about the  cost  and 
prices  of  services,  about  their  quality  and  whether  targets  for  quality  are 
being met13. 

By including  network  access within the scope  of  universal  service,  users  are 
given  the  possibility  of  accessing  not  only  the  defined  voice  telephony 
today's 
service  but  all  services 
telecommunications  networks  (i.e. every  citizen will be able to  access  inter 
active  and  on-line  information  services  including  the  Internet,  provided  they 
have  a  computer  and  a  subscription  with  an  Internet  service  provider14). 
Nevertheless, the quality  and  speed of  the  connection will influence  the ease 
with which these services can be used. 

that  can  be  provided  over 

This scope meets the concerns  of the  European  Parliament 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 the time taken 
to  repair  faults.  The  Directive  in  promoting  new  services  also  meets  the 
Parliament's call for highly specific service elements, such as the availability of 
itemised  billing,  calling  line  identification,  touch-tone  dialling  and  number 
portability15. 

b.  Affordabiiity 

Whilst a political consensus has emerged on affordabiiity  as a key element in 
any concept  of  universal  service, this  is not yet  an explicit  requirement  of the 
Voice Telephony  Directive.  Affordabiiity  is  a matter  to  be  determined  at a 

national  level  because  it is  so closely  linked  to  specific  national  circumstances 
and  national  policy  objectives  (such  as  regional  development  policy). 

The  current  concept  of  universal  service  simply  allows  national  regulatory 
authorities  to  impose  controls  on  pricing  linked  to  universal  service  and 
regional  development  policies.  Such  an  approach  is  consistent  with  the 
principle  of  subsidiarity.  In contrast  to  areas  such  as  technical  performance  or 
quality  of  service,  where  objective  standards  may  be  defined,  it  does  not 
appear  appropriate  to  establish  a  maximum  or  minimum  level  for  affordabiiity 
(implying  price  regulation  at  a  European  level)  which  should  apply  to  all 
Member  States. 

Nevertheless, 
of 
telecommunications  service  to  every  citizen  and  progress  made  in  Member 
States  will  be closely  monitored  (see  Section  III below). 

affordabiiity 

extension 

crucial 

the 

to 

is 

c.  Financing  of  universal  service 

The  shift  from  a  monopoly  environment  to  competition  means  that  rules  are 
needed  to  determine  the  extent  to  which  any  financial  burden  associated  with 
providing  universal  service  is  shared  out  amongst  market  players.  Common 
rules  across  the  Community  are  also  needed  to  calculate  how  much  providing 
universal  service  costs. 

identifying 

The  measures 
therefore 
accompanied  by  principles  for  its  costing  and  funding  through  the  proposed 
framework 
the 
Commission  to  verify  whether  national  schemes  for  universal  service  are  in 

interconnection16,  as  well  as  a  mechanism  allowing 

the  scope  of  universal  service 

for 

is 

line with the  Community  framework 

17 
. 

framework  envisages  payments  being  made  either 

This 
into  an 
independent  universal  service  fund  at  a  national  level  which  would  make 
payments  to  operators  providing  universal  service  or  (ii)  directly  to  operators 
providing  universal  service  as  an  additional  payment  to  the  commercial 
charges  for  interconnecting  with their  network. 

(i) 

These  rules  will  be  complemented  later  this  year  by  the  guidelines  on  costing 
and funding  identified  above. 

The  regulatory  certainty  which  the  current  framework  is  establishing  has  been 
essential  to  allow  Member  States  to  prepare  their  national  regulatory  environment 
in time for the  1998  deadline.  Where  this  Communication  refers  to the  Community 
framework  it  is  therefore  referring  to  this  whole  package  of  measures  preparing 
the  environment  for  full  liberalisation,  unless  otherwise  specified. 

The  improvement  of  service 

levels  between  1990  and  1995 

The  level  and  range  of  telecommunications  services  offered  in  the  European 
Union  has  improved  over  the  last  five  years  (See  Tables  in  Annex  2).  Users  are 
seeing  this  in  very  practical  ways.  Choice  is  no  longer  limited  to  the  colour  of  the 
telephone  set.  Waiting  lists  for  a  telephone  line  have  been  substantially  reduced 
in almost  every  Member  State.  Faults  occur  less frequently  and  are  repaired  more 
quickly. 
In  many  countries  customers  are  compensated  if  appointments  are 
missed  or the  line  is out  of  action  for  too  long. 

In  Denmark,  France,  The  Netherlands,  Finland,  Sweden  and  the  UK  more  than  9 
out  of  every  ten  homes  have  a  telephone  (see  Table  A1  in  Annex  2),  whilst  in 

Germany  the  figure  in  very  close  to  nine  out  of  ten,  even  taking  account  of 
reunification. 
Improvements  have  also  be  seen  in  some  of  the  less  favoured 
regions  of  the  Union,  for  example,  the  national  phone  network  in  Ireland  and 
Portugal  have  been  substantially  extended with the  percentage  of  homes  with a 
telephone  growing from 66% and 47% respectively  in 1990 to 80 and 75% today, 
partly  reflecting  the  investment  provided  through  the  Community's  Special 
Telecommunications Action for Regional development (STAR) programme. 

In  relation  to  the  prices  of  telecommunications  services,  the  general  trend  since 
1990 has  been for fixed  elements,  (connection  charges  and  rentals)  to  increase, 
as  well  as  increases  in  peak  rate  local  calling.  At  the  same  time,  important 
reductions  have  been  seen  in  international  and  long-distance  prices  and  many 
Member  States  have  extended  the  availability  of  cheap  rate  local  calling  to 
compensate  for  the  increases  in  peak  rate  charges.  From  the  questionnaire 
completed  by  the  Member  States,  seven  out  of  eight  Member  States  who  were 
able to provide an average figure for price changes showed that overall prices had 
decreased \n real terms by between 5 and 43%. 

User  demands  are  becoming  much  more  sophisticated.  A  rapidly  increasing 
proportion  of  citizens  are  using  a  mobile  telephone. 
In  Scandinavian  Member 
States  the figure  is close to one  in four.  At  home the telephone  line  is  no  longer 
just connected to a telephone  or an answering  machine,  it may  be shared with a 
fax or a modem.  There are a wide range of freephone  and value-added  services 
available  and  even  in  the  basic  telephony  service  many  users  are  offered  new 
advanced  telephone  facilities,  such  as  the  possibility  of  forwarding  their  calls  to 
another telephone number or being informed that there is another call on the line. 

Whilst the overall trend is one of  improvements  in the level and quality  of service, 
continued  pressure through competitive  forces  and through  regulation  is  required 
to ensure that this process continues and accelerates as competition takes hold. 

What are the reasons  for this steady  improvement  in telephone  services? 

Improvements  in quality  and choice  are a direct  response to the  falling  costs  and 
greater  reliability  of  new  services  and  equipment.  Competition  too  in  terminals, 
value-added  service  and  mobile  communications  have  stimulated  innovation, 
lower prices  and better customer  service. The separation  of  the  operator  and the 
regulator  of  telecommunications  services, a requirement  of  Community  law  since 
1990, has led to more effective  regulation as the State has sought to impose clear 
targets,  often  in  the  form  of  licence  conditions  or  negotiated  contracts,  with  its 
incumbent operator. 

Ill 

ISSUES  FOR  THE  EVOLUTION  OF  UNIVERSAL  SERVICE  IN  THE  SHORT 
TERM 

It is clear from the public consultation that a range of concerns  remain about both 
the current level of service and the impact of a liberalised environment. 

Concerns  remain despite the overall improvements  in service. 

Why does the Community  at present  not take a broader definition of  universal 
service? 

How  will  the  affordabiiity  of  universal  service  be  maintained  in  a  liberalised 
environment? 

-  What  will  happen  to  uniform  national  prices  in a fully  liberalised  environment? 

-  How  can  universal  service  be 

improved 

in  the 

less  favoured  and 

less 

populated  regions  and  areas  of  the  Community? 

- 

Is adequate  service  provided  to  users with  disabilities  or  special  needs? 

-  Are  quality  of  service  standards  being  effectively  monitored  and  enforced  in 
the  Member  States  and what  will  be  the  European  Community's  role  in  setting 
those  standards? 

-  How  can  users  compare  service  levels,  prices  and  even  affordabiiity 

in 
different  Member  States  more  effectively  and  how  can  users  have  a  stronger 
role  in  setting  quality  of  service  standards  and the  level  of  affordabiiity? 

Why  does  the  Community  at  present  not  take  a  broader  definition  of 
universal  service? 

Defining  the  scope  of  the  universal  service  obligation  represents  a  delicate 
balance.  Too  narrow  an  vision  of  universal  service  arid  citizens  may  be  kept  out 
of  full  participation  in  society.  Too  broad  a vision  and  the  competitive  forces  which 
are  the  principal  driver  of  better  services,  lower  prices  and  greater  innovation  will 
be  held  back  as  new  players  in  the  market  will  be  deterred  from  entering  the 
market, 
it  is  in  striking  that  balance  that  the  interests  of  every  citizen  can  be  best 
secured. 

The  universal  service  obligation  does  not  include  at  this  stage  a  requirement  to 
provide  leased  lines18  or  ISDN1".  These  are  services  whose  provision  on  the  basis 
of  cost-oriented  tariffs  is,  however,  already  either  required  or  recommended 
throughout  the  European  Union.  Any  broad  extension  of  universal  service 
obligations  is felt  to  be  premature  at this  stage,  particularly  because : 

- 

- 

it  could  end  up  making  users  and  households  pay  for  services  they  neither 
need  nor  use; 

the  costs  involved  (where  these  have  to  be  shared with the  other  players  in  the 
market,  e.g. through  a universal  service  fund)  might  actually  deter  market  entry 
by  those  companies,  delaying  the  arrival  of  the  benefits  which  competition  will 
offer  to  all  users;  and 

- 

it  risks  providing  or  even  subsidising  services  which  users  may  be  able  to  pay 
for  on  a normal  commercial  basis. 

The  provision  of  an  affordable  voice  telephony  service  will  already  mean  that 
households  and  businesses  in  any  part-of  the  Community  can  talk  to  each  other, 
send  faxes  and  electronic  mail,  hook  up  computers  to  "surf"  the  Internet  and  other 
on-line  services.  This  is  the  same  telephone  line  over  which  services  such  as 
telephone  banking,  tele-shopping  and  on-line  information  services  are  already 
being  consulted  and  down which  even  video-on-demand  services  could  be  sent. 

At the  same  time, the  current  failure  in some  parts  of  the  Community  (as  shown  by 
the  results  of  the  survey  of  Member  States)  to  guarantee  even  this  basic  level  of 
service would,  if  not  corrected  by  a  regulatory  framework  allowing  new  investment 
to  proceed  and  a  strong  and  active  national  regulatory  authority,  have  risked 
increasing  regional  disparities  and  the  creation  of  the  two  tier  society  identified 
above  A  first  priority  must  therefore  be  the  delivery  of  genuine  universal 

service  throughout  the Community,  and, in particular,  throughout  the  Community's 
less favoured  regions. 

respond 

All the  same  there  is  broad  recognition  that  universal  service  is  a  dynamic  and 
evolving  concept  and  must 
in  the  needs  and 
expectations  of  Europe's  citizens.  This  implies  that  the  scope  of  universal 
service  must  be  reviewed  as  a  basis  for  more  concrete  policy  action,  where 
appropriate.  Nevertheless  those  subject  to  universal  service  obligations  require  a 
degree  of  certainty  against  which  investment  decisions  can  be  made.  The  speed 
of  evolution  of  the  concept  has  therefore  to  be  balanced  against  the  need  for 
predictability  for  investment  decisions. 

to  changes 

The  Commission  will therefore  report  by  1 January  1998 and,  at  regular  intervals 
thereafter,  on  the  scope,  quality,  level  and  affordabiiity  of  the  universal  service  in 
the  European  Community  and  consider  the  need,  in  the  light  of  the  prevailing 
circumstances  for  adaptation  of  the  scope  of  universal  service  at  a  European 
level,  bearing  in mind the  need to  ensure  a predictable  regulatory  environment. 

The  main  issues  to  be  addressed  in  that  Report  as  well  as  the  criteria  for  this 
evolution  are  returned to  in Section  IV  below. 

How  will  the  affordabiiity  of  universal  service  be  maintained  in  a  liberalised 
environment? 

Whilst  costs  have  fallen  dramatically  for  operators,  these  have  not  often  been 
passed  on  in  the  form  of  lower  prices  for  users.  Price  levels  vary  considerably 
between  Member  States  (See Table A7  in Annex  2 for  a comparison  of  1995  price 
levels  in  ECU).  Now,  as  competition  approaches,  operators  are  attempting  to 
adjust  their  prices.  This  reflects  both  existing  requirements  of  the  Community 
framework  for  prices  in  a  monopoly  environment  to  be  cost-oriented20,  and  the 
threat  of  competitors  charging  lower  prices  for  the  most  profitable  services  (i.e. 
business, long-distance  and  international  communications). 

fundemental  element  of 

This  process  of  tariff  rebalancing,  resulting  from  the  political  decisions  in favour  of 
the liberalisation  of the  sector,  means  that for  some  users,  particularly  in the  short-
term  before  real  competition  bites,  telephone  bills  could  rise21.  This  process 
remains  a 
liberalised 
environment22. 
At  the  same  time,  it  is  essential  to  ensure  that  further 
progressive  and  necessary  rebalancing  does  not  adversely  affect  users, 
particularly  residential  consumers  who  make  few  long-distance  and  international 
calls and  so cannot  benefit  from the  lower  rates  in those  areas.  This  fundamental 
concern was  well  reflected  in  the  public  consultation  which  raised  the  fact  that  the 
impose 
current  framework,  whilst  promoting  affordabiiity,  does  not  yet 
explicit  obligations  for  services  to  be  provided  at an affordable  price 

the  preparation 

for  a 

fully 

In  the  short  term  it  is  very  important  to  protect  the  most  vulnerable  groups  of 
users,  and  residential  users  in  general,  from  the  effects  of  the  rebalancing 
process.  Member  States  should  ensure  that  National  Regulators  adopt,  where 
necessary,  special  tariff  packages23,  price  caps24  and  other  mechanisms  in  order 
to  moderate  the  effects  of  the  rebalancing  process  on  connection  charges, 
monthly  rental  and  tariffs.  This  is  particularly  important  in  the  run  up  to  a 
liberalised  environment  and  for  users  in  the  Community's  less  favoured  and  less 
populated  regions.  Such  targeted  and  special  tariff  schemes  are  already  in  place 
to  varying  degrees  in  all  Member  States  and  are  listed  in  Table  A10  of  Annex  2 
Potential  burdens  associated  with  their  provision  may  be  financed  out  of  the 
funding  mechanism  for  universal  service. 

As  mentioned  above,  the  Monitoring  Report  before  1  January  1998  will  also 
assess  developments  in  the  pricing  of  different  telecommunications  services  and 
consider  the  need  for  further  action  at  a  Community  level  to  ensure  affordable  ' 
access  for  every  citizen. 

Even  so,  the  issue  is  affordabiiity  rather  than  stopping  any  adjustment  of  pricing 
structures.  The  affordabiiity  of  the  overall  service  for  all  users,  and,  especially  for 
particularly  vulnerable  groups,  such  as the  disabled, or those  on  low  incomes  must 
be  maintained.  Assessment  of  affordabiiity  is  principally  an  issue  to  be  decided  at 
the 
a  national 
framework  provided  by  Community  legislation,  taking  account  of  the  specific 
national  situation  and  the  views  of  user  and  consumer  organisations.  Consumer 
organisations  have  also  suggested  the  need  for  comparison  at  a  European  level 
of the  relative  affordabiiity  of  services. 

level  by  the  appropriate  national  regulatory  authority  within 

Affordabiiity  is  not  only  a  matter  of  overall  price,  for  many  users  it  is  also  a 
question  of  managing  weekly  and  monthly  expenditure  and  being  able  to 
predict what  the telephone  will  cost. 

As  soon  as  competition  is  effectively  established  a  much  wider  range  of  payment 
packages  are  likely  to  be  offered,  for  example,  spreading  the  installation  charge 
over  a series  of  quarterly  payments  or paying  a higher  monthly  rental, but with  free 
or  cheaper  local  or  national  calling.  Such  flexibility  would  allow  users,  particularly 
those  on  low  incomes,  much  better  predictability  over  what  the  telephone  would 
cost them  each  month. 

At  the  same  time,  many  users  also  want  more  information  from  their  bills  about 
what they  spend. 

