Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Report regarding the outcome of the Review of the Scope of Universal Service in accordance with Article 15(2) of Directive 2002/22/EC {SEC(2006) 445}
Date: 2006-04-07
Institutions: European Commission
Subjects: competition law, consumer protection, electronics, report, technological change, telecommunications, transmission network, universal service

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 7.4.2006 
COM(2006) 163 final 

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

Report regarding the outcome of the Review of the Scope of Universal Service in 
accordance with Article 15(2) of Directive 2002/22/EC 

{SEC(2006) 445} 

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

Report regarding the outcome of the Review of the Scope of Universal Service in 
accordance with Article 15(2) of Directive 2002/22/EC 

(Text with EEA relevance) 

1. 

BACKGROUND AND PURPOSE OF THE COMMUNICATION 

On 25 May 2005, the Commission published a Communication On the Review of the Scope of 
Universal Service,  accompanied by a  Commission  Staff  Working  Paper.1 This first periodic 
review  under  Article  15  of  the  Universal  Service  Directive2  examined  whether  the  scope  of 
universal  service  should  be  maintained  or  changed  in  particular  to  include  mobile  or 
broadband  communications.  The  Commission  invited  public  comment  on  its  analysis  and 
preliminary  conclusions,  as  well  as  on  a  number  of  longer-term  questions  designed  to 
encourage  a  forward-looking  policy  discussion  that  can  feed  into  the  general  review  of  the 
regulatory framework for electronic communications in 2006. 

In  accordance  with  Article  15(2)  of  the  Universal  Service  Directive,  this  Communication 
provides a report to the European Parliament and  the Council  on  the  Commission’s review, 
taking into account the results of the public consultation. 

2. 

SUMMARY OF THE COMMISSION’S ANALYSIS AND INITIAL POSITON  

The  Communication  of  May  2005  recalled  the  scope  of  universal  service  as  currently 
defined3,  and  the  criteria  for  its  review  as  set  out  in  the  Universal  Service  Directive4.  In 
particular,  it  recalled  that,  in  eCommunications,  universal  service  is  a  safety  net  for  those 
whose  financial  resources  or  geographical  location  do  not  allow  them  to  access  the  basic 
services that are already available to the great majority of citizens. 

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2 

3 

4 

COM (2005) 203 and SEC (2005) 660 respectively. See: 
http://europa.eu.int/information_society/policy/ecomm/info_centre/documentation/public_consult/index
_en.htm 
EP  and  Council  Directive  2002/22/EC  on  universal  service  and  users  rights  relating  to  electronic 
communications networks and services, OJ L108, 24.4.2002, p. 51-77.  
The  current  scope  consists  of:  (1)  a  connection  to  the  public  telephone  network  at  a  fixed  location 
supporting  voice  and  functional  access  to  the  Internet,  and  (2)  access  to  publicly  available  telephone 
services.  
See  Recital  25  and  Annex  V.  The  review  must  examine  social,  economic  and  technological 
developments  in  order  to  identify  and  analyse  services  available  to  and  used  by  the  majority  of 
consumers, with a consequent risk of social exclusion for those who cannot afford them.  

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The Communication concluded that: 

–  The  competitive  provision  of  mobile  communications  had  resulted  in  consumers  already 
having  widespread  affordable  access  to  mobile  communications,  such  that  the  conditions 
for  including  mobile  communications  within  the  scope  of  universal  service  were  not 
fulfilled. 

–  In  the  case  of  broadband  internet  access,  current  level  of  take-up  does  not  meet  the 
criterion  of  use  of  the  service  by  a  “majority  of  consumers”  and  so  the  conditions  for 
including broadband services within the scope of universal service were not fulfilled. 

The Communication also raised a number of long term issues: 

–  Should  universal  service  separate  access  from  services  and  address  only  access  to  the 

communications infrastructure and not to the telephone service? 

–  Should universal service address access at any location? 

–  Is  it  still  appropriate  to  include  provisions  on  public  payphones  within  the  scope  of 

universal service? 

–  For how long will there be a need to keep directories and directory enquiry services within 

the scope of universal service? 

–  Should special measures for users with disabilities be further harmonised at EU level in the 

context of universal service provision? 

