COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Universal service in e-communications: report on the outcome of the public consultation and the third periodic review of the scope in accordance with Article 15 of Directive 2002/22/EC
Date: 2011-11-23
Institutions: European Commission
Subjects: competition law, consumer protection, electronics, technological change, transmission network, universal service

EUROPEAN COMMISSION 

Brussels, 23.11.2011 
COM(2011) 795 final 

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

Universal service in e-communications: report on the outcome of the public consultation 
and the third periodic review of the scope in accordance with Article 15 of Directive 
2002/22/EC 

(Text with EEA relevance) 

{SEC(2011) 1398 final} 

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

Universal service in e-communications: report on the outcome of the public consultation 
and the third periodic review of the scope in accordance with Article 15 of Directive 
2002/22/EC 

(Text with EEA relevance) 

1. 

PURPOSE OF THE COMMUNICATION 

In its second periodic review of the scope of universal service in electronic communications 
in September 20081 the Commission undertook to consult interested parties on several long-
term  policy  issues.  Prior  to  adoption  of  the  Telecom  Package  in  2009  the  Commission 
confirmed to the European Parliament that it would carry out a wide-ranging consultation on 
the subject. 

This document reports on the outcome of the consultation on universal service principles in e-
communications,  which  took  place  between  March  and  May  2010.  It  also  covers  the  third 
periodic  review  of  the  scope  of  universal  service  under  Article  15  of  the  Universal  Service 
Directive 2002/22/EC2 (‘the USD’). Finally, it sets out some reflections on the measures to be 
taken by the Member States when implementing the USD. It is accompanied by a short Staff 
Working Document3 summarising the responses to the public consultation. 

The EU rules on universal service in electronic communications emerged in the context of full 
liberalisation in the 1990s. The rationale of universal service obligation (‘USO’) is to act as a 
social safety net where market forces alone do not deliver affordable access to basic services 
for consumers, particularly those living in remote areas or having low incomes or disabilities. 
In  order  to  achieve  the  three  objectives  of  the  safety-net  concept,  namely  availability, 
affordability  and  accessibility,  one  or  more  specifically  designated  undertakings  can  be 
obliged to deliver such basic services. 

Member States must accordingly ensure that all end-users have access at a fixed location to 
voice  and  data  communications,  including  ‘functional  internet  access’,  while  minimising 
market  distortions.  The  USD  is  neutral  as  to  the  technology  by  which  the  services  can  be 
provided. 

Where the cost of USO represents an unfair burden on the designated provider(s), the latter 
must  be  compensated  for  the  net  cost  incurred.  Such  compensation  can  be  financed  from 
public  funds  and/or  from  a  fund  to  which  market  players  in  the  e-communications  sector 

1 
2 
3 

COM(2008) 572. 
OJ L 108, 24.4.2002, p. 51. 
SEC(2011)1398. 

EN 

2 

   EN 

 
                                                 
contribute. Currently, 22 Member States provide for sectoral funding only4, two foresee both 
public and sectoral funding, and three have opted for public funding only. 

Several Member States have exercised their discretion not to designate any USO provider, or 
have  relaxed  obligations  concerning  service  elements  that  are  already  catered  for  by  the 
market (e.g. public payphones and directories). 

While the 2002 USD limited ‘functional internet access’ to narrowband data rates5, the 2009 
Telecom Package gave Member States the flexibility to define, where necessary, the data rates 
at  national  level,  which  may  include  broadband  speeds6.  To  date,  Finland,  Spain  and  Malta 
have adopted legislation to include broadband in national USO. 

On 5 July 2011, the European Parliament adopted a resolution7 underlining the importance of 
USO as a safety net for social inclusion. 

2. 

RESULTS OF THE PUBLIC CONSULTATION 

The aim of the consultation was to examine whether, in today’s converged and competitive e-
communications environment, there is a need to revise the overall EU approach and principles 
for  universal  service.  A  key  question  was  whether  USO  should  become  a  pro-active  tool  in 
the context of broadband and therefore have a role in meeting the objective of ‘broadband for 
all’, or whether this should be left to other EU and national policy measures, while retaining 
USO  as  a  safety  net.  Other  important  issues  raised  in  the  consultation  were  the  concept  of 
universal service, its financing, and the Member States’ flexibility in implementation. 