Finally,  users  also  want  greater  control  over  what  they  spend,  for  example,  the 
possibility  of  barring  calls  to  particular  numbers,  such  as  "premium"  rate  services 
or  international  calls. 

What  will  happen 
environment? 

to  uniform  national  prices 

in  a 

fully 

liberalised 

In  a  fully  liberalised  environment  the  way  services  are  packaged  and  priced  is 
likely  to  be  much  more  innovative,  offering  real  choice  and  potential  savings  to 
most  users. 
fundamental 
responsibility  for  national  regulatory  authorities  will  be  to  ensure  that 
universal  service  is  affordable  for  all  groups  of  users,  whether  as  a  response 
to competition  or as  a result  of  regulatory  intervention. 

time,  as  highlighted  above,  a 

the  same 

At 

This  involves  an  assessment  by  the  regulator  of  what  in  light  of  specific  national 
circumstances  can  be  considered  as  a  "reasonable"  price  for  users  in  particular 
regions. 

Member  States  currently  require  at  least  the  incumbent  operator  to  provide  a 
standard  nation-wide  package  of  prices  (effectively,  a  set  of  geographically 
averaged  tariffs)  for  most,  if  not  all  telecommunications  services  (including  basic 
voice  telephony  services).  The  result  is  that  the  same  tariff  bands  are  offered 
throughout  the  country,  even  if  the  cost  of  providing  a  connection  and  services  in 
one  region  may  be  higher  than  in  another. 
In  the  past  this  helped  to  ensure  that 
services  remained  affordable  for  citizens  in every  part  of  a  country. 

In  a  monopoly  environment  such  geographic  price  averaging  does  not 
automatically  mean  that  operators  are  making  a  loss  in  providing  every  service  in 

10 

those  high  cost  areas,  because  in  the  absence  of  competition  they  can  charge 
prices  for  services  which  are  not  part  of  universal  service,  such  as  leased  lines, 
which ensure a profit even in high cost areas.. 

In a liberalised environment, any approach to uniform pricing must guarantee 
and  improve  affordabiiity.  However,  the  situation  is  altogether  more  complex 
than before. 

As  competition  establishes  itself,  particularly  in  cities  and  other  areas  which  can 
be  served  relatively  cheaply,  new  players  may  concentrate  on  customers  there 
and offer lower prices than the incumbent. 

Strictly  maintaining  uniform  national  prices  would  (i)  if  prices  were  maintained  at 
current  levels,  risk  the  incumbent  operator  losing  substantial  parts  of  its  market 
share  in  the  cities  and  low  cost  regions;  (ii)  if  prices  were  lowered  nationally  to 
meet  lower  prices  offered  by  competitors  in  certain  areas,  raise  the  amount  of 
funding required from other market players to cover the gap left  by the  potentially 
lower revenues in high cost areas from which universal service had be funded 

. 

Competitive  pressures are likely to encourage over time a progressive  move away 
from  strict  geographic  averaging  towards  considerably  more  flexible 
tariff 
structures,  This  is  likely  to  mean  that  different  tariffs  are  offered  for  the  same 
services in different areas within a Member State. 

Greater  flexibility  must  be  conditional  upon  the  regulatory  framework  (i) 
including  adequate  measures  to  ensure  affordabiiity  (such  as  those  outlined 
above);  (ii)  ensuring  that  price  increases  for  users  in  remote  and  rural  areas, 
other  than  adjustments  to  achieve  cost-orientation,  are  not  used  to 
compensate  operators  for  losses  in revenue  resulting  from  price  decreases 
elsewhere  and  (iii)  ensuring  that  any  differences  in  pricing  between  high  cost 
areas and low cost areas do not endanger the affordabiiity  of universal service. 

How  can  universal  service  be  improved  in  the  less  favoured  and  less 
populated regions and areas of the Community? 

Whilst  the  current  regulatory  framework,  (and  in  particular,  the  obligations  in 
respect  of  the  voice  telephony  service,  interconnection  and  the  minimum  set  of 
leased  lines), has  been  designed  to  guarantee  the  provision  of  universal  service 
throughout the Community, the Commission  and Member States  remain aware of 
the particular pressures faced in the less favoured and less populated regions  . 

The 
issues  of  scope  and  affordabiiity  of  universal  service,  and  of 
telecommunications  services  in  general,  are  of  critical  importance  to  the 
Community's  less favoured  regions.  This reflects the traditionally  lower level of 
development,  demand  and  incomes  in  such  regions  and  the  sometimes  higher 
costs  of  installing,  operating  and  maintaining  facilities  due  to 
the  location  or 
climate. 

These  concerns,  highlighted  by  a  number  of  operators,  regulators  and  user 
associations located in these regions, become all the more critical in the context of 
the information  society.  The Commission will continue to work to  ensure that 
a  combination  of  liberalisation  and  new  technologies  reduces  rather  than 
widens existing regional differences within the European Community. 

Given  that  fuir liberalisation  has  not  yet  touched  many  of  the  Community's  less 
favoured  regions,  it  is  difficult  to  assess  its  real  impact  and  the  positive  effects 
which  may  be  brought  in  terms  of  improvements  in  service  quality,  choice  and 

11 

prices,  as  well  as  increasing  private  investment.  Additionally,  the  costs  of 
providing service in remote and rural areas are continuing to fall as a result of new 
technologies  (such  as  mobile  or  wireless  solutions)  and  may  fall  further,  where 
telephony  services  can  be  offered  in  combination  with  other  new  services 
(including audio-visual services and information services). 

Experience  in  liberalised  markets,  such  as  the  United  Kingdom,  Finland  and 
Sweden, or in the  rapid growth of  digital  mobile  communications  under  a duopoly 
environment  are  however,  encouraging,  though  some  caution  must  be  exercised 
in  directly  extending  the  experience  of  more  developed  countries  in  the 
Community  with  relatively  higher  standards  of  living  to  other  regions  in  the 
Community,  particularly  given  the  higher  relative  current  costs  associated  within 
providing universal service in less favoured regions27. 

On the other hand, there are important concerns about the more marked impact of 
price  changes  on  both  residential  and  business  users  in  these  regions  and  the 
speed  with  which  they  will  enjoy  benefits  associated  with  competition  compared 
with  developed  areas within  the  EC.  Additionally,  the  process  of  liberalisation  in 
releasing  private  investment  may favour  investment  in  services  and  infrastructure 
in areas of high demand and relatively low cost. 

The Commission  must  be vigilant  against the  danger  that the  different  speeds  at 
which  territories  of  the  Community  equip  themselves  with  the  infrastructures, 
services and skills needed for the emerging  information  society  may contribute to 
sustaining a "time gap" and to further widening of  social and economic disparities. 
These  issues  must  obviously  be  taken  into  account  within  the  Community's 
cohesion policy. 

In  relation  to  the  twin  concerns  of  encouraging  network  investment  and  the 
provision  of  services  throughout  each  Member  State  and  avoiding  a  significant 
time gap in development in different  Member States, priority must continue to be 
attached  at  a  national  and  Community 
level  to  the  development  and 
extension of existing networks. 

In  addition  to  the  framework  provided  by  universal  service,  the  Community 
Structural  Funds, as well as other  initiatives  at  Community  and national  level, will 
continue  to  contribute  as  a  complement  to  private  financing  -  to  the  task  of 
upgrading  and  developing  the  telecommunications  infrastructure  in  less  favoured 
regions within the Community, as has been successfully achieved in many parts of 
Ireland. 

In  particular,  the  completion  of  the  programmes  of  network  digitalisation, 
especially  in Greece,  Portugal, Spain  and  Southern  Italy,  should  be an  important 
priority.  Account  is also  taken  of  the  need for  relevant  training  initiatives  and  for 
pilot projects aimed at stimulating awareness and demand. 

For  all  these  reasons,  there  is  a  particular  need  for  close  monitoring  of 
developments  in these  regions  in order to take  appropriate  action to  strengthen 
economic  and  social  cohesion.  Detailed  aspects  of  this  monitoring,  particularly 
with  regard  to  the  evolution  of  prices  and  the  collection  of  data  allowing  a 
comparison of  the relative affordabiiity  of services are set out below. 

In the light of such monitoring, the Commission will determine  periodically  whether 
the definition  and scope of  universal service has to be revised, or new or existing 
mechanisms (for example, regional development  policies)  used to take  account of 
specific effects of liberalisation in these regions. 

12 

Is adequate  service  provided 

to  users  with  disabilities  or  special  needs? 

Certain  groups  of  customers  have  special  needs,  which  universal  service  today 
either  does  not  always  meet,  or  does  not  do  so  at  an  affordable  price.  This 
concern  has  been  highlighted  by  the  European  Parliament.  Telecommunications 
offers  such  users  a  real  lifeline  with  the  rest  of  their  community  and  the  concept  of 
universal  service  should  ensure  that  such  users  benefit  from  an  equivalent  level 
of  service  at  an  affordable  price  to  that  offered  to  users  without  disabilities, 
taking  into  account  the  state  of  network  development  and  market  demand. 
Examples  cited  in  the  consultation  included  both  the  provision  of  services  in  the 
It  could 
home  (such  as  video-  or  textphones  for  the  deaf)  and  in  public  places. 
also  include,  where  necessary,  the  provision  of  special  services  (such  as  relay 
services  allowing  textphone  users  to  communicate  with  users  without  textphones), 
or specially  adapted  equipment. 

A  second  element  in  extending  the  current  coverage  of  service  to  specific  users 
might  include  the  offer  of  special  and  innovative  services  (such  as  voice  mail 
boxes  in  the  public  network)  for  users  who  cannot  easily  receive  calls  because 
they  do  not  have  access  to  their  own  telephone.  Those  benefiting  from  such  a 
service, which  is being  trialed  in a number  of  Member  States,  might  include  groups 
such  as  the  homeless,  thereby  recognising  the  role  of  telecommunications  in 
fighting  social  exclusion. 

It would  be  a matter  of  national  social  policy,  rather  than  universal  service  funding 
mechanisms  as  to  whether  specific  financial  support  was  made  available  to 
ensure  the  affordabiiity  of  such  services  for  particular  groups  of  users. 

Are  quality  of  service  standards  being  effectively  monitored  and  enforced  in 
the  Member  States  and  what  will  be  the  European  Community's  role  in 
setting  those  standards? 

The  Voice  Telephony  Directive  already  requires  Member  States  to  set  quality  of 
service  indicators  for  a range  of  different  things,  such  as  how  long  it takes  to  get  a 
telephone,  how  long  it  takes  a  call  to  connect  and  what  proportion  of  public 
payphones  are  in  working  order.  This  simply  builds  on  current  practice  in  most 
Member  States.  Results  must  be  published  of  the  performance  of  the  operators 
required to  meet  these  targets. 

Whilst  this  provides  greater  transparency,  it will  only  be  fully  effective  if  supported 
by  active  monitoring,  and where  appropriate,  enforcement  of  such  standards  (with 
an appropriate  range  of  sanctions  up to the  possible  withdrawal  of  licences,  where 
there  is  a  consistent  failure  to  meet  service  targets)  by  the  telecommunications 
regulator  in  the  Member  State.  Furthermore,  there  should  be  clear  and  straight 
forward  procedures  allowing  users  to  initiate  complaints  against  the  operator. 

Looking  beyond  the  current  framework,  it  is  important  that  the  different  levels  of 
service  quality,  as  well  as  differing  targets  set  at  a  national  level,  do  not  create 
barriers  to  the  development  of  the  internal  market  and  distort  competition  within 
the  Community.  Equally,  it  is  essential  that  in  setting  service  levels  Member 
States  maintain  a high  standard  of  consumer  protection. 

In  this  context  and  subject  to  the  principle  of  subsidiarity,  minimum  quality  of 
service  targets  should  be  defined  at  a  European  Community  level  as  a  reference 
within  which  detailed  national  targets  (taking  account  of  the  specific  situation  of 
each  Member  State)  would  be  set. 

13 

How  can  users  compare  service  levels,  prices  and  even  affordabiiity 
in 
different  Member  States  more  effectively  and  how  can  users  have  a  stronger 
role  in setting  quality  of service  standards  and the level  of  affordabiiity? 

It is clear  that  despite  overall  improvements,  there  remains  considerable  variation 
in the quality and level of service in the Member States and in the degree to which 
sanctions  exist  and  are  used  ,  where  targets  are  not  met  by  operators.  This 
concern  is  compounded  by  the  difficulties  faced  by  some  national  regulatory 
authorities in obtaining basic indicators of universal service, such as the number of 
households  with  a telephone,  and  by the  lack  of  comparability  of  certain  of  data 
between Member States. 

The  obligations  in  the  Voice  Telephony  Directive  should  help  by  imposing 
obligations  to  set  and  publish  quality  of  service  indicators  at  a  national  level. 
However,  users  seek  more  than  this  and  the  varying  levels  of  service  in  the 
Member States impacts the provision of pan-European networks and services. 

More generally consumer involvement at both a national and European level in the 
setting  of  quality  of  service  targets,  and  more  generally,  in  decisions  as  to  the 
future evolution of universal service, should be strengthened. 

MONITORING  THE  EVOLUTION  OF  PRICES  AND  THE  RELATIVE  AFFORDABILITY  OF 
TELECOMMUNICATIONS SERVICES IN  THE  EUROPEAN  COMMUNITY  AND  ADAPTING 
EUROPE'S  TELECOMMUNICATIONS FRAMEWORK IN  THE SHORT  TERM IN RESPONSE 
TO THE CONCERNS OUTLINED ABOVE 

I.  MONITORING  THE  EVOLUTION  OF  PRICES  AND  RELATIVE  AFFFORDABILITY  OF 

SERVICES 

In line with the  overall  proposal to  review  by  1 January  1998 the  scope, level, 
quality  and  affordabiiity  of  universal  service 
the 
Commission  intends,  in  close  co-operation  with  the  Member  States  and 
building on on-going work at a national level, to : 

the  Community, 

in 

V  define  a "basket  of  services"  in  order  to  provide  comparable  information 
about  the  relative  affordabiiity  of  services  within  the  Community  and 
between different  regions within the  Member States; 

V 

identify  the  structure  of  spending  on  universal  service  in the  Community 
(i.e.  what  proportion  (at  both  a  national  and  regional  level)  of  average 
residential  and  business  bills  relate  to  rental;  local,  long-distance  and 
international calls; and calls to value-added ("premium-rate"  services), and 

V 

identify  where the  major  costs  of  universal  service  are  incurred  (i.e. within 
urban or rural areas; on targeting  subsidies to specific groups of customers or 
to particular high cost areas), within the Member States. 

The  results  collected  will  allow  the  Community  and  Member  States  to  better 
target support  and identify  best  practice. 

II  ADAPTATION  OF  THE  EUROPEAN  TELECOMMUNICATIONS  FRAMEWORK 

IN  THE 

SHORT TERM 

The Commission  intends to address the following  issues, in particular through an 
amendment to the Voice Telephony  Directive28:  These steps will: 

14 

V  Develop further the definition of  universal  service to provide  a clear  obligation 
for  Member  States  to  ensure  its  affordable  provision29;  to  ensure  that  an 
equivalent  level of  service  is offered to  users with  disabilities  at an  affordable 
price;  to  provide  users  with  more  information  about  and  more  control  over 
they  are  spending30,  and  to  ensure  users  can  access  and  use  inter 
what 
active services (such as tele-banking or automated switchboards)31. 

V  Require Member States to remove restrictions which currently  limit the offer of 
targeted  or flexible tariff schemes; and to ensure that  they  take  appropriate 
measures  (e.g.  targeted  tariff  schemes  and  price  caps)  necessary  to 
maintain  the  affordabiiity  of  services  for  all  users,  as  well  as  for  particularly 
vulnerable  groups,  such  as  the  elderly,  those  with  disabilities,  those  who  do 
not use the telephone  very  much or those  on  low  incomes.  These  measures 
are particularly important in the run up to full liberalisation. 

V  Taking  account  of  the  obligation  progressively  to  adjust  tariffs  towards  costs, 

require Member States  to ensure: 

- 

- 

that price increases in remote and rural areas are not used to compensate 
losses in revenue resulting from price decreases elsewhere; and 

that differences  between prices in high cost areas and low cost areas do 
not endanger the affordabiiity of universal service. 

V  Ensure  more  information  on the  scope,  level,  affordabiiity  and  quality  of 
service  in the EC is collected".  This is essential  if universal service  is to be 
kept  under  effective  review  and  appropriate  targets  are  to  be  set  for  service 
quality within the existing Community framework. 