–  Should universal service funding from general taxation be an objective? 

3. 

CONSULTATION OF INTERESTED PARTIES 

3.1. 

Overview of responses received 

The  public  consultation  was  launched  by  posting  the  Communication  and  the  associated 
Commission Staff Working Paper on the Commission’s websites, with a deadline of 15 July 
2005 for contributions to be sent by e-mail. 

76  contributions  were  received  from  a  wide  range  of  stakeholders  in  e-communications 
including governments, regulatory authorities, non-governmental organisations (in particular 
representing  consumer  and  user  interests  as  well  as  people  with  special  needs),  private 
citizens,  operators,  service  providers,  manufacturers  and  other businesses  and  organisations. 
Geographically the contributions represented 16 out of 25 Member States while over 40% of 
them  came  from  three  major  countries.5  Several  comments  focused  solely  on  the  long-term 
questions. 

5 

UK 16, Germany 9, France 8, Spain, 5, Portugal 4, Austria 3, Belgium 3; Czech Republic, Greece, 
Finland, Italy, Ireland, Lithuania, the Netherlands, Norway, Romania, Slovakia and Slovenia - 1 or 2 
each; European or international associations – 14, available at: 
http://europa.eu.int/information_society/policy/ecomm/info_centre/documentation/public_consult/unive
rsal_service/index_en.htm. 

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There was a broad consensus in favour of the Communication’s assessment and conclusions 
whilst  views  on  the  long-term  issues  were  differing.  The  majority  of  the  contributors 
emphasised that the ever increasing use of mobile and broadband communications owes both 
to the competitive policies in the EU and the business models and technological strategies of 
the  industry.  Mandating  certain  technologies  in  the  changing  technological  landscape  was 
often  regarded  as  troublesome.  Many  were  concerned  that  any  extension  of  the  scope  of 
universal  service  and  its  financing  would  deter  competition,  hinder  investments  and  stifle 
innovation. 

On the other hand, several consumer as well as other organisations considered that the review 
criteria or the Commission’s assessment were too restrictive or lacking ambition, and called 
for  extending  the  scope  to  mobile  and/or  broadband  services.  However,  consumer 
organisations specialised in e-communications supported the Communication's conclusions. 

A few contributors brought up aspects that are not addressed in this review such as concerns 
on quality of service, differential implementation in the EU and international roaming. Some 
comments also related to other user rights and interests in communications such as access to 
emergency services (that is covered by a specific provision in the Directive). These issues are 
outside the current review but the contributions will provide input for the policy debate in the 
context of the general regulatory review in 2006. 

3.2.  Mobile Communications  

The Commission’s preliminary conclusion on mobile communications was that the conditions 
for including mobile communications within the scope of universal service were not fulfilled. 

There  was  a  general  agreement  on  the  Communication’s  assessment  and  conclusion:  over 
70% of the contributors were in support including all the national governments and authorities 
and  the  industry.  Some  of  these  respondents  were  of  the  opinion  that  inclusion  of  mobile 
services within the scope would be premature but that the development should be re-examined 
in the forthcoming general review. 

Several  contributors  pointed  out  that  although  the  second  generation  (2G)  mobile  networks 
cover from 98 to 100% of the population in most Member States, geographic coverage can be 
still an issue in some remote areas. By the same token, the regulatory authorities saw that it 
would  be  disproportionately  expensive  to  require  100%  coverage  from  the  operators  and 
noted  that  there  is  a  range  of  initiatives  to  achieve  full  coverage  such  as  financial  support 
(outside  the  universal  service  regime)  to  roll  out  of  infrastructure  or  the  encouragement  of 
infrastructure sharing. 

The country-specific data and socio-economic analysis by the national regulatory authorities 
supported the view that consumers have affordable access to 2G mobile services. The mobile 
operators  emphasised  that  they  provide  services  to  all  consumer  segments  through  a  wide 
range of service packages that offer both post-paid and pre-paid tariff options. The latter was 
regarded  as  having  successfully  extended  the  provision  of  telephony  services  in  Europe 
especially  to  the  lower  income  groups.  The  highly  competitive  retail  market  was  seen  as 
ensuring that the mobile coverage continues to progress further as well as to lower the prices. 

Many  consumer and  other  organisations criticised the review criteria and  the Commission’s 
approach  for  being  restrictive  and  called  for  extending  the  scope  to  mobile  services.  Some 
called  for  deeper  analysis  of  the  social  elements  and  affordability  issues.  It  was  argued  that 

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pre-paid cards tend to be more expensive than post-paid subscriptions and that in general, the 
cost  of  mobile  communications  is  not  affordable  for  lower  income  consumers.6  The 
organisations  representing  disabled  users  argued  that  extension  would  be  necessary  because 
many disabled persons have serious problems in the access and use of mobile services. 

3.3. 

Broadband Internet Access 

The  Commission’s  preliminary  conclusion  on  broadband  internet  access  was  that  only  a 
small, although rapidly growing, minority of European consumers currently make use of these 
services and that the actual take-up per head of population does not meet the criterion of use 
of  the  service  by  a  “majority  of  consumers”.7  Therefore,  the  conditions  for  including 
broadband services within the scope of universal service were not fulfilled. The Commission 
will continue close monitoring of this issue in preparation for the next review of the universal 
service  Directive.  This  does  not  prevent  Member  States  from  supporting  the  rollout  of 
broadband infrastructures in conformity with the applicable state aid rules. 

The  public  consultation  resulted  in  broad  support  for  the  Commission’s  assessment  and 
conclusion on broadband as 80% of the respondents including all national governments and 
authorities as well as the industry were in agreement. Some regulatory authorities reported on 
recently-conducted national regulatory reviews which supported the analysis. 

It was noted that satellite broadband services are available and that there is a range of local, 
regional  and  national  initiatives  which  are  extending  broadband  coverage,  sometimes  using 
fixed  wireless  technologies.  Some  called  for  support  for  provision  of  broadband  service  in 
areas where commercial provision could not be relied upon for the time being. 

The industry and users emphasised that broadband is at a relatively early phase of adoption in 
the market, in which competition is driving penetration and lowering prices for consumers. At 
this  stage  it  would  be  difficult  to  assess  whether  market  failures  will  persist.  Mandating 
broadband  access  would  entail  an  unreasonable  level  of  cost  or  cross-subsidies  between 
different  customer  groups  or  services  and  would  risk  being  overtaken  by  technological 
advances, not least in data rates. In addition, charges for access are increasingly bundled with 
content,  making  market  interventions  more  problematic.  Some  considered  that  the  costs  of 
universal  service  for  broadband  would  create  a  significant  burden  to  several  new  Member 
States where fixed broadband infrastructure is less advanced. 

Several  contributions  from  consumer  associations  considered  that  broadband  had  become 
necessary  for  normal  participation  to  the  society  and  should  be  included  within  universal 
service.  Some  thought  that  low  penetration  rates  were  not  a  reason  to  exclude  regulatory 
intervention  if  the  potential  benefits  outweighed  potential  costs  to  consumers.  A  few 
respondents  argued  that  because  it  takes  some  years  for  regulatory  changes  to  be  nationally 
implemented, this review should be proactive by extending the scope as it could encourage a 
higher broadband take up. A regional public authority saw that inclusion of broadband would 
be necessary to guarantee equal access to all and help to meet the region’s Lisbon objectives. 

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7 

See Section 5.2 of the Impact Assessment Report 
11.5%  of  the  EU  population  had  a  fixed  broadband  connection  in  October  2005.  The  increase  from 
6.5%  in  mid-2004  (as  reported  in  the  Communication  in  May  2005)  does  not  justify  change  in  the 
Commission’s analysis. 

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3.4. 

Longer-term questions 

3.4.1.  Overview 

Stakeholders agreed broadly that the issues raised warrant policy debate on how the universal 
service  provision  should  evolve  in  the  converging  and  competitive  communications 
environment, whilst the views on the future direction ranged from “universal service should 
be abolished” to “universal service provision must be strengthened”. The emphases were also 
varied in different Member States depending on the legal traditions and market realities. Some 
responses called for increased regulatory flexibility to better reflect national or local/regional 
conditions in the enlarged Union. Many underlined that the discussion has limitations at this 
stage,  as  the  implications  of  technological  developments,  especially  internet  protocol  (IP) 
based communications, are not known. A few contributors argued that the review is premature 
given the limited experience with the implementation of the current rules. 