V  Define minimum quality  of service targets at a European level as a basis upon 
which  detailed  national  targets  (taking  account  of  the  specific  situation  of 
those countries) would be set. 

Furthermore the Commission will 

V  Encourage  Member  State  and  Community  action  to  allow  all  users  to  have 
improved  access  to  computer  networks,  such  as  the  Internet",  (in  terms  of 
faster network access speeds). 

V  Report by 1 January  1998 and, at regular  intervals thereafter,  on the quality, 
level  and  scope  of  the  universal  service  in  the  European  Community.  This 
Monitoring  Report  will  look  in  particular  at  developments  in  relation  to 
residential  users  and  in  the  less  favoured  regions,  including  the  progress 
made in rebalancing tariffs,  .  (Other issues to be addressed in that Report are 
set out in Section  IV below).  As mentioned above, the report will consider the 
need, in the light of the prevailing circumstances for adaptation of the scope of 
universal service at a European level, bearing in mind the need for predictably 
for investment decisions. 

15 

V  Promote  the  greater  involvement  of  consumer  representatives  in the  decisions 
on  the  current  and  future  scope  of  universal  service  (and  in  particular,  in 
relation  to  establishing  and  monitoring  of  the  quality  of  service  and  the 
the  adequate  availability  of 
affordabiiity  of  service). 
information  on  the  scope,  level,  quality  and  affordabiiity  of  universal  in  the  EC 
in  order 
involvement  of 
residential  users.  Consideration  will  be  given  to  a  possible  monitoring 
committee  at a  European  level to  represent  consumer  interests. 

transparancy  and  effective 

to  ensure  greater 

This  will  rely  on 

A  Timetable  reflecting  these  measures  is set out  in Annex  1. 

IV 

THE  EVOLUTION  OF  UNIVERSAL  SERVICE  FOR  TELECOMMUNICATIONS 
AND  ACCESS  TO  ADVANCED  SERVICES 
IN  THE  CONTEXT  OF  THE 
INFORMATION  SOCIETY 

Universal  service  is  recognised  as  an  essential  element  of  the  global  information 
society.  This  was  acknowledged  at  the  special  G7  Summit  on  the  information 
society  in  Brussels  in  February  1995.  The  participating  ministers 
identified 
"ensuring  universal  provision  of  and  access  to  services"  as  one  of  the  eight  core 
principles  behind  the  realisation  of  their  common  vision  of the  information  society. 

The  Community  is  supporting  through  the  regulatory  framework  the  delivery  and 
development  of  universal  service,  whilst  at  the  same  it  is  looking  beyond  the 
current  concept  of  universal  service  for  telecommunications  to  promote  actively, 
through  a  diverse  range  of  initiatives  the  use  of  advanced  telecommunications 
services  in  fields,  such  as  education  and  healthcare,  in  the  context  of  the 
through  pilot  and  stimulation  projects, 
information  society, 
awareness  building  and development  of  public-private  partnerships). 

(for  example, 

The  recent  reform  of  telecommunications  in  the  United  States  also  looks  beyond 
the  current  concept  of  universal  service  for  telecommunications,  which  in  their 
legislation  consists,  for  example,  in  promoting  widespread  access  to  quality 
services  at  reasonable  rates  and  ensuring  that  rural  and  high  cost  areas  have 
access  to  telecommunications  and  information  services  at  prices  reasonably 
comparable  with those  offered  in urban  areas34. 

looks  beyond 

legislation,  however, 

The  US  telecommunications 
their  basic 
definition  of  universal  service  to  tackle  within  a  regulatory  framework  the  same 
priorities which  are  now  on  the  Community's  agenda.  The  US  legislation  identifies 
the  provision  of  access  to  advanced  telecommunications  services  for  schools, 
healthcare  and  libraries  as  one  of  the  principles  for the  "advancement  of  universal 
service"  in the  future. 
In contrast,  to  the  approach  in the  Community,  the  United 
States  appears  to  mix  a  policy  on  universal  service  for  telecommunications  with 
objectives  linked  to  education,  healthcare  or  information  policies  at  a  national 
level. 

the 

to  universal 

the  Community, 

for 
regulatory  approach 
In 
telecommunications  is carefully  circumscribed  by  the  application  of  the  principal  of 
subsidiarity.  This  has  limited  action  at  a Community  level  to what  is  necessary  for 
the  internal  market  for  telecommunications  services  and  for  the  maintenance  of  a 
high  standard  of  consumer  protection.  In any  event,  the  evolution  of  the  definition 
of  universal  service  for  telecommunications  is  only  one  of  a  number  of  factors 
which  is  influencing  the  roll  out  of  advanced  telecommunications  services  in  the 
Community. 

service 

16 

Criteria 
in  the  information 

Society 

for  the  evolution  of  universal  service 

for 

telecommunications 

for 

the 

the  basis 

future  evolution  of  universal  service 

Determining 
raises 
fundamental  issues.  Should  universal  service  for  telecommunications  continue  to 
be subsidised  only  by  undertakings  in the  sector  or  should  other  means  of  funding 
(e.g.  greater  direct funding  by the  State / stimulation  of  public-private  partnerships) 
be  envisaged?  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  -  seeking  to  steer  and  develop  the  evolution  of  markets  and/or 
technologies?  A  simple  answer  cannot  be  given  at  this  stage. 
In  reality  the 
challenges  of  the  information  society  will  be  met  by  both  an  evolving  concept  of 
universal  service  and  by  a  range  of  other  public  and  private  sector  initiatives  to 
stimulate  demand  for  and  supply  of  information  society  services. 

User  demand  and  technological  evolution  must  be  the  principal  determinants  of 
the future  evolution  of  universal  service35. 

Any  extension  is  therefore  likely  .to  combine  a  market-based  analysis  of  the 
demand  for,  and  widespread  availability  of,  a  particular  service,  and  a  political 
assessment  of  its  social  and  economic  desirability.  Only  when  these  two  criteria 
are  satisfied  would  it  be justifiable  to  impose  a  legal  obligation  to  guarantee  that 
the  service  is universally  available  at an affordable  price. 

This  Communication  does  not  attempt  at this  stage  to  identify  telecommunications 
services  which  should  be  considered  in  the  future  for  inclusion  in  universal 
service, but  rather  it points  to the  general  areas where work  is already  underway  in 
the  context  of  preparing  the  information  society.  At  the  same  time,  the  existing 
framework  already  requires  Member  States  to  set  targets  for  the  Community-wide 
introduction  of  certain  advanced  telephone  facilities36  (which  are  not  currently  part 
of  universal  service)  and  this  will  remain  an  important  element  in  the  Community 
approach. 

As  mentioned  in  Section  II above,  the  Commission  will  carry  out  a  comprehensive 
review  by  1 January  1998  of  the  scope,  level, quality  and  affordabiiity  of  universal 
service  in  the  European  Community  and  consider  the  need  for  adaptation  of  the 
scope  of  universal  service  at  a  European  level,  in  the  light  of  the  prevailing 
conditions  and taking  account  of  the criteria  outlined  above. 

Examples  of the  issues  linked to the future evolution  of universal  service 
obligations  which will  be  considered  in the  First  Monitoring  Report 

In  addition  to  assessing  issues  linked  to  the  level  and  quality  of  the  current 
universal  service  obligation,  the  Report  will  examine:  (i)  technical  indicators  of 
service  levels  (and  whether  cost  burdens  were  associated  with  their  provision),  (ii) 
evidence  of  particular  social  or  economic  need,  (iii)  evolution  of  prices  and 
relative  affordabiiity  of  services  and  (iv) developments  in other  parts  of the World. 

In relation  to the first two  issues, the  report would  consider,  inter  alia: 

Technical  indicators  would  include  for each  Member  State: 

- 

Level  of  household  personal  computer  penetration  and  households  with 
access  to on-line  services 

17 

'"*vmi 

- 

- 

- 

Level of  network  digitalisation 

Level of  business,  residential  and  local community  ISDN  penetration 

Level of  penetration  of  tele-working 

-  Percentage  of  schools,  hospitals,  libraries  with  access  to  on-line  information 

services 

Issues  of particular  social  or economic  need  would  include: 

- 

- 

Issues  associated with  educational  and  healthcare  establishments 

Issues  associated with  less favoured  and  less  populated  regions 

-  Specific  social  needs  of  particular  groups  of  users  (such  as  users  with 

disabilities) 

Promoting 

the  information 

society 

In  addition  to  the  maintenance  and  development  of  universal  service,  public-
private  initiatives  will  play  a  major  role  in  promoting  the  availability  of  new 
telecommunications  services  in the  information  society. 

In  the  context  of  the  information  society,  new  inter-active  services  should  be 
accessible  to  every  citizen  in  the  Community,  so  that  the  benefits  of  new 
technologies  and  services  are  felt  in  areas,  such  as  education  and  training, 
healthcare  and  access  to  public  information.  This  should  in  turn  benefit  the 
overall  economic 
for 
telecommunications  is  to  act  as  the  highway  over  which  many  of  these  new 
services  can  be offered  and competitive  forces  are stimulating the  price  reductions 
and  innovation which  are at the  heart  of the current  revolution. 

effectiveness 

principal 

society. 

The 

role 

of 

There  was  a  widespread  consensus  within  the  public  consultation  that  whilst 
universal  service  for  telecommunications  cannot  be  divorced  from  this  broader 
political  vision  of  the  information  society,  that  neither  access  to  such  services  nor 
the  services  themselves  should  be  included  at this  stage  in the  current  concept  of 
universal  service. 

Nevertheless  the  Commission  has  stressed  the  importance  of  education  and 
training  in  the  Information  Society,  notably  in  relation  to  equipping  the  workforce 
with  appropriate  skills  for  the  information  age  with  a  view  to  fostering  employment 
possibilities  and  overall  competitiveness. 
therefore 
committed  itself  to  promoting  access  to  and  use  of  advanced  communications  and 
information  services  within  the  educational  field.  The  provision  of  advanced 
telecommunications  services,  as  well  as  improvements  in  service  quality,  prices 
and  the  speed  of  the  network  are  all  likely  to  result  from  a  fully 
liberalised 
environment. 

The  Commission  has 

At  the  same  time,  consideration  should  be  given  to  the  extent  to  which  these 
developments  can  be further  promoted  by  regulatory  or other  action.  One  specific 
issue  may  be  whether  schools,  colleges  and  universities  should  be  offered 
reduced  prices  for  high  speeds  of  network  access  or  for  the  use  of  current  or 
the 
advanced  telecommunications  services.  That 
relationship  between  universal  service  for  telecommunications  and  broader  policy 
objectives  in  the  educational  area,  and  of  how  such  discounted  tariffs  might  be 
funded,  where  they  represent  a  financial  burden  for  the  operator  providing  them. 

in  turns  raises 

issues  of 

18 

(For  example,  should  they  be  funded  directly  by  the  State  as  part  of  its  education 
budget; 
for 
telecommunications;  or through  other  mechanisms?). 

funding  universal  service 

the  mechanism  set  up 

through 

for 

Such  issues  will  be  further  considered  in  the  forthcoming  Communication  on  the 
Citizen  and  the  Information  Society,  and  also  more  broadly  in  the  light  of  the 
comprehensive  review  of  universal  service for telecommunications  in  1998. 

Generally,  however,  new  and  advanced  telecommunications  and 
information 
services  are  appearing  primarily  in  response  to  market  forces  and  user  demand. 
The  role  of  the  Community,  public  authorities  and  other  public  institutions  is,  on 
the  one  hand,  that  of  catalyst,  and,  on  the  other,  to  ensure  a  regulatory  climate 
which  is favourable  to innovation. 

Action flowing  from the  recent  legislation  in the  United  States  has been  highlighted 
above.  In Europe,  a range  of  initiatives  are  underway,  aimed  at  stimulating  public-
private  partnerships  and  strengthening  awareness  and  demand.  This  reflects 
priorities  established  in  the  Communication  "Towards  the  Information  Society", 
COM(95) 24437. 

the  Community  which  either  cater 

That  Communication  emphasised 
that  the  Community's  role  focused  on  (i) 
stimulation  of projects  (through  provision  of  information  and  increasing  awareness 
of  information  society  initiatives;  through  brokering  partnerships  between  actors  in 
different  sectors  and  between  public  and  private  sector  organisations,  and 
providing  guidance  on  available  finance)  and  (ii)  the  provision  of  financial  support 
for  certain  projects  by 
relevant 
infrastructure  and  the  development  of  awareness,  skills  or  services  (through 
funding  via  the  trans-European  networks  framework;  the  Community  structural 
and cohesion  funds; the  European  Investment  Bank  and the  European  Investment 
Fund  and  through  Community  programmes  dedicated  to  education  and  training, 
such  as  the  SOCRATES  and  LEONARDO  programmes),  or  which  stimulate  the 
necessary 
to  new  concepts, 
prototypes  or  services  which  are  key  to  the  advancement  of  the  Information 
Society  (through  the  RTD  Framework  Programme,  and,  in  particular  through  the 
Advanced  Communication  Technologies  (ACTS)  programme). 

research  and  development  activities, 

leading 

the 

for 

Public  access  to information  society 

services 

The  Commission  through  these  measures  is  supporting  the  extension  of  "public 
access"  to  the  information  society.  This  involves  the  connection  of  schools, 
colleges,  hospitals,  oublie offices,  libraries  and  other  public  access  points  into  the 
information  society 

. 

The  Commission  will  explore  ways  of  better  co-ordinating  the  various  on-going 
initiatives  at  a  national 
in 
to  enhance 
Communication  on  the  Information  Society  and  the  Citizen  mentioned  above. 

impact  on  everyday 

level 

the 

life 

risk  of  delay 

there  may  be  a 

Public  and  "community"  access  may  be  of  particular  importance  in  less  favoured 
regions,  where 
in  accessing  advanced 
telecommunications  services  if  left  to  market  forces  alone.  The  Commission,  in 
the  framewoik  of  the  Monitoring  Report  before  1  January  1998,  will  closely 
monitor  developments,  as  public  access  may  be  a  means,  within  a  reasonable 
time  scale,  of  overcoming  the  difficulties  in  providing  access  to  many  advanced 
services  and  sources  of  information  for  individuals  and  for  the  non-profit  and 
voluntary  sectors.  These  are  groups  which  may  otherwise  be  excluded  because 
of  the  high-cost  initial  investments  required  in  terminals,  computers  and  network 
connections). 

19 

The  Commission  will  keep  the  actual  progress  made  in  extending  public  access 
under review, both in the less favoured regions and in the Community as whole, in 
order to assess  periodically  the  need for  additional  action or for any  reshaping  of 
the concept of universal service at a European level. 

Issues for further consideration 

A range of factors must be taken into account in the developing framework  for the 
information society. 

-  Low tariffs  for  use  of  the  network  are  essential  to the widespread  take  up of 

on-line information and services. 

-  Many 

information  society  services  will  be  provided  without  regulatory 

intervention. 

-  Action may be needed to ensure that public institutions can access these new 

services. 

- 

Initiatives,  in particular,  stimulating  public-private  partnership,  should  continue 
to  promote  the  availability  and  take  up  of  new  information  society  services, 
especially,  with  regard  to  their  development  and  broader  take  up  amongst 
residential users. 

- 

"Public  access"  should  go  beyond  promoting  physical  connections  to  include 
adequate training, support and investment in equipment. 

Some  of  these  issues  such  as the  needs  for  low  tariffs,  are  closely  linked  to  the 
current 
far  beyond 
telecommunications  to touch on policies for education, healthcare and training. 

for  universal  service;  others,  extend 

framework 

The  integration  of  a  policy  on  universal  service  into  the  broader  development  of 
the  information  society  is a matter  for  further  consideration.  This  process  will be 
helped  by  the  Review  announced  in this  Communication  for  1998  of  the  scope, 
level and quality of  universal service in the Community.  In this  respect,  a Council 
Resolution is being examined on the use of  multimedia technologies  and services 
for  educational  purposes.  The definition  of  future  policy  on  universal  service will 
also take account of the outcome of  on-going  and future  debates, in particular,  in 
relation  to  the  White  Paper  on  "Teaching  and  Learning  :  towards  the  learning 
society"  in  the context of the European  Year  of  Lifelong  Learning  1996,  and  the 
forthcoming Green Paper on the Social Aspects of the Information Society. 