3.4.2. 

Should  universal  service  address  only  access  to  the  communications  infrastructure 
and not access to the telephone service 

Several  stakeholders,  such  as  regulators  and  industry  representatives,  considered  that  there 
may be a case for separating the access to infrastructure from the service provision especially 
given  the  move  towards  next  generation  networks  and  services  environment,  in  which  the 
consumer can choose between different suppliers for both access and services (that is already 
the  case  in  voice  telephony  over  IP).  Effective  competition  should  ensure  availability  and 
affordability  while  public  intervention  should  ensure  technologically  neutral  regulation 
fostering competition.  

Most consumer and user representatives did not see that access to infrastructure alone would 
be sufficient to secure essential services to more vulnerable consumers. However, consumer 
groups  also  argued  that  universal  service  should  guarantee  all  citizens  a  technologically 
neutral “real equality of access” to communications network as broadband would potentially 
deliver flexible services (voice, text, video and relay services) that could also help to meet the 
requirements of those with special needs. 

It  was  also  argued  that  in  the  short-term,  separating  access  from  services  might  be  not  be 
practical whilst the access regimes are still in the process of being established in the EU and 
incumbents often retain market power at retail level. There was also some concern amongst 
universal service providers about creating complex regulatory and contractual arrangements if 
the access and service provisions were to be separated. 

3.4.3. 

Should universal service address access at any location 

The responses indicate that this question was interpreted in different ways. Some saw that this 
requirement is already being partly met, given the current flexibility of the Directive allowing 
universal service to be supplied by mobile/wireless service provider (“at a fixed location”). A 
few  respondents  considered  that  only  mobile  technology  could  deliver  “access  at  any 
location”  and  saw  a  contradiction  with  the  position  taken  on  mobile  communications. 
However,  it  was  commonly  pointed  out  that  there  are  many  existing  (and  expected)  access 
technologies  that  can  deliver  “access  at  any  location”  in  varying  prices.  Many  stakeholders 
therefore considered that it would be worth exploring possibilities to allow a flexible delivery 
of  universal  service  by  any  means  (that  could  be  cheaper  than  a  fixed  terminal  at  fixed 

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location). However, a number of issues should be considered in this context such as quality of 
service and access to emergency services.  

The  industry  argued  in  general  that  the  market  already  provides  ‘mobility’  or  ‘internet 
mobility’/nomadic  communications  services  and  that  it  should  not  be  an  area  for  which 
universal  service  obligations  are  needed.  It  would  require  considerable  investments  in 
networks to ensure quality of service “at any location”. 

3.4.4. 

Is it still appropriate to include provisions on public payphones within the scope of 
universal service 

Given the near ubiquity of mobile phones, several contributors considered that a reduction in 
the  number  of  payphones  would  be  reasonable  and  they  could  be  removed  from  the  scope. 
However,  many  saw  that  that  demand  for  payphones  may  persist  in  certain  areas  or 
circumstances,  and  that  they  were  valued  by  the  most  vulnerable  members  of  society  in 
particular.  

Several contributors argued that there could be a case to improve or upgrade the payphone for 
example as an internet access point or adding multi-functional facilities that could provide for 
the  disabled,  too.  It  was  also  suggested  that  in  areas  where  payphones  are  removed, 
alternatives  could  be  examined  such  as  emergency  contact  points  that  would  be  under  the 
responsibility of public authorities.  

3.4.5.  For how long will there be a need to keep directories and directory enquiry services 

within the scope of universal service 

Many  responses  pointed  out  the  fact  that  the  Directive  makes  a  distinction  between  the 
requirements to collect and pass on directory data (at wholesale level) and the obligations to 
provide  access  to  directory  services  (at  retail  level).  The  contributions  from  the  Member 
States  where  liberalisation  has  advanced  in  this  sector  saw  that  directory  enquiry  services 
could  be  removed  from  the  scope.  Comments  from  the  other  countries  were  more  cautious 
deeming  it  often  necessary  to  maintain  the  existing  requirements.  The  directory  services 
industry  saw  universal  service  obligation  in  the  retail  market  as  unnecessary  or  harmful  to 
competition  while  calling for the  effective enforcement of  access  requirements at wholesale 
level. 

3.4.6. 

Should special measures for users with disabilities be further harmonised at EU level 
in the context of universal service provision 

Most  authorities  saw  that  given  the  pace  and  nature  of  the  transition  to  Next  Generation 
Networks  (NGNs)  it  would  be  premature  to  introduce  further  harmonisation  beyond  the 
existing provisions in the Directive (Article 7), which would also go against the principles of 
subsidiarity  and  proportionality.  The  industry  response  was  mixed,  but  in  general  further 
harmonisation  was  deemed  unnecessary  and  costly  especially  given  the  variety  of  products 
and services that take into account specific user needs. However, it was also noted that there 
can be potential problems that - besides being dealt with under the eAccessability8 initiative – 
could be further examined such as compatibility of (legacy) equipment in the IP environment. 

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See 
http://europa.eu.int/information_society/policy/accessibility/com_ea_2005/index_en.htm 

Communication 

eAccessability 

Commission 

on 

COM(2005) 

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425: 

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Several  organisations  representing  disabled  users  argued  for  further  harmonisation  of  the 
range of measures that could include, for instance, access to emergency services when using 
IP networks. On the other hand, some of these organisations and consumers considered that 
further  harmonisation  could  become  too  prescriptive  and  preferred  other  initiatives  such  as 
designing inclusive mainstream services. 

3.4.7. 

Should universal service funding from general taxation be an objective 

The  views  on  this  issue  differed  considerably  between  public  authorities  and  industry.  In 
general, the former did not see reasons to change the current system of funding (that allows a 
choice  between  the  use  of  public  funds  or  by  setting  up  a  sector-specific  fund).  Some 
governments, however, did not exclude the possibility to examine further tax-based funding in 
the  longer-term,  while  others  wished  further  studies  to  be  conducted  on  alternative  funding 
methods. 

Some responses argued that the debate on universal service is confused with the much broader 
question of affordable access for all to the ‘information society’, which is a wider social issue 
and should not be limited to the communications sector. Most of the industry saw that sector-
specific  financing  creates  market  distortions  and  cross-subsidisation  between  consumers 
thereby raising overall communications costs.  

Consumers’  main  concerns  related  to  the  lack  of  transparency  of  accounts  or  cross-
subsidisation  that  can  lead  to  a  situation  in  which  the  consumers  pay  too  much.  Users  also 
warned against creating an unrealistically high burden of universal service on operators and 
their customers as witnessed in some countries. 

4. 

COMMISSION POSITION 

The Commission considers that the public consultation has provided widespread support for 
the preliminary position taken in the Communication of May 2005, and that no new rationale 
has  emerged  to  change  the  conclusion  that  neither  mobile  nor  broadband  communications 
fulfils the conditions of the Universal Service Directive for inclusion in the scope of universal 
service. The Commission recognises that the review was limited in scope, as commented on 
by  some  respondents.  However,  the  Commission  is  bound  in  this  respect  by  the  criteria  for 
this  review  laid  down  in  the  Universal  Service  Directive.  Nevertheless,  given  technological 
and  market  developments,  the  Commission  will  revisit  shortly  the  whole  eCommunications 
regulatory  framework  in  order  to  ensure  that  the  overall  objectives  continue  to  reflect  the 
Lisbon  goals,  as  indicated  in  the  Communication  on  “i2010  –  A  European  Information 
Society for growth and employment”9 .  

5. 

CONCLUSION 

The Commission has undertaken a review of the scope of universal service in accordance with 
Article  15(1)  of  the  Universal  Service  Directive.  The  result  of  this  review  is  that  the 
Commission will not propose any change in the scope of universal service at the present time. 
However, the contributions received by the Commission on the longer-term issues provide a 
good basis to continue a forward-looking policy discussion on the universal service provision 

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COM(2005)229. 

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in  the  context  of  the  general  regulatory  review  of  eCommunications  starting  in  2006.  This 
review  will  give  the  opportunity  to  address  the  necessity  of  securing  technology  neutral 
provision of universal service. 

In accordance with Article 15(2) of the Universal Service Directive, the Commission presents 
this report on its review to the European Parliament and the Council. 

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