V 

CONCLUSIONS 

This  Communication  has  identified  universal  service  as  an  essential  element  of 
the  information  society,  but  it  is  only  one  of  several  factors  which  are  allowing 
Europe's  citizens  to enter  into  a new and exciting  age  of  information.  In order to 
accelerate  and  support  the  process  of  transformation,  three  sets  of  conclusions 
can be drawn: 

1  The  current  concept  of  Universal  Service  forms  a  firm  anchor  for  the 
regulatory reforms underway at a national level to achieve the full liberalisation 
of the telecommunications  sector in Europe. 

20 

-  The current concept  of  universal service corresponds  to the obligation to 
provide  access  to  the  public  telephone  network  and  to  deliver  and 
affordable  telephone  service  to  all  users  reasonably  requesting  it. 
The  detailed  elements  comprising  that  service  are  defined  in  the  Voice 
Telephony  Directive and are sufficient for the drafting of national schemes 
for universal service according to the Full Competition Directive. 

-  A framework for the costing  and funding of universal service  is found 
in  the  Interconnection  Directive  and  the  'Full  Competition  Directive. 
Common  principles  are  proposed  to  identify  how  much  universal  service 
obligations  cost.  These  costs  may  be  shared  with  other  market  players 
either  (i)  via  a  universal  service  fund  at  a  national  level  or  (ii)  by  direct 
payments  to those  providing  universal  service.  Guidelines  to  be  used in 
assessing national approaches to costing and funding are in preparation. 

-  Where  additional  telecommunications-related  obligations  outside  the 
scope of universal service are imposed  by Member States, any  additional 
financial burden associated meeting such obligations  must not funded out 
the mechanism established for funding universal service.. 

Universal  service  in  the  Community  can  and  should  be  strengthened  In  the 
short term: 

-  Affordabiiity  is at the  heart  of the framework  for  universal  service  for 
telecommunications.  The  requirement  for  affordabiiity  must  be  made 
clearer. 
At  the  same  time,  Member  States  should  ensure  that 
appropriate  measures  are  taken,  (e.g.  price  caps,  targeted  tariff 
schemes)  necessary  to  maintain  the  affordabiiity  of  services  for  all 
users, particularly  in the run up to full competition.  The Monitoring Report 
include  an  assessment  of 
announced 
of 
pricing 
developments 
telecommunications  services within the Community. 

for  1  January  1998  will 

affordabiiity 

relative 

and 

the 

in 

-  For  users  in  the  rural  or  remote  areas,  price  increases,  other  than 
adjustments  to  achieve  cost-orientation,  must  not  be  used  to 
compensate 
in  revenue  resulting  from  price  decreases 
elsewhere.  Furthermore, any differences  in pricing  between  high cost 
areas  and  low  cost  areas  must  not  endanger  the  affordabiiity  of 
universal service. 

losses 

-  The  definition  of  universal  service  will  ensure  that  an  equivalent  level  of 
service  is  offered  to  users  with  disabilities  at  an  affordable  price  and 
Member States are encouraged to provide citizens with improved access 
to  computer  networks  and  on-line  services  (in terms  of  faster  network 
access speeds); 

-  The  Commission  will  place  greater  emphasis  on  quality  of  service  and 
the level of affordabiiity  at both a European and national level, (including 
on monitoring, enforcement  and compensation when targets are not met); 
as well as providing a stronger role for the consumer voice, particularly, 
in  defining  standards,  the  level  of  affordabiiity  and  the  future  scope  of 
universal service. 

21 

- 

The  Commission  will encourage  action  in the  less favoured  regions  to 
accelerate  the  process  of  network  digitalisation  there.  Developments 
will  be  carefully  monitored  to  ensure  that  citizens  in  such  regions  benefit 
the  Commission  will  continue  to 
from  the  arrival  of  competition  and 
work 
liberalisation  and  new 
technologies  reduces  rather than  widens  existing  regional  differences 
within  the  European  Community. 

that  a  combination  of 

to  ensure 

3.  Universal  service  is  an  evolving  and  dynamic  concept  and  will  play  an 
important  role  in  the  meeting  the  challenges  of  the  information  society:  The 
Commission  will  report  by  1  January  1998  on  the  scope,  level,  quality  and 
affordabiiity  of  universal  service  in  the  Community  and  consider  the  need,  in 
the  light  of  the  prevailing  circumstances,  for  adaptation  of  the  scope  of 
universal  service  at  a  European 
for 
predicatability  for  investment  decisions. 

level,  bearing 

the  need 

in  mind 

-  Any  extension  of  the  current  concept  of  universal  service  must  combine  a 
market-based  analysis  of demand  for  and  availability  of the  service  with 
a  political  assessment  of  its  social  and economic  desirability. 

initiatives  will  play  a  major  role 

Public-private 
in  promoting  the 
availability  of  new  telecommunications  services  in  the  information 
society,  particularly  in the  less favoured  regions  of the  Community. 

-  Public  access  is  an  important  means  of  bringing  the 

information 
society  to  every  citizen.  Progress  in  extending  such  access  will  be  kept 
undei  review  to  assess  periodically  the  need  for  additional  action  or  for 
any  reshaping  of the  concept  of  universal  service. 

The  information  society  raises  issues  far  beyond  universal  service  for 
telecommunications.  An  overall  Community  policy  for  the  information 
society  must  integrate  aspects  of  education,  healthcare  and  social 
policy. 

ENDNOTES 

1 

2 

3 

4 

5 

6 

7 

8 

See  Commission  Directive  [../../EC] amending  Commission  Directive  90/388/EEC  regarding  the  implementation  of  full 

competition  in telecommunications  markets  ("the  Full  Competition  Directive"). 

Directive  95/62/EC  on  the  application  of  Open  network  provision  (ONP)  to  voice  telephony  ("the  Voice  Telephony 

Directive"),  OJ  L321,  30.12.95 

Commission  Communication  on  the  consultation  on  the  Review  of  the  situation  in  the  Telecommunications  Services 

Sector,  COM(93)  159 

Council  Resolution  94/C48  of  8  February  1994  on  Universal  Service  principles  in  the telecommunications  sector,  OJ 

C48,  16.2.1994 and  Council  Resolution  95/C258  of  18 September  1995 on the  implementation  of  the  future  regulatory 

framework  for telecommunications,  OJ  C258,  3.10.95 

European  Parliament  Resolution  of  19  May  1995  on  the  Green  Paper  on  the  liberalisation  of  telecommunications 

infrastructure  and cable television  netwoiks  - P.nt  II A4-0111/95;  OJ  C151,  19.6 95 

Opinion  of  the  Economic  and  Soci.il  Committee  ol  13  September  1995  on  the  Green  Paper  on  the  liberalisation  of 

telecommunications  infrastructure  and cable television  networks  - Part  II,  OJ  C301,  13.11.95 

Opinion of the  Committee  of the  Regions  on the Commission  Communication:  Europe's way to the  information  society. 

An action  plan (COM((94)  347  final).  CdR  21/95  ESP/ET/AG/ym  and CdR  21/95 Appendix  D/BAN/JKB/NF/as. 

A  detailed  questionnaire  was  completed  by  Member  States  on  the  level  and  quality  of  telephone  services  in  their 

territory. 

The  results  of  the  Member  State  questionnaire  are  set  out  in  Annex  2.  More  than  100  organisations 

attended  a  public  hearing  in  October  in  Brussels  and  more  than  60  written  comments  were  received  in  response  to a 

Theme  Paper  sent  out to more than 400 organisations.  A list  of  participants  and  a summary  of the  main  issues  raised 

is set  out in Annexes  3 and 4. 

9 

See the detailed description  on the current  level of service  in Member  States  in Annex  2 

22 

10 

11 

Article  129a  EC  Treaty 

See  Proposal  for  a  European  Parliament  and  Council  Directive  on  interconnection  in  telecommunications  ensuring 

universal  service  and  interoperability  through  the  application  of  the  principles  of  open  network  provision  (ONP), 

COM(95)  379,  19.7 95  ("the  Interconnection  Oiieclive")  and the  Full Competition  Directive  These  set  out  in  particular 

the  principles  to  be  used  in  working  out  the  cost  ol  providing  universal  service  and  the  systems  (either  a  universal 

service fund or a system of  supplementary  charges) which can be used to share out any costs  involved 

12 

The  Interconnection  Directive  sets  out  a  technical  description  of  the  type  of  connection  over  which  services  are 

provided. 

It  specifies  that  only  the  provision  of  the  public  fixed  telecommunications  network  is  part  of  universal 

service.  Universal  service does  not  mean that  users  have a right  to a  mobile telephone,  although  wireless  technology 

represents  an  important  way  of  delivering  universal  service  in  remote  regions  (for  example  by  using  a  radio-link  to 

connect  a fixed telephone  in a remote home or farm, instead of  having to provide a fixed telephone line. 

13 

Member  States  are  required to  implement  the  obligations  set  out  in  the  Voice  Telephony  Directive  by  13  December 

1996. 

14 

Monthly  subscriptions  with  on-line  service  providers  are  generally  in  the  region  of  4  -  15  ECU.  The  trend  towards 

telecommunications  organisations  offering  cheap  Internet  access  to  subscribers  is  likely  to  develop  in  Europe, 

lowering further  the cost  of  accessing certain  inter-active services. 

15 

The  Interconnection  Directive  requires  Member  States  to  introduce  number  portability  in  all  major  population  centres 

by 2003 at the latest.  For a description of these other  services see the glossary with Table A6 in Annex  2. 

16 

17 

See the  Interconnection  Directive and the  Full Competition  Directive 

According  to the  Full  Competition  Directive  these  schemes  must  be  sent  to the  Commission  by  1  January  1997  and 

will be assessed to ensure, in particular,  that the obligations  proposed are non-discriminatory;  proportional, transparent 

(i.e.  clearly  formulated  so  that  applicants  know  the  extent  of  their  obligations  in  advance);  based  on  objective  criteria 

(allowing judicial  review  in the  case  of  conflict)  and  imposed  only  on  those  undertakings  foreseen  by  the  Community 

framework. 

18 

Council  Directive  92/44/EEC  of  5  June  1992  on  the  application  of  open  network  provision  to  leased  lines,  OJ  L165, 

19.6.92 

19 

Council  Recommendation  92/383/EEC  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,  OJ  L200,  18.7.92 

20 

See the  Voice  Telephony  and  Leased  Lines  Directives. 

In  a  monopoly  environment  operators  enjoyed  considerable 

freedom  in  setting  their  prices  which  tended  to  lead  to  substantial  profits  being  made  on  international  and  long 

distance  calls.  Prices  were  not  constrained  by  competitors  who  could  otherwise  have charged  their  customers  lower 

prices,  hi  the  absence  of  competition,  the  regulatory  framework  in  the  Community  has  obliged  certain  tariffs  to  be 

cost-oriented  in the  run up to effective  competition 

21 

22 

indications of the level of rebalancing  between  1090 and  1995 are set  out  in Tables A8 and A9 in Annex  2 

The  requirement  for  cost-orientation  is  a  central  element  in  the  principles  governing  tariffs  for  telecommunications 

services  in the  European  Community  (see  the  1990  Open  Network  Provision  Framework  Directive  (90/387/EEC)  and 

the subsequent  ONP  directives on Leased  Lines and Voice Telephony). 

The  Full Competition  Directive in  Recital  17 calls for  Member  States to "phase  out  as  rapidly  as possible  all  unjustified 

restrictions  on  tariff  rebalancing  by  telecommunications  organisations  and  in  particular 

those  preventing 

the 

adaptation  of  rates  which  are  not  in  line  with  costs  and  which  increase  the  burden  of  universal  service  provision". 

Article  4C  of  the  Full  Competition  Directive  provides  that  where  such  rebalancing  cannot  be  completed  before  1 

January  1998 the Member  States concerned  shall report  to the Commission  on the future  phasing out of the  remaining 

tariff  imbalances  and that  such a report  shall include  a detailed timetable. 

23 

Targeted  tariffs  schemes  designed,  for  example  for  low  users,  the  elderly,  or  those  on  low  incomes,  can  combine  a 

low initial connection charge, low  monthly  rental and a limited number  of  free or cheap call units each month. 

24 

Price  caps  operate  by  pegging  annual  price  rises  either  for  the  whole  telephone  service  or  for  specific  components, 

(such  as  rental  for  residential  users)  at  or  below  the  rate  of  inflation.  This  can  lead  to  real  reductions  in  prices  for 

users, whilst encouraging  the operator  to improve  its  efficiency. 

25 

in  reality,  lower  prices  in  a  competitive  environment  are  likely  to  stimulate  telecommunications  traffic  lessening  the 

overall impact  of  price competition  on the total revenue of such  operators. 

26 

See  Commission  Communication  on  the  consultation  of  the  Green  Paper  on  the  liberalisation  of  telecommunications 

infrastructure  and cable  television  networks,  COM(95)  158, 3.5.95  and  Council  Resolution  95/C258  of  18  September 

on the implementation  of the future  regulatory  framework  for telecommunications,  OJ  C258,  3.110.95 

27 

Estimates  of  the  cost  of  universal  service  prepared  for  the  Infrastructure  Green  Paper  suggested  a  cost  associated 

with universal service of  between  1 to  2% of  total turnover  for  most  of the  12 Member  States  at that  time.  The  figures 

for  Ireland  and  Italy were  around  3%,  Spain  around 6%,  Portugal  7%  and  Greece  15%.  It  should  be emphasised  that 

these  figures  were  estimates  prepared  without  full  details  of  the  underlying  cost  structures.  More  comprehensive 

23 

studies  are currently  underway  in almost  every  Member  State.  Initial  indications  point  to  figures  well within the  ranges 

suggested  in the  Infrastructure  Green  Paper 

28 

Article  32 of  that  Directive  already  requires  the  Commission  to  propose  a revision  of  the  directive  in good  time  to  allow 

the  European  parliament  to decide on it  by  1 January  1998 

29 

Affordabiiity  will  be assisted  by the  provision  of  free  itemised  billing  on  request  and  availability  of  selective  call  barring. 

Users  should  also  be  able  to  spread  the  costs  of  initial  connection  and  operators  should  replace  disproportionate  or 

discriminatory  deposit  schemes with more proportionate  means of credit control (such as pre-agreed credit  limits). 

Examples  of action to achieve this  are itemised  billing and giving all customer  the  possibility of call-barring. 

This  requires  completion  by Member  States  of the on-going  deployment  of "touchtone" dialling  in their  networks 

An  important  element  of  quality  of  service  at  a  national  level  is  enforcement  of  quality  of  service  targets  and  the 

30 

31 

32 

existence  of  rights of  redress  for  users  and appropriate  compensation  mechanisms. 

33 

This  requires  the  provision  of  networks  with  the  necessary  transmission  quality  to  allow  users  to  access  data 

communications  services  at commonly  available  speeds. 

34 

The  approach  in  the  US  envisages  ,  in  particular,  a  compensation  mechanism  to  meet  burdens  associated  with  the 

provision  of  preferential  tariffs  offered  to schools  and  libraries, though  much  of  the  detail  still has to  be worked  out.  A 

private  foundation,  The  National  Education  Technology  Funding  Corporation  aimed  at  promoting  the  financing  and 

development  of additional  services  is also being  set  up to attract  private funding  into the  sector. 

35 

In the  United  States four  criteria  have been identified  against  which  possible  candidates  for  universal  service would  be 

assessed:  "(A)  essential  to  education,  public  health  or  public  safety,  (B)  have,  through  the  operation  of  market 

choices  by  customers,  been  subscnbed  to  by  a  substantial  majonty  of  residential  customers;  (C)  are  being  deployed 

in  public  telecommunications  networks  by  telecommunications  carriers;  and  (D)  are  consistent  with  the  public 

interest,  convenience  and  necessity". 

These  criteria  highlight  the mixture of  universal service objectives  and  broader 

policy objectives  linked to education  or  healthcare  found  in the draft  legislation. 

36 

The  Voice  Telephony  Directive  lists  of  these  services.  Table  A6  in Annex  2  shows  the  extent  to which  some  of  these 

are already available  in the  EC. 

37 

Communication  of  31  May  1995  on  a  methodology  for  the  implementation  of  information  society  applications  and 

proposal 

for  a  European  Parliament  and  Council  Decision  on  a  series  of  guidelines 

for 

trans-European 

telecommunications  networks,  COM(95)  224.  The  Communication  identified  a  diverse  range  of  projects  related  to 

applications, generic  services  and  basic  networks. 

38 

The  issue  of  public  access  has  been  addressed  in  "Building  the  European 

Information  Society  for  us  all"  Interim 

Report  of  the  High  Level  Expert  Group  on  social  and  societal  aspects  of  the  information  society. 

It  is  also  being 

tackled  in  the  on-going  work  of  the  Information  Society  Forum. 

The  goal  of  connecting  schools,  hospitals  and 

libraries  is  already  being  explored  in  some  Member  States  and  underpins  the  developing  approach  in  the  United 

States. 

24 

Annex 1 : Timetable for Action 

ANNEX 1 : 

TIMETABLE FOR ACTION IN THE SHORT TERM (1996-1998) 

PIH 
Before 30 June 1996  Proposal  for  a  European  Parliament  and  Council  Directive 
amending the Voice Telephony Directive. 

Action 

Member  States  commence  drafting  authorisation  schemes  for 
voice  telephony  and  public  network  providers  as  provided  by 
the Full Competition Directive 

Member  States  concerned  apply  for  derogations  to  the  1998 
deadline  and  provide  all  necessary  economic  data  necessary 
for  the  assessment  of  the justification  of  such  derogation  as 
provided by the Full Competition Directive 

Common  Position  on  the  ONP 
Interconnection  Directive 
(including  principles  for  the  costing  and  funding  of  universal 
service). 

Common  Position  on the  proposed  European  Parliament  and 
Council  directive  on  a  common 
for  general 
authorisations  and 
the  European 
Community. 

framework 

individual 

licenses 

in 

Before 30 
September 1996 

Communication  on  the  Commission  criteria  for  costing  and 
funding of the universal telephone service in the EC 

Before 31 December 
1996 

Common position on the  proposal for a Council and  European 
Parliament Directive amending the Voice Telephony Directive. 

Adoption of the ONP Interconnection Directive. 

Adoption of the Licensing Directive. 

the  Member  States  of  authorisation 
Communication  by 
schemes 
telephony  and  provision  of  public 
telecommunications  networks  including  obligations  related  to 
universal service 

for  voice 

Before 30 June 1997  Decisions  of  the  Commission  on  the  authorisation  schemes 

submitted. 

Publication in the Member States of information required by the 
Full Competition  Directive with  regard  to  licensing  procedures 
and terms and conditions for  interconnection. 

Adoption  of 
Parliament Directive amending the Voice Telephony Directive. 

for  a  Council  and  European 

the  proposal 

Before  1  January 
1998 

Ifoeralisation  of 

Full 
telecommunications  services  and 
networks,  subject  to  possible  transitional  arrangements  for 
certain Member States, where justified and subject to scrutiny. 

First Commission  Report on the monitoring of the scope, level, 
quality  and  affordabiiity  of  the  universal  telephone  service  in 
the Community. 

25 

Annex 2  : The Universal Telephone Service in the European Union Today 

ANNEX 2: 

UNIVERSAL  SERVICE  FOR  TELECOMMUNICATIONS 
EUROPEAN COMMUNITY TODAY 

IN  THE 

This Annex presents the results of survey of the level of service currently found in 
the European Community.  It addresses five areas : 

(I) General developments in the provision of telecommunications services; 

(II) Quantitative indications service penetration; 

(III) Qualitative indications of service quality 

(fV) the availability of advanced telephone services and 

(V)  the  level  of  tariff  changes  and the  existence  of  special  or  targeted  tariff 
schemes. 

The  information  is based primarily on the responses  of the Member  States  to a 
questionnaire  sent  out by the  Commission  in  Summer  1995.  A  copy  of  that 
questionnaire is provided at the end of this Annex. 

I 

GENERAL  DEVELOPMENTS  IN THE PROVISION OF  TELECOMMUNICATIONS 
SERVICE 

In the last decade, a number of technical and service developments  have had  a 
considerable impact on the nature of the basic telephone service. 

1.  The development of relatively  inexpensive fax machines and modems means 
that ordinary telephone  lines are being  used to an ever  increasing  extent to 
communie ate data and images as well as voice, although at a relatively  slow 
speed. 

2.  The digitisation of the telephone  network combined with  improved  signalling 
means that a range of supplementary telephone services are being offered on 
the basic telephone  line.  These  services  include  call-forwarding, call  transfer 
and  call-waiting,  voice-mail  and services  which  allow  the identification  of the 
calling-party  ("calling  line  identification").  These  add-on  services  have  the 
potential  to  generate  significant  revenues  for  telecommunications  operators. 
In addition, it is now far easier to provide  more  sophisticated  billing  details to 
customers including itemised billing. 

3.  Although  many  of  the  above-mentioned  services  are  not  yet  extensively 
provided  or  marketed  by  all  telecommunications  operators,  particularly  to 
residential  customers,  most  operators  offer  ISDN  (integrated  services  digital 
network)  service  and some  are planning  to offer  an ISDN  connection  at the 
same price as an analogue link in certain areas.  ISDN is beginning to be used 
for applications  where  users  require additional functionality.  Examples  include 
desk-top  video-conferencing  or data  transfer,  as an alternative  to or back-up 
for leased lines, and for Group 4 or higher speed fax. 

4.  There  has  been  a  dramatic  growth  in  wireless  telephony  and  in  particular 
mobile cellular networks and subscribers.  5 per cent of telephone  subscribers 
in  the  European  Community  are  currently  based  on  mobile  networks1. 
Wireless-based 
telecommunications  now  demonstrates  some  significant 
operational  and  cost  advantages  over  wire-based  telecommunications  for 
In  particular,  providing  a  wireless  connection  to 
certain  types  of  usage. 

26 

Annex 2  : The  Universal Telephone  Service in the European Union Today 

customers in remote or scarcely populated areas is considerably cheaper than 
the  installation  of  a fixed  line. Wireless  applications  in the  local  loop  are  also 
being  seen,  particularly  in  central  and  eastern  Europe,  as  one  means  of 
rapidly  upgrading  the  network  and meeting  unsatisfied  demand  for  telephone 
service or for introducing competition into the local loop.  Examples include the 
use  of  wireless  telephony  solutions  to  deliver  rural  service  in  Spain2  and 
Germany,  whilst  Digital  European  Cordless  Telephone  (DECT)  technology  is 
being used for local loop competition in Finland). 

5.  Satellite  communications  have not yet fulfilled  their  earlier  promise  in  relation 
to the delivery of a universal telephone service, as until recently regulatory and 
technical constraints  existed which combined to inhibit  growth.  However,  the 
new regulatory  environment, together with the emergence of satellite  personal 
communications  services  may  develop  further  the  role  of  satellite  based 
communications  in connecting  the  remoter  regions within the Community  and 
in order to support this the Commission has proposed a framework for the co 
ordinated  selection  and  licensing  of  satellite-based  personal  communications 
systems3.  There is also scope for making temporary  use of VSATs4 to serve 
isolated areas pending roll-out of a more permanent terrestrial infrastructure. 

6.  The process of deregulation is increasingly allowing full advantage to be taken 
of  developments  in  hybrid  fixed  networks  (using  fibre  and then  coaxial  cable 
and/or copper for part of the local network) which support the joint provision of 
telephone  service  with  cable  television  service,  where  new  franchises  have 
been  awarded  and  the  regulatory  situation  has  permitted.  The  use  of  such 
technologies,  combined  with  the  advent  of  ISDN /  broadband  networks  and 
digital compression technologies, has the potential to rewrite the economics of 
delivering  universal service, whilst the falling  cost of transmission  should  lead 
to tariff  structures which are less dependent on distance and on the duration of 
In  such  an  environment,  the  combined  offering  of  telephone, 
the  call. 
information  and  entertainment  services  once  effective  competition 
is 
established,  may  allow  operators  to  price the  telephony  elements  at  a  lower 
level reflecting the more efficient  use of their networks and the dual source of 
revenue. 

27 

Arme* 2  : The Universal Telephone Service in the European Union Today 

H. 

QUANTITATIVE INDICATORS OF THE LEVEL OF TELECOMMUNICATIONS SERVICES 

The quality and teve* of telecommunications services in the  European Union has 
shown  a  steady  and  significant  improvement  over  the  last  five  years.  This  is 
reflected  in  the  detailed  responses  to  the  questionnaire  completed  by  Member 
States  and in many of the comments made in response to the Theme  Paper.  A 
number of features of the current environment should be highlighted. 

1.  Overall,  there  have  been  important  improvements  in  the  Community  in  the 
number  of  households with  a  telephone  (see  Table  A1).  Whilst  household 
penetration  in  France,  the  Netherlands  and  Scandinavia  was  already  weH 
above  90%  in  1990  and  has  improved  since  then,  even  more  impressive 
growth has been seen elsewhere.  In 1990 only 66% homes in Ireland, whilst 
today  its 80%  and for  Portugal  the  level  has risen in the  same  period from 
47.1%  to 74.8%.  However,  it is notable that at least five  national regulatory 
authorities  even  today  do  not  have  publicly  available  data  on  this  basic 
measure of universal service.  Furthermore, where data has been provided, it 
is not directly comparable between Member States. 

2.  The average  number for the  EC of residential main lines per hundred homes 
(see  Table  A1),  has  also  seen  a  substantial  rise  from  87  to  96  lines per 
household.  These  figures  provide  a  more  comparable  measure  of  the 
situation  between  Member  States,  do  not  distinguish  between  those 
homes/individuals with more than one telephone line (e.g. business and/or fax 
line and residential line) and those with no telephone.  This results in Denmark, 
France,  Luxembourg,  Finland  and  Sweden  ail  have  a  residential  main  line 
penetration in excess of 100%. 

28 

Annex 2  : lb*  UniversalTelephone Sendee In the European Union Today 

Tabte A1  Telephone penetration rates within the European Community 

Country 

Percentage of  households 
with A telephone1 

Residential  Main Lines  per 
100 Households2 

V. 

B 

DKa 

°4 

EL 

E 

F 

IRL 

1 

L 

NL 

AUT 

po 

FIN 

SWEO' 

UK 

EC Average 

1Ô90 

n/a 

94.3 

80 

n/a 

n/a 

94 

§& 

n/a 

n/a 

93 

n/a 

47.1 

95e 

98.7 

88 

-

1994 

n/a 

n/a 

89 

n/a 

n/a 

96.4 

80 

n/a 

n/a 

96.5 

n/a 

74.8 

97e 

98.7 

91.1° 

-

1990 

81 

103 

81 

80 

80 

104 

60 

90 

88 

96 

n/a 

43 

103 

121 

89 

87 

1994 

92 

106 

93 

96 

89 

111 

75 

99 

105 

96 

n/a 

64 

104 

121 

99 

96 

Source: National Regulatory Authorities (1995). 

n/a  indicates that the NRA does not have this data available.  EC average excludes Austria. 

Notes 

1.  All  data  provided  in  this  section  of  the  table  relates  to  the  most  recent  period  for  which 

information is available (normally 1994).  Where available, additional data is given in these notes. 

2.  This indicator of residential telephone penetration is imperfect as it is not the same as the number 

of households which have a telephone; the latter indicator would have an upper value of 100. 

3.  Source: Tele Danmark. 

4.  Figure includes the new Bundeslânder. 

5.  Figures  refers to  penetration  rate for Portuguese mainland  (excluding  Madeira  and the Azores). 

The household penetration figure in 1994 including those islands was 74.8%. 

6.  Estimated figures for 1990 and 1995 

7.  % relates to 1989 which was the last year for which figures were calculated, given the very high 

level of penetration achieved 

8.  Data relates to March 1995  (Source: UK Family expenditure survey). 

29 

Annex 2  : The Universal Telephone Service in the European Union Today 

3.  The  general  growth  in service  penetration  extends  to  most  other  areas  : total 
main lines  (business  and  residential);  mobile  subscribers.and  in the  provision 
of  public  payphones.  (see Table A2)  For public  payphones, the  EC average 
has  increased  from  2.9  to  3.1  per  1000  population, with  the  percentage  at a 
national level either staying the same or increasing, with the sole exception of 
Italy (where penetration was already  the highest within the EC). 

Table A2 - Penetration  of fixed  and cellular telephones  per 
100 population  and  payphones  per 1000  population  in the  EC 

Main Lines 

Country 

per 100 

Cellular 
subscribers 
per 100 

Payphones 

perl 

000 

B 
DK 
D 
EL 
E 
F 
IRL 
I 
L 
NL 
AUT 
P 
FIN 
SWED 
UK 
EC Average 

1990 
39 
57 
40 
39 
32 
50 
28 
39 
48 
46 
42 
24 
54 
68 
45 
43 

1994 
45 
60 
48 
48 
38 
55 
35 
43 
55 
51 
47 
35 
55 
68 
49 
49 

1990 
0 
2.9 
0.4 
0 
0.1 
0.5 
0.4 
0.5 
0.2 
0.5 
0.5 
0.1 
5.2 
5.6 
2.1 
0.9 

1994 
0.7 
9.7 
3.0 
1.4 
1.0 
1.4 
1.7 
3.9 
3.2 
2.0 
3.5 
1.8 
13.3 
16.0 
6.1 
3.6 

1990 
1.3 
1.3 
1.7 
2.1 
1.1 
3.2 
1.5 
7.7 
0.8 
0.5 
4.3 
2.6 
4.1 
4.3 
1.6 
2.9 

1994 
1.5 
1.6 
2.1 
3.5 
1.4 
3.5 
1.8 
6.8 
0.9 
0.7 
4.3 
3.3 
4.6 
3.7 
2.1 
3.1 

Source: National Regulatory Authorities; (1995) 

30 

Annex 2  : The Universal Telephone Service in the European Union Today 

III 

QUALITATIVE INDICATORS OF THE LEVEL OF TELECOMMUNICATIONS SERVICES 

1.  Alongside  improvements  in overall  numbers, almost  every  Member State  now 
sets,  monitors  and  publishes  results  in  relation  to  quality  of  service  targets. 
This  practice  has  now  been  reinforced  by  the  requirements  of  the  Voice 
Telephony  Directive (see below).  These indicators, which are generally, set in 
a manner to require annual improvements in the level of service, provide users 
with information about what they are entitled to expect and as such they are a 
crucial element of universal service. 

At  the  same  time,  the  results  of  the  questionnaire  have  indicated  the 
considerable  divergence  between  the  standards  set  and/or  achieved  in 
different  parts  of  the  Community,  and  show  the  difficulty  in  comparing  the 
position in each Member State.  The results are summarised below: 

2.  Length of time for installation of a telephone (see Table A3). 

Targets are set in almost  all Member States for  installation times with most of 
them  also  publishing  some  information  on  the  supply  times  achieved.  The 
average  length  of  time  to  obtain  a  telephone  in  1995  in  the  Member  States 
varied from  1 day  in Sweden  to 45  days  in Austria  and 220  days  in Greece. 
Operators  in  most  Member  States  complete  a  high  proportion  (60-80%)  of 
installations within 5 to 20 days. 

31 

Annex 2  : The Universal Telephone Service in the European Union Today 

Table A.3  Target periods for network connection  and supply times achieved 
in the EC1 

Information 
Published 

Target 

Actual supply  time 

B 

DK 

Yes 

Yes 

D 

Yes 

90%  within 20 working days* 

95%  on installation date agreed 
upon with customer. 
Remaining 5% within 10 days. 
80%  within 20 working days 

n/a 

No' 
Yes 
Occasionally10 

80%  of new connections within 
30 days5 
n/a 
Within 5 working days0 
n/a 

EL 

E 
F 
IRL 

1 

L 

NL 

AUT 

n/a 

n/a 

n/a 

n/a 

P 

Yes 

FIN 
SWED 
UK 

Yes 
n/a 
Statistics 
published regularly 
by BT and  Mercury 
only 

For new connections: 60 days 
For take-overs: 30 days 
n/a 

1 month 

n/a 

Target: 2 months (95)/1.5 
m(96)/1 m(97)12  Minimum 
level : 
2.8/2.4/2 months 
n/a 
Within 5 days14 
87":  For residential customers: 
within 8 working days. 
For business customers: within 
6 working days 
Mercury. Access for indirectly 
connected customers: within 2 
days of order16 

90.9%  within 20 working days 
61.3%  within 5 working days3 
98%  within target 

87.1% within 20 working days in Western Lander 
42.3%  within 20 working days in Eastern Lander 
98.3%  of lines provided on date agreed with 
user4 
220 days on average0 

5 working days on average 
8 days on averagey 
11 working days on average 
75%  of customer orders completed within 2 
weeks11 
97.8%  of connections within targets 

60%  within 30 days 
89%  within 3 months 
11% over 3 months 
96%  within target 

45 days on average 

0.4 months average (Sept 95) 

5.4 days on average13 
Less than 1 day on average 
BT: For residential 85.3% satisfied target 
For business customers 76.4% satisfied 
target15 

Mercury.  72.8% of connections on date agreed17 

n/a=data  not  available 

Source:  National  Regulatory Authorities  (1995). 

NOTES 
1  All data provided in the table relates to the most recent period for which information is available (normally 1994).  Where 

available, additional data is given in these notes. 

2  Target set in Belgacom's Management Contract.  The target set for 1995 is 80%  of connections within 5 working days. 
3 

In 1993:26.6% within 5 working days and 83.9%  within 20 working days. 

4  These figures relate to the second half of  1994.  In first half of 1994 83% of  lines provided within 20 days in Western 

Lânder. 

5  Target set for 1995 
6  Data relates to 31.12.94 

7 

Information provided to the Spanish Advisory Telecommunications  Council.  Public can obtain information given to that 

body. 

8  Target set in France Telecom's contract with the  Direction Générale de Postes et Télécommunications  (DGPT Annual 

Report (1994)). 

9  Figure as at 31  December 1993 (Source: DGPT Annual Report (1994)). 
10  The last set of information was published on 21  March 1994. 
11  In 1993:19 days on average. 

12  Target  and  minimum  acceptable  level  set  in  contract  between  ICP  and  Portugal  Telecom  and  covers  period 

1995/1996/1997 

32 

Annex 2  : The  Universal Telephone Service in the European  Union Today 

13  In 1993:5.3 days on average; in 1992:5.5 days on average 

14  Target forms part of Telia's service warranty. 

15  In  addition  to  requesting  a  direct  connection  to  the  Mercury  Network,  users  can  access  Mercury's 

long 

distance/international network indirectly via BT or other local connection.  Access  is obtained by dialling a specific  preface 

(132) after subscribing to Mercury. 

16  Figures relate to October  1994 to March  1995.  For April  1995 to September  1995, corresponding  figures are 86.9%  and 

78%. 

17  Mercury completed on average 82.5% of connections on date agreed with the customer in 1993. 

33 

Annex 2  : The Universal Telephone Service in the European Union Today 

3  Fault repair time (see Table A4) 

Targets  are used in all Member States, and are generally  set for  % of  repairs 
within  one working  day  and  achievement  of  targets  generally  in the  range  of 
85-95%.  Additionally,  operators  in  twelve  Member  States  currently  offer 
compensation to customers, where certain repair targets are not met. 

Table A4  : Target  periods for fault repairs, repair times achieved  and 
compensation  schemes  available  in the  EC1 

Country 

Fault repair  times 

Compensation 

Target2 

Actual repair time 

Schemes 

B 

DK 

71%  before end of next working 
day3 
100% within 12 working hours 

91% within target. 

81.3% of repairs within targets 

n/a 

If Tele Danmark defaults on the 
time 
of execution concerning the 
change of an existing connection 
to the public telecommunications 
network, or if faults occur in the 
telecommunications  network 
leading to interruptions of the 
connection, Tele Danmark shall 
make a proportional reduction in 
the subscription charge for the 
period in question, provided that 
the amount exceeds DKK 25. 
The amount shall be deducted on 
the subsequent invoice for 
subscription charges. 
Graduated system of discounts 
(up to a full 100% discount) for 
network connection delays and 
compensation schemes for 
network connection and fault 
repair delays depending on 
nature of service and length of 
delay4 
Basic charge reimbursed if repair 
time target not satisfied 

Reimbursement of a 
proportionate part of the monthly 
line rental for repairs exceeding 
repair time target 
n/a 

n/a 

Rental charge reimbursed if 
repair time target not fulfilled 

Twice the monthly rental will be 
reimbursed if repair targets not 
met 
Reimbursement of 1/30 of 
monthly line rental for every day 
of delay to line repair in excess of 
repair time target 
Reimbursement of the monthly 
subscription corresponding to the 
number of days for which service 
was interrupted 

34 

D 

80% within 3 working days 

82.5% of repairs within target 

EL 

E 

F 

IRL 

1 

L 

NL 

AUT 

p10 

60% within 24 hours1* 

57% within target 

Within 6 days0 

98.4% of faults attended to 
within 

24 hours 

92% before end of next working 
day7 
n/a 

n/a 

Within 5 days0 

67.3% same day 
97.1% within 2 days 

86.2% same day 
100% within 10 days 

Within 12 working hours 

98% of repairs within target 

Within  1 day6 

93% within 24 hours 

Objective : within 2 working days 
83%(95)/ 85%(96)/ 90%(97) 
Minimum level: 75%/80%/85% 

92% within 2 working 
days(September  1995) 

86.3% of repairs within target0 

90% within 2 daysy 

No schemes in operation 

Annex 2  : The URfcefeal Telephone Service In the European Union Today 

fm 

n/a 

66.4% within 24 hours1' 

SWED 

Within 1 working day12 

93% of repairs within target 

UK 

BT. by end of  next working day0 
Special services guaranteeing a 
quick response are offered at an 
extra fee 

98.9% of business customer 
faults 95.2% of residential 
customer faults repaired within 
2 working days13 

Mercury.  For 2100 service, within 
24 hours; for indirect service, 90% 
of faults within 24 hours 

68.3% within 4 hours 
94.1% within 48 hours 

n/a:  data  not  available 

Source:  National  Regulatory Authorities  (1995) 

There is a reimbursement of a 
monthly basic fee if the line is out 
of order for more than 48 hours 
within one month. 
Discount of quarterly fee if new 
connection not within 5 days or if 
fault not repaired within repair 
time target 
Compensation available for 
various service failings either on 
the basis of a daily rate or actual 
financial loss, up to maximum of 
£100014 
Compensation available for late 
delivery of service depending on 
nature of service and length of 
delay, up to maximum of £5000 

. 

NOTES 
1  All data provided in this table relates to the most recent period for which information is available (normally 1994).  Where 

available, additional data is given in these notes. 

2  Where possible and where no specific target has been provided repair time targets have been adduced from time limits 
used in the corresponding compensation scheme for the purposes of determining entitlement to compensation.  See 
footnote 6  below. 

3  Target set for 1994 by management contract between Belgacom and the Belgian Government.  The target has been set at 

4 

76%  for 1995. 
For example, a network connection delay of up to 10 working days will entitle the subscriber to a discount of up to 30% on 
the connection fee and a delay of over 2 working days in repairs to basic telephone services entitles the subscriber to 
50DM. 

5  The Special Circular of 24 July 1995 amending the Greek Telephone  Regulation imposed a target of 5 working days for 

6 

1995 and of 3 working days for  1996. 
Target adduced from time limits adopted in compensation scheme for purposes of determining entitlement to 
compensation. 

7  Target set in France Telecom's general contract with the Direction Générale de Postes et Télécommunications  (Source: 

DGPT Annual Report  (1994)). 
Figure as at 31  December  1993 (Source: DGPT Annual Report  (1994)). 

8 
9  This figure relates to customer reported faults.  With regard to line faults 88% are repaired within 2 days. 
10  Target and minimum acceptable level set in contract between ICP and Portugal Telecom and covers period 

1995/199671997.  Compensation available after 3 days without if fault is operators responsibility and after 10 days without 
service if force  majeure. 
In 1993,73.5%  of faults were repaired within 24 hours. 

11 
12  Target forms part of Telia's service warranty. 
13  Figures relate to period April to September  1994.  In the same period, 87.6% of business and 75.5% of residential faults 

were repaired within 5 working hours or 9 working hours respectively or on a date agreed with the customer. 

14  On the daily rate basis, the customer is entitled to claim one month's rental for each day of delay. 

35 

Annex 2  : The Universal Telephone  Service in the European Union Today 

4  Percentage of public payphones in working order (see Table A5) 

Payphones  have  a particular  role  in compensating  for the lack  of  telephone 
penetration, especially in rural areas.  For those Member States where data is 
available,  a very  high  proportion  of those  payphones  were  in working  order 
(between  92 and 96%).  Nevertheless,  National  Regulatory  Authorities  in 6 
Member  States  were  unable  to  provide  data  on the  percentage  of  public 
payphones in working order. 

Table A5  Average percentage of public payphones in working order 
in Member States in 19941 

B 

n/a 

OK 

D 

EL 

E 

F 

IRL 

\ 

I 

n/a 

95 

92^ 
973 

n/a 
4 

n/a 
5 

Over 
93 

n/a 

Over 
97 

NL 

95 

AUT 

P 

FIN 

SWED 

97 

99.9 

n/a 

+/-9B 

UK 

94.6e 

n/a: data  not available 

Source: National Regulatory Authorities (1995). 

NQTES 
1  AM  date provided in the table  relates to the  most recent  period for which information is available  (normally  1994).  Where 

available, additional data is given in these notes. 

2  Com operated payphones. 

3  Card operated payphones. 

4 

The average  repair  time  in public  telephones  of aH types  (that  is  in public  and private  places)  is 2.8 hours; for public 

telephone boxes it is 10.6 hours. 

5  France Telecom's general  contract with the Direction  Générale de Postes et Télécommunications  stipulates that only 5% 

of public payphones should remain out of order for more than 24 hours.  As at 31  December  1993 4.8%  remained out  of 

order for a longer period (Source: DGPT Annual Report (1994)). 

6  This figure relates to BT public payphones for the period October  1994 to March  1995.  For the preceding 6 month period 

the figure was 95.9%. 

5.  Supply time  and  quality of service  indicators  required  by Annex  II of the 

ONP Voice Telephony Directive 

According to the Voice  Telephony  Directive5,  Member  States will  be required 
from the end of 1996 to set and publish targets for supply times and quality of 
service indicators for those operators covered by the Directive, in respect of: 

Supply time for initial network connection 
Fault rate per connection, fault repair time and call failure rate 
Dial tone delay and call set up delay, 
transmission quality statistics, 
Response times for operator services 
The proportion of coin and card-operated public pay-telephones in 
working order 
Billing accuracy 

Results  must  be published  annually  and the Commission  will  publish  in the 
Official  Journal, where that information can be found at a national  level.  The 
choice  of  indicators  in  part  reflects  the work  already  undertaken  within the 
OECD, ITU and ETSI6. 

36 

Annex 2  : Trie Unr^rsaJ Telephor» Swvtae in the Eurorjean Union Today 

IV 

AMAtU^BJIJW  OTAF^^ 

1.  An  increasing  rangelof  advanced  telephone  features  (see  Table  A6)  are now 
currently  commercially  available  or on trial throughout the  Community,  though 
the level of deployment is often  linked to the extent of digrtaltsation of  national 
networks. 

•  Touchtone  (DTMF)  dialling  is  available 

in  aJl  Member  States  (though 

sometimes confined to subscribers connected to a digital exchange). 

•  Call  waiting  and  call  forwarding  services  are  also  fairly  widely  available, 
whilst calling  line  identification  is offered  in 5  Member States, with  operators 
in a further three Member  States including in an ISDN  offering, and  plans for it 
to be offered or piloted in three more Member States in 1996. 

•  Call  barring  facilities  are  available  in  twelve  Member  States,  (although  in 
Austria,  Belgium,  Denmark,  and  Finland)  this  possibility  is  currently  limited  to 
certain value-added  services). 

•  Voice  mail  services  are  available  in 7  Member States, with trials  underway  in 
a  further three  Member  States,  and the  facility  being  a  common  feature within 
the GSM  network. 

2.  Three of these facilities (i.e. Touchtone  Dialling /  Call  Forwarding / Calling Line 
Identification at a  national level) are identified in the Voice Telephony  Directive 
as elements  of the telephone  service which should  be introduced  according to 
nationally set dates.  They are increasingly  available in substantial parts of the 
network. 

Call  Waiting  is a service  which  permits a  subscriber to  be  notified  (by a  specific tone)  of an 
incoming call while engaged in another call.  The user then has the choice of accepting, rejecting 
or ignoring the waiting call. 

Call Forwarding  is a service which permits a served user to have the network send to another 
number all  incoming calls for the served  user's number.  (This service  should  be distinguished 
from call forwarding when busy and call forwarding when no  reply). 

Call Transfer  is a service which enables a user to transfer an established  call to a third party. 
For the original call, the served user may have been either the  calling or called party. 

Calling Line Identification  is a service which provides the calling party's number to the called 
party  prior to the  call being established.  It  may  be  possible that the  calling  party  restricts the 
presentation of the calling party's number to the called party. 

Dial-Tone  Multi-Frequency  (DTMF)  operation  /  Touchtone  Dialling  means  the  facility 
offering  users  Touchtone  dialling,  which  is  essential  for  the  use  of  many  new  interactive 
telephone services.  This is defined  in the ONP Voice Telephony  Directive  i.e.  the fixed public 
telephone  network supports the  use of DTMF  telephones for signalling to the exchange, using 
tones as defined in ITU-T Recommendation Q.23,  and supports the same tones for end to end 
signalling through tne network, both within a Member State and between Member States. 

Integrated  Service*  Digital  Network  (ISDN)  is a  network  wfuch attows, via  a  stngte access, 
using the existing subscriber line, the transmission of voice telephony, text, data and Image®. 

37 

Annex 2  : The Universal Telephone Service in the European Union Today 

Table A6 : Availability of Advanced Telephone Facilities in the EC 

Country 

B 

DK 

D 

EL 

E 

F 

IRL 

1 

L 

NL 

AUT 

P 

FIN 

SWED 

UK 

NOTES 

Dual-tone 
Multi-
Frequency 
(DTMF) 
Dialling 
Yes' 

Yes 

* 

Yes 

Yes5 

Yes 

Yes 

Yes5 

Yes5 

Yes 

Yes 

Yes 

Yes10 

Yes 

Yes 

Yes 

Call 
Waiting 

Call 
Forward 

Voice-mail 
in the  public 
network 

Calling  Une 
Identification 

Call Barring 
Facilities 

Yes^ 

Yes5 

Yes 

Yes5 

Yesy 

Yes 

Yes5 

Yes 

Yes 

No14 

Yes 

Y e slb 

Yes 

Yes 

Yes 

Yes^ 

Yes5 

No0 

Yes5 

Yesa 

Yes 

Yes5 

Yes 

Yes 

Yes 

Yes 

Yesi tJ 

Yes 

Yes 

Yes 

Yes 

Yes5 

Yes 

No 

No 

Yes 

Yes5 

No1"1 

No 

No11 

Yes1° 

Yes,D 

Yes 

Yes 

No11 

YesJ 

NoD 

Yes 

No 

N o '" 

Yes 

No 

Yes** 

No 

No15 

YesJ 

Yes 

Yes 

Yes 

Yes 

Yes« 

Yes' 

Yes 

No 

No 

Yes 

No 

Yes1^ 

Yes1J 

Yes 

Yes1' 

Yes'l u4 

Y e siy 

Yes 

Yes 

Source:  National  Regulatory  Authorities  (1995). 

1  For 93.5% of PSTN lines. 
2  For 60% of PSTN lines. 
3  Available on ISDN 
4  Call barring available to block access to kiosk services. 
5  Commercially availability linked to whether subscriber is connected to a digital exchange (percentage of subscribers for 

those States indicated in brackets) : DK (55%),  EL (3%), IRL (75%) and Italy (67%) 

6  Gradual introduction from February 1996. 
7  Commercially available blocking access to specific value-added services; per line or per call barring of call facilities (such 

as call identification) will be introduced in  December 1995. 

8  Technical possibility on ISDN but this is not commercially available for the moment. 
9  47.8% of the subscribers have the possibility to access this service. 
10  There is a plan to offer such a service in 1996 for subscribers connected to digital switches. 
11  Voice-mail was on trial in 1995. 
12  Call barring facilities for trunk traffic and kiosk billing services. 
13  Customers have the possibility of per line barring of call facilities. 
14  Pilot in 1995 and introduction in 1996. 
15  Pilot in 1995. 
16  Available for mobile telephone (GSM). 
17  Barring access available only to specific value-added services (not per line or call blocking facilities) 
18  Available whenever it is technically feasible and for CLI, available on ISDN whenever it is technically feasible. 

19  Customers  are offered  the possibility  of per line  barring  of call  facilities  and barring  access  to specific  value-added 

services. 

38 

Annex 2  : The Universal Telephone Service in the European Union Today 

V 

T HE AFFORDABILITY OF TELECOMMUNICATIONS SERVICES IN THE  EUROPEAN 

COMMUNITY  TODAY 

As  indicated  in  the  Communication,  for  the  majority  of  users,  it  is  the  overall 
affordabiiity  of  the  telephone  service  which  is  important.  It was  also  stressed  in 
many  of  the  comments  received  that  users  needed  to  be  better  informed  about 
what they are spending and to be given more control over that expenditure.  This 
is  all  the  more  important  in  an  environment  in  which  the  general  volume  of 
telephone  usage  is  increasing  and  in which  there  are  an  increasing  number  of 
new  audiotex  services,  providing  information  or  entertainment,  often  priced  at  a 
premium above the normal cost of universal service. 

Price  levels within  the  Community  are already  quite varied. -  Indications  of  these 
absolute levels are provided in Table A7. 

39 

Annex 2  : The Universal Telephone Service in the European Union Today 

Table  A7  : T e l e p h o ne  C h a r g e s1  for  Residenial  Users  in  the  EC  Member 

States 

(by  fourth  quarter  1995) 

Installation 
Charges2 
(New 
Connection) 
90 
212 
46 
160 
13^3 
39 
148 
99 

64 

93 

90 

77 
169 
79 
1J7 
117 

I 

B 
DK 
D 
GR 
ES 
F 
IRL 
\ 

L 

NL 

A 

P 
SF 
S 
UK(BT) 
UK (MCI)4 

| 

Rental 
Charges3 
(Bi-monthly) 

• 

23 
27 
23 
V\ 
16 

12 
25 
12 

V\ 

22 

24 

19 
20 
20 
17 
25 

3-minute  Local  Call 

3-minute  Trunk  Call 

Peak  period 

Cheap  period5 

Peak  period 

Cheap  period6 

B 

DK 
D 
GR 

E 

F 

IRL 

1 

L 

NL 

AU 

P 

SF 
S 

UK  (BT) 
UK  (MCI)7 

0.10 

0.13 

0.11 
0.10 
0.07 

0.09 

0.12 

0.13 

0.08 

0.08 

0.15 

0.06 

0.12 
0.08 

0.12 

n/a 

0.03 

0.07 
0.04 
0.10 

0.07 

0.03 

0.02 

0.09 

0.04 

0.04 

0.15 

0.02 

0.12 

0.05 

0.05 

n/a 

0.58 

0.29 
0.87 
0.98 
1.00 

0.81 

0.67 

0.92 

0.08 

0.25 

1.21 

1.17 
0.28 
0.24 

0.30 

0.23 

0.23 

0.14 
0.40 
0.65 

0.42 

0.28 

0.46 

0.34 

0.04 

0.13 

0.90 

0.59 

0.17 

0.14 

0.18 

0.15 

Notes 
1.  All charges in the tables are in ECU and include value added tax. 
2.  Charges are minimum charges excluding time and material charges which are levied in some Member States. 
3.  Rental charges reflect the price for a single line in the capital city. Germany includes free call minutes equal  to ECU 2.42. 
4  Mercury rental charge comprises the BT rental plus the charge for the authorization code. 
5.  The cheapest off-peak rates have been taken into consideration 
6.  Refer to note 5. 
7.  Mercury does not offer local calls for residential users. 

40 

Annex 2  : The Universal Telephone Service in the European Union Today 

Progress  made  in  adjusting  tariff  structures  with  the  Community  and  its 
impact on the overall affordabiiity of universal service 

1.  Table A8  indicates the overall percentage  change  in the  general  level of the 
prices of telecommunications services in the Member States of the European 
Community  between  1990 and  1995.  (A detailed  breakdown of  the  different 
elements within the overall change is provided in Table A8).  The information 
set out is based on the data provided by national regulatory authorities and is 
It  is  not  therefore  possible  to 
calculated  according  to  national  practice. 
compare  price  changes  directly  between  different  Member  States,  making it 
difficult to compare price changes in different parts of the Community. 

Additionally,  Tables  A7  and  A8  show  percentage  changes  and  do  not 
indicate the  prices actually  charged.  It  is not therefore  possible  to  draw 
conclusions  concerning  the  effects  of  these  rises  on  the  overall 
affordabiiity of the services concerned. 

Nevertheless,  the  data  shows that important changes  in  tariff  structures  are 
underway and, in particular, the general trend of increases in fixed elements in 
the  tariffs  for  universal  service  (connection  and  rental),  as  well  as  higher 
charges  for  local  calls  at  peak  hours  and,  in  most  Member  States, 
corresponding reductions in regional, long-distance and international calls. 

2.  information on the current availability  of targeted or special tariff  schemes is 

set out in Table A-9. 

41 

Annex 2 : The Universal Telephone Service in the European Union Today 

Table  A8:  Average  Overall  Tariff  Adjustments  - (NRA  E s t i m a t e s)  1990  -
1995 

Tariff changes indicated are change in real terms, with nominal changes, where available, shown in 
brackets 

Detailed data on the changes for installation / rental / local / regional / national and international 
tariffs are set out in Table A8 

I 
_________ 

Overall  %  Change in tariffs  (1990-1995) 

...  . 

.

.

.. 

DK 

EL2 
J_* 
F3 
J 
JRL 
J_ 
NL4 

AUT1 
J_ 
FIN 
SWED5 
UK6 

I 

-_§ 
j-0_5 
n/a 
- 43.2  (-7.2  nominal  change) 
n/a 
-  14 (- 3.4 nominal  change) 
rj/a 
- 42 (- 25 nominal  change) 
n/a 
+ 3 .7 (Mandatory  services) 
+  6.6(Small  user tariff) 
n/a 
-  10.2 (+ 27.6 nominal  change) 
_5 
,  8 (+ 8 nominal  change) 
-23.7 (-10.2 nominal change) 

n/a : Data  not available. 

Source: National Regulatory Authorities (1995) 

Notes on Table A8 

1.  Data provided for changes in individual tariff elements, but no overall figure available. 
2.  Average overall tariff change for call charges only 
3.  Period  1990-1994 
4.  Data provided indicates price change of an unspecified basket of services in relation to 

consumer price index. 

5.  Calculated on the basis of Telia's index of its tariff basket. 
6.  The global figures for the overall percentage change in BT's tariffs between 1990/91-
1994/95 and relates to an overall weighted average of all the services in the price 
control basket, not just the ones listed in the table. 

Information 
and 
telecommunications 

control 

over 

what 

customers 

spend 

on 

3.  Above  indications  were  given  about  the  increasing  availability  of  call-barring 
facilities  for  residential  users  which  can  offer  a  degree  of  control,  by  allowing 
them  to  block  calls  to  selected  services  (e.g.  premium  priced  services),  or 
potentially  to long-distance  and /or  international calling. 

4.  Additionally,  the  Voice  Telephony  Directive  requires  from  the  end  of  1996 
Member  States  to  set  targets  for  the  availability  of  itemised  telephone  bills  -  a 
service which  is in  any  event  increasingly  common  throughout  the  EC.  This  is 
an  important  means  of  providing  users  with  sufficient  information  over  what 
they  have  spent  on  the  telephone.  At  the  same  time,  a  number  of  comments 
stressed  that  current  long-billing  periods  made  it  difficult  for  some  users  to 

42 

Annex 2  : The Universal Telephone Service in the European Union Today 

control expenditure and that therefore warning should be given of excessive or 
unusual use of a particular telephone connection. 

The use of special  and targeted tariff schemes  in the EC 

As  part  of  a  general  aim  of  ensuring  affordabiiity  for  telecommunications 
services,  special  and  targeted  tariff  schemes  are  provided  in  all  Member 
States  (see  Table  A8  for  full  details)  to  improve  the  overall  affordabiiity  of 
universal service  for certain  users, or for certain groups  of  users with  specific 
needs or specific calling patterns.  Low user schemes are available in France, 
Ireland,  Sweden  and  the  United  Kingdom.  Such  schemes  are  particularly 
important in the context of tariff  rebalancing  as it is generally those  users who 
make  few  calls,  or  few  long-distance  and  international  calls,  who  may  be 
disadvantaged  by  the  price  changes  resulting  from  rebalancing. 
In addition, 
social  schemes  for  those  on  low  incomes  are  available  in  Belgium, 
Germany,  France,  and  Austria.  All  Member  States,  with  the  exception  of 
Luxembourg,  the  Netherlands  and  Finland,  also  offer  some  form  of  special 
tariff packages for elderly users and for users with disabilities. 

A  number  of  organisations,  particularly  those  representing  the  interests  of 
users with  disabilities,  stressed  in this  context  the  need  for  such  schemes  to 
be  available  automatically  to  such  users  or,  at  least,  that  the  administrative 
formalities  connected with  benefiting  from  such  schemes  should  be reduced, 
(for example, to avoid the requirement to register separately for each scheme). 

43 

Annex 2 : The Universal Telephone Service in the European Union Today 

Table  A9  : Tariff  Changes  within  the  EC between  1990 and  1995 

Generally real % change is indicated (nominal change in brackets) : * indicates that figure is real change where no nominal figure is given 

Overall  Change 
n/a 

Bl 

Installation 
Connection/ set 
up 
+ 39% 
Existing line - 37% 

Rental 
+ 35% large areas 
+50%  med. areas 
+ 70% small areas 

+0.5% 

n/a 

+  8.3% 

+  3.5% 

-15.4%* 

-15.4%* 

+ 105.2%* 

+  68.1%* 

-43.2% 
(-7.2  in nominal 
terms) 
n/a 

Local 
+  7.6% 

+  8.5% 

-15.4%* 

+  89.1%* 

Regional 
+5.8% 
(interzonal 
traffic conti 
guous zones) 

National 
-5.8% 
(interzonal traffic 
non-contiguous 
zones) 

No  change 

- 20.6% 

n/a 

- 55.4%* 
(>100km) 

+ 68.6%* 

+ 2.38% 

+ 24.2% 

+ 192.3% 

- 23.5% 

+ 10.6% 

-14% 
(- 3.4% nominal 
change) 
n/a 

+ 30%7 
(+16%) 

n/a 

Residential: + 42% 
Bus:  No change 

+ 25% 
(+11.5%) 

Peak : + 4 1% 
Bus:  +12% 

- 29.5%8 
(-37%) 

-19%  (> 100km) 
(-27.5%) 

-42% 
(-25%  nominal 
change) 
n/a 

No change 

No change 

+10% 

No change 

No change 

See  national 

See  national 

DK 

D3 

EL^ 

£5 

F6 

1 

IRL 

L*1 

Peak: 
Business - 6% 

- 1 1% 

-4.61» 

Peak : -6% 
Other: -13.4% 

international 
Examples: 
France  -22.2%; 
- 33.3%; 
Italy 
- 28.6%; 
Spain 
- 40%; 
USA 
- 55%; 
Japan 
- 5 %2 

Examples: 
- 68.9%* 
USA 
Norway - 33.9%* 
-1.6%* 

Examples 
EC Calls - 23% 
- 6 1% 
USA 
-18.7% 
(-27.5%)9 

Examples: 
-20%; 
UK Peak 
Cheap 
- 20% 
USA  Peak-43% 
- 48% 
Cheap 
- 4.7% 
UK: 
- 4.7% 
Other: 

1995  -13 to 50% 

44 

Annex 2  : The Universal Telephone  Service in the European  Union Today 

NL<* 

AUT 
P 

Overall  Change 
Mandatory services 
+ 3.7%*  Small user 
tariff 
+ 6.6%* 
n/a 
-10.2% 
(+27.6% nominal 
change) 

FIN 

-5%™ 

SWE1B 

UK18 

-8% 
(+8%  nominal 
change) 
-23.7% 
(-10.2% nominal 
change)19 

Installation 
No  change 

Rental 
16.7% 

* 

Local 
Av: 
+  22% 
Peak  + 2 6% 
Cheap + 1 8% 

+33% 
- 0.6% 
(+41.2% nominal 
change) 

No change 
- 5.9% 
(+33.7% nominal change) 

No  change 
+11.9% 
(+58.9% nominal 
change) 

Regional 
Av:  + 22% 
Peak: + 26% 
Chp:  + 1 8% 

-40% 

+  27.1%-
(+80.6% 
nominal 
change) 

-11% 
-13.7% 
(+22.6% nominal 
change) 

National 

International 
-21.3% 

n/a 

n/a 

n/a 

+14.2%14 
+ 2.4  (%)* 

n/a 

Peak:-61.2% 

+  15to20%17 

+ 60%17 

n/a 

n/a 
Europe: - 32.2% 
(-3.6% nominal change) 
Other:-44.5% 
(-21.2% nominal 
change) 
Examples11): 
Sweden 
Germany 
USA 
n/a 

- 47.4% 
-19.2% 
-16.8% 

Residential: -0.7% 
Business:  -33.1% 

Resid'l exclusive: +37.5% 
Bus.  exclusive: +37.7 
Wholesale: +54.4% 

-13% 

-19.8% 

B1-rate:-19.5% 
B-rate:  -35.5% 

-22.3% 

n/a 

Data showing % changes in specific tariff from 1990-1995 not provided by the  NRA. 

Source: National Regulatory Authorities (1995) 

Notes on Table 

1. 
2. 

3. 
4. 
5. 
6. 
7. 
8. 
9. 

Belgacom is paying back the guarantee previously  required from customers. 
Period : 1994-1995.  Since July 1995. calls from Denmark to other EC countries, Norway and Switzerland have been reduced by 20%  (off peak).  A similar 20% 
reduction to USA and Canada occurred in January 1995. 
Period  1990-1994.  Inflation indicator for the period indicated an increase in prices of + 15.4% 
Average overall tariff change for call charges only 
Tariff changes refer to 1994 only 
Period  1990-1994 
Percentage change represents both connection and rental charge 
Decrease attributable to creation of enlarged local calling areas 
Data provided for a range of tariffs varying from intra-EC /cross-border -19%  (-27.5%) to North American  routes - 32% (- 29%) 

45 

Annex 2 : The Universal Telephone Service in the European Union Today 

Includes calls to Northern  Ireland 

10. 
11.  Since 1 July  1993 the duration of one tariff  unit has been 4 minutes (peak rate) and 8 minutes (off peak).  Since 1 May 1995 a monthly minimum of 20 units is 

charged per subscriber line. 

12.  Data provided indicates price change of an unspecified basket of services in relation to consumer price index. 
13.  The global figure has been calculated for residential users who mainly use local telephone services.  The figure would be different for business users because 

they use more long distance and international telecommunications  and in these services the prices have dropped considerably. 

14.  Data provided indicates price change of a specified basket of local services in relation to consumer price index.  The basket consists in 8% of connection fee; 

annual subscription fee and 750 local daytime 4 minute telephone calls. 

15.  Cheapest rate and cheapest operator  (1990) Telecom Finland and (1995) Telivo. 
16.  Period  1993-1995. 
17.  Calculated on the basis of Telia's index of its tariff basket. 
18.  Price changes are for BT. 
19.  The global figures for the overall percentage change in BT's tariffs between 1990/91-1994/95 and relates to an overall weighted average of all the services in 

the price control basket, not just the ones listed in the table. 

46 

Annex 2 : The Universal Telephone Service in the European Union Today 

Table A10 - Special tariff schemes for targeted user groups in the EC 

Country  Description of scheme 

BE 

DK 

EL 

The contract between the Belgian State and Belgacom imposes certain tariff  reductions for social or humanitarian reasons. 
0 social groups: Around 370.000 people are benefiting from the social telephone rate (8.1% of the total number of connections).  The following tariff 
reductions are applied: 70% reduction of connection charges, 50% reduction of rental fee, and 50 free units of traffic for 2 months. 
ii) Elderly and handicapped:  Reduced tariffs for elderly (over 65) and handicapped. 
Specific  text-telephone  service  under  operation  for  hearing  impaired  users,  including  provision  of  different  types  of  terminal  equipment.  The 
service is provided on a non-commercial basis. 
Reduced tariffs for visually  impaired and blind users when using Directory Services. 
Reduced tariff scheme for elderly, disabled, and low income croups.  These special groups receive a 5 DM reduction on rental charges and 30 units 
free of charge per month.  There will be a tariff re-balancing in 1996 which will make larger discounts. 
There is no low usage tariff scheme and there is none foreseen. 
i) Disabled:  Special  reduced  rates have been introduced for blind subscribers.  Blind subscribers are allowed  150 units a month free of charge on 
the first  main telephone  line subscribed in their  name.  Additionally, specially  designed  public card phones  have  been installed  at  airports, railway 
and bus stations and hospitals. 
There is no special policy on low user schemes within the context of universal service. 
ft  Elderly  and  handicapped:  Special  "social  subscription" that  consists  of  a 95% discount on the  monthly  fee  and  a 70% discount  on the  initial 
connection fee for those citizens over 64 and handicapped (only when they do not receive a certain level of income). 
i) Handicapped, elderly  and social groups:  Reduced tariffs  for special and social groups, such as handicapped, aged over 65  living  alone  or with 
their partner and war veterans.  These reductions include  a 50% reduction on subscription fee, 40 units free of charge  per month  (domestic calls), 
and free access to information services. 
ii) The low user scheme gives a reduction for those who use less than 26 units per month. 

47 

Annex 2 : The Universal Telephone Service in the European Union Today 

Country 

Description  of  s c h e me 

IRL 

NL 
AUT 

FIN 

SWED 

Free rental and subsidised usage scheme provided to specific user groups such as the deaf,  the aged and the disabled. 
i)  Disabled:  The  deaf  customers  can  use  special text  terminals  (Minicom)  to  communicate  with  non-deaf  customers.  Due to  the  fact  that  this 
method is slower than normal speech, the operator has a refund scheme under which deaf customers are entitled to reclaim up to 70% of the cost 
of their calls subject to an annual maximum.  Additionally, the State may refund the VAT  element  of the purchase  price of the Minicom  equipment 
for the deaf. 
ii)  The  company  also  provides  financial  assistance  to  other  voluntary  charitable  groups,  such  as  Samaritans,  Irish  Cancer  Society,  Rape  Crisis 
Centre, etc. which allows the organisation to be contacted by users of their services either by freephone or at a reduced rate. 
iii) Low user scheme: there  is a low user scheme on its analogue mobile service which provides service with connection charges as little as 41%  of 
normal charges, rental charges as little over  103% of normal charges but which includes a credit per month on national calls. 
iv) Aged and disabled:  The Department  of Social Welfare  provides state aid for the aged and disabled, i.e., free telephone  rental for certain aged 
and disabled people living alone or with other excepted persons. 
Since  January  1995,  there  is  a  special  scheme  for  low  consumption  users  upon  request  (it  includes  a  low  rental  fee  and  low  tariffs  for  low 
consumption per month, i.e., up to 40 units/month: 50 lira). 
P&T Luxembourg  has no plans to introduce specific schemes targeted towards particular social groups as the basic telephone tariffs are very low. 
There is no special scheme targeted to a specific group of customers. 
Certain  social  groups,  including the  blind,  handicapped,  pensioners,  low  income  people,  students,  are  exempted  from  paying the  following  fees: 
basic monthly connection fee and one free  hour of telephone use per month. 
There  are  special  tariff  reductions  for  retirees  and  pensioners  with  a  monthly  salary  less  than  the  national  minimum.  The  reductions  are  the 
following: a 60% reduction of subscription fees and at least 25 units free of charge per month. 
The  operators  are  equally  obliged  to  concede  the  following  facilities  for  population  with  special  needs:  micro  telephones  with  amplifier,  a  call 
warning, etc. 
There are no special schemes regarding telecommunications  charges.  The state budget finances special services targeted to some special groups, 
which operators are not willing to provide (i.e. special services for disabled). 
There is an agreement  between the State and Telia, where the latter has committed itself to provide the low consumption  subscription (Telia Mini). 
The quarterly  fee  must  not  exceed  70% of the  regular quarterly  fee  and at  least  10% of  household  customers  should  benefit  from  to this type  of 
subscription. 

___________ 

^ _^ 

43 

Annex  2  : The  Universal  Telephone  Service  in the  European  Union Today 

UK 

; BT provides the following schemes: 
\  Spread connection fee - which divides the initial connection charge into 5 quarterly payments (plus an administration charge) 

Deposits - in 1996 BT  plans to  introduce Usage Limits, whereby new customers agree a financial ceiling on call expenditure.  This should largely 
eliminate the need for deposits. 
Low User Scheme - BT provides this under its licence, the guidelines for which are negotiated with the regulator. 
Elderly  gnd Disabled -  new customers over 65 will not be asked for a deposit unless they owe BT money or are bankrupt (Kingston has a similar 
policy) 
Protected Service Scheme - enabling elderly and disabled customers to nominate a third party to deal with bill payment. 
Free Priority  Fault  Repair  Service - for customers whose telephones are vital lifeline - scheme is designed to ensure priority treatment  in the event 
of a fauit. 
Visually  impaired  and  blind  customers  -  are offered  large  print/Braillertalking"  bills and free  Directory  Enquiries (all companies offer the  latter in 
order to meet  a licence  requirement).  Free Directory  Enquiries is offered to visually impaired customers and others who are physically unable to 
use the printed phone book. 
Deaf users - have access to Type talk, a national telephone relay service, which BT is obliged under its licence to provide and fund.  A Text User's 
Rebate  is available  to  acknowledge that calls made on by text  phones take  longer than the voice telephony  equivalent.  Some cable companies 
>ffer disabled customers personal visits to collect their bill payments. 

Source: National Regulatory Authorities (1995) 

Annex 2 : Questionnaire 

QUESTIONNAIRE SENT TO MEMBER STATES 

I  -  THE CURRENT SITUATION WITH RESPECT TO  UNIVERSAL SERVICE. 

Questions concerning the general level of telephone penetration. 

1.  What was the total number of business telephone lines and residential telephone 
lines at the end of 1990 and at the end of 1994? Please give more recent figures 
if they are available? 

2.  What was the ratio of residential lines to number of households at the end of 1990 

and at the end of 1994? 

3.  What was the total number of public payphones at the end of 1990 and at the end 

of 1994? 

4.  What was the total number of mobile cellular telephone subscribers at the end of 
1990 and at the end of  1994?  Please give more recent figures if they are 
available 

Question concerning basic aspects of service quality 

5.  Please give details of the main indicators of telephone service quality that are 

currently published.  Please give details where they are available for supply time 
for network connection, fault repair times and compensation schemes and 
proportion of public payphones in working order. 

Question concerning the basic telephone service features that are offered. 

6.  Please give details of the main service features that are offered by the fixed 
telephone service operators ?  Please indicate whether any of the following 
service features are commercially available or the date planned for their 
introduction : DTMF dialling, call intenrupt/waiting,  call forwarding or call transfer, 
voice-mail,  calling-line identification.  Please also specify whether customers are 
offered the possibility of per line or per call blocking of call facilities,  (such as 
calling identification), or the possibility of blocking access to specific value-added 
services (such as premium-rate or "kiosk" services)? 

50 

Annex 2 : Questionnaire 

II  - THE ADJUSTMENT OF  PRICING STRUCTURES,  AFFORDABILITY AND SPECIAL MEASURES. 

In most Member States, tariffs structures are changing in line with the process of 
rebalancing to reflect modern cost structures, competitive pressures and to encourage 
more efficient use of telecommunications  networks. 

Questions concerning major pricing adjustments, whether there is a measure of decline 
in prices overall, if price-cap schemes are being used to control pricing adjustment, the 
affordabiiity of telephone service and whether special tariff schemes are available. 

1.  What are the major tariff reforms that have been undertaken or are being 

planned? 

2. 

Is it possible to give a measure of the average change in tariff levels since  1990? 
(Please specify in relation to connection charges, rental/fixed charges,  local,  long 
distance and international call charges) 

3.  What are the particular target levels, if any,  for the adjustment of tariff structures? 

4.  What price-cap schemes,  if any,  in operation? What are the plans, if any,  to 

introduce price-cap schemes or modify existing schemes? 

5.  Please give the latest information concerning specific schemes (either voluntary or 
as a result of regulation) which are being used  or planned in order to provide 
service to a specific group of customers.  This includes schemes targeted towards 
particular social purposes (schemes for customers with disabilities / the elderly/ 
those on low incomes,  etc.), schemes to offset the adverse impact on certain 
customers of re-balanced tariffs?  Additionally,  what low user schemes (either 
voluntary or as a result of regulation) are available or being planned? 

51 

Annex 3 : List of participants 

ANNEX 3 : 

LIST OF ORGANISATIONS PROVIDING WRITTEN RESPONSES  TO THE 
THEME PAPER ON UNIVERSAL SERVICE 

ANGA 
Antelope  Consulting 
APEC - Association of Private European Cable  Operators 
ARD - Radio + TV 
ASIMILEC 
A T &T 
ATC  Finland 
Austrian Ministry of economy and transport 
Belgacom 
BellSouth 
British Telecom 
Bureau Européen des Unions des Consumateurs 
Conseil  National du Patronat Français 
Compagnie General des Eaux 
COST 219 - National Research & Development Centre for Welfare  & Health 
COST 219 The  Mike Martin Consultancy 
CRID 
CURDS - University of Newcastle 
Dansk Industri (Dl) 
Department of Trade and Industry (UK) 
Deutsche  Postgewerkschaft 
Deutsche Telekom 
Direction Générale des Postes et Télécommunications  (FR) 
ETNO 
EU Committee of the American chamber of Commerce in Belgium 
European Conference of Data Protection Commissioners 
Forschungsinstitut fur anwendungsorientierte  Wissensverarbeitung 
France Telecom 
Fundesco 
GEF - Global Electronic Finance  Management 
INESC 
Ingeneria y Gestion de  Redes 
INTEL 
International  Council of Aircraft Owner and Pilot Associations 
IPTT 
Kooperativa Institutet 
Erika Mann M.E.P. 
Mercury Communications Ltd 
MFS  Communications 
Ministerie Van Verkeer  en Waterstaat  (NL) 
Ministry of Transport & Communications  (FIN) 
Ministry of Transport  & Communications  (SWED) 
Omnitel Pronto  Italia 
Portugal Telecom 
PTT  Force  Ouvrière 
PTT Telecom 
STET 
TAG - Telecommunications Action Group 

52 

Annex 3  : List of participants 

TELECEL S.A. 
Telecom Eireann 
Telefonica de Espana 
Telenor 
TELIA AB 
The Finnish Consumers Association 
Thyssen Telecom A.G. 
The Telecommunications Managers Association 
United States Council for International Business 
Universidad de Valencia 
Universitât Potsdam 
VEBACOM 

v 

53 

Annex 4 : Summary of the main issues raised in the public consultation on the universal service theme paper 

ANNEX 4: 

SUMMARY  OF  THE  MAIN 
CONSULTATION ON THE UNIVERSAL SERVICE THEME PAPER 

ISSUES  RAISED 

IN  THE  PUBLIC 

A  broad  range  of  comments  where  made  during  the  public  consultation. 
appropriate to highlight five main issues raised: 

It  is 

1.  Scope of the universal telephone service 

There is recognition of a continuing improvement in the level and quality of service 
within the  European  Community.  Few comments  favoured  a radical reshaping of 
the  current  concept  of  the  universal  telephone  service,  which  should  remain 
narrowly  defined, but open to future  evolution in the light of  changes  in customer 
and  market  demand.  Nevertheless,  some  organisations,  particularly,  user 
organisations  and  operators  from  the  less  favoured  regions  suggested  that  the 
current  concept  of  universal  service  could  be more  ambitious  and should  include 
both leased lines and ISDN. 

At  the  same  time,  there  was  support  for  measures  at  a  European  level  to 
strengthen  the  current  concept  in  order  to  overcome  important  gaps  at  present 
with regard to the scope of services within the universal telephone service and the 
need  for  an  explicit  obligation  of  affordabiiity.  Emphasis was  placed  on  ensuring 
users  had adequate  information  and control  over what  they  spend  (e.g.  itemised 
billing,  flexible  ways  of  paying,  such  as  spreading  connection  charges  over  a 
series of installments or allowing users to block calls to particular numbers). 

2. Quality of service and comparability of service at a European level 

A  particular  concern  resulting  from  the  consultation  was  on  the  considerable 
variation  in the  quality  of  service  targets  currently  established  at  a  national level, 
as  well  as  national  enforcement  of  targets  and  the  availability  and  nature  of 
compensation schemes where targets were not met.  This concern from users was 
compounded  by  the  difficulties  faced  by  some  national  regulatory  authorities  in 
obtaining  basic indicators  of the universal telephone  service, such as the  number 
of households with a telephone, and by the lack of comparability  of certain of data 
between Member States. 

The situation is partly  remedied by the Voice Telephony  Directive, which  provides 
for the  setting  and  publication  of  national  quality  of  service  indicators.  However, 
the consultation indicates that users seek more than this and that varying levels of 
service  in  the  Member  States  impacts  the  provision  of  pan-European  networks 
and  services  and,  if  not  corrected  could  lead  to  widening  the  gap  between  the 
Community's  developed  areas  and  its  less  favoured  regions,  undemining  the 
objective of economic and social cohesion. 

A  further  concern  raised  by  consumer  organisations  was  also  whether  adequate 
sanctions exist at a national level to allow quality of service to be enforced. 

More  generally  such  organisations  raised  the  issue  of  consumer  involvement  at 
both a national and  European  level in the setting of  quality  of  service targets  and 
measures  of  affordabiiity,  and  more  generally,  in  decisions  as  to  the  future 
evolution of universal telephone service and of the information society. 

54 

Annex 4 :Summary of the main issues raised in the public consultation on the universal service theme paper 

3. Costing and funding of the universal telephone service 

The  most  recent  consultation  exercise  did  not  invite  detailed  comment  on  the 
costing and funding  of  the  universal telephone  given their detailed discussion  in 
the  context  of  the  infrastructure  Green  Paper  (see  COM(95)  158).  These 
principles  are  reflected  in  the  proposed  Interconnection  Directive  and  the  Full 
Competition Directive. 

Nevertheless,  where  comments  were  made  they  tended  to  address  practical 
issues associated with costing (for example, the calculation of the value to existing 
operators  providing  the  universal  telephone  service)  or  with  funding  (the 
requirements  of  a  universal  service  fund,  the  feasibility  of  "pay  or  play" 
mechanisms).  Additional  guidance on these  practical issues  at a  European  level 
was felt to be useful, even though the main regulatory principles were found in the 
proposed legislation. 

4. Tariff rebalancing 

There  was  general  support  for  the  process  of  tariff  rebalancing  to  which  the 
European  Community  is  committed, with  many  of  those  comments  stressing  the 
need  for  completion  of  the  process  by  the  date  set  for  full  liberalisation.  Many 
pointed to the benefits which overall lower tariffs would offer many users. 

At the same time, there was recognition of the need to protect particular groups of 
users  from  the  effects  of  unconstrained  rebalancing  in  order  to  ensure  that 
customers  are  not  forced  to  leave  the  network  because  of  the  costs  involved. 
Consumer  organisations  stressed  in  this  context  the  role  to  be  played  both  by 
price cap mechanisms and specially targeted tariff schemes. 

5. Public access to the information society 

The fundamental importance of the information society was widely  recognised, but 
the emerging services were not considered part of the universal telephone service 
today.  At  the  same  time,  the  idea  of  market-led  "public  access"  (to  connect 
schools,  hospitals,  libraries,  etc.)  was  supported,  though  it  was  not  considered 
necessary to define precise targets at this stage. 

At the  same  time, there  was  recognition  of  the  need  to  put  in  place  appropriate 
mechanisms  to  monitor  the  demand  for,  and  take  up  of,  new  services  at  both a 
national and European level in order to keep the scope of the universal  telephone 
service  under  review,  and  in  particular  to  measure  the  extent  to  which  "public 
access"  was  being  developed,  particularly  in  the  less  favoured  regions  in  the 
Union. 

Stress was also placed by consumer organisations of the importance of their voice 
being heard in this monitoring process. 

ENDNOTES 

1 

2 

3 

4 

5 

6 

In Sweden, for example, new subscriptions to mobile services have for the first time exceeded subscriptions to the  fixed  network 

In  Spain,  for  example,  more  than  180,000  subscribers  benefit  from  wireless  local  loop  services  and  there  are  more  than  700 

wireless public call boxes. 

Proposal  for  a  European  Parliament  and  Council  Decision  on  an  action  at  a  Union  level  in  the  field  of  satellite  personal 

communications  services  in the  European  Union, COM(95) 529, 8.11.95 

VSATs - Very Small  Aperture  Satellite  Terminals. 

Article  5 and  Annex  III 

Sec  "Performance  Indicators  for  Public  Telecommunications  Operators",  Information  Computer  and  Communications  Policy 

series, No. 22, OECD,  Paris  1990  and  ETS1  Technical  Report  "Quality  of service  indicators  lor Open  Network  Provision  (ONP) 

of voice telephony  and  Integrated  Services  Digital  Network  (ISDN)"  ETR  138, July  1994 

55 

ISSN  0254-1475 

COM(96) 73  final 

DOCUMENTS 

EN 

15  08  10 

Catalogue number  : CB-CO-96-118-EN-C 

ISBN 92-78-01688-8 

Office for Official Publications of the European Communities 

L-2985 Luxembourg