A wide range of views were expressed in the consultation, with no consensus emerging as to 
the  future  role  of  USO  in  furthering  Europe’s  broadband  objectives.  However,  many 
stakeholders,  particularly  governments  and  national  regulatory  authorities  (NRAs),  support 
the  existing  principles  and  favour  maintaining  the  key  features  of  the  USO  regime.  The 
accompanying Staff Working Document provides a summary of the responses8. 

3. 

CHALLENGES: UNIVERSAL SERVICE AND BROADBAND 

The EU regulatory framework and its open access policy have fostered competitive markets, 
thereby  increasing  consumer  choice  and  reducing  prices,  and  placing  some  EU  countries 
among the world leaders in broadband. Within the EU, the highest broadband take-up is found 
in Member States with infrastructure competition, combined with effective ex ante regulation 
to promote service competition where infrastructure competition is not possible. 

4 

5 
6 
7 

8 

In Latvia, the establishment of a sectoral fund has been postponed to 1 June 2013 and in the meantime 
the compensation is provided by public funding. 
Recital 8 USD. 
Recital 5 of the Citizens’ Rights Directive (CRD), OJ L 337, 18.12.2009, p. 11. 
Resolution (P7_TA(2011)0306): 
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2011-
0306&language=EN. 
Contributions are published at: 
http://ec.europa.eu/information_society/policy/ecomm/library/public_consult. 

EN 

3 

   EN 

 
                                                 
The  Digital  Agenda  for  Europe  (DAE)9  sets  out  the  socio-economic  benefits  of  broadband, 
including its importance for social participation and employment. The DAE target for ‘basic 
broadband’ is that such networks should cover 100 % of EU citizens by 2013. For ‘fast’ and 
‘ultra-fast’ internet, the aim is to ensure that by 2020 there is 30 Mbps coverage for all EU 
citizens  and  that  50 %  or  more  of  EU  households  have  subscriptions  above  100  Mbps. 
Achieving these targets requires substantial investment from private and public players alike. 
To facilitate this process, the Commission adopted a ‘Broadband Package’ in September 2010 
comprising:  i)  the  Broadband  Communication10,  laying  out  a  framework  for  action  and 
the  NGA 
outlining  proposals 
Recommendation11,  setting  out  regulatory  guidance  to  promote  legal  certainty,  and  hence 
encourage  private  investment;  and  iii)  a  proposal  for  a  multiannual  Radio  Spectrum  Policy 
Programme12,  to  improve  coordination  and  management  of  spectrum  in  the  EU,  thereby 
facilitating the growth of wireless broadband. 

to  Member  States 

for  achieving 

targets; 

the 

ii) 

In  addition,  various  policy  tools  are  available  to  (co-)finance  infrastructure  development, 
including  public  funding  (e.g.  loans,  grants  to  public-private  partnerships).  The  Broadband 
Guidelines13  clarify  how  public  funding  can  be  granted  for  broadband  development  in  line 
with EU State aid rules, to achieve coverage also in the areas where there is no commercial 
interest.  The  Structural  Fund  programmes  for  2007-13  also  earmark  almost  €
 2.3  billion  for 
ICT infrastructure, mainly broadband networks. Moreover, the Commission has proposed in 
the Financial  Perspectives  2014-2020 a Connecting  Europe Facility14 with a  budget of  €
 9.2 
billion  to  encourage  pro-competitive  investment,  grants  and  credit  enhancement  for 
broadband projects and digital service infrastructures. 

To foster demand, the DAE envisages a range of measures, including promotion of e-health 
and e-government services,  facilitating licensing  schemes  for  online  rights  management  and 
the online accessibility of audiovisual content15, and initiatives to ensure digital literacy, skills 
and inclusion. The Commission considers that fostering demand for broadband services will 
in turn trigger the deployment of broadband networks, thus stimulating a virtuous cycle. 

Unlike telephony in the old EU-15 more than a decade ago, the broadband market in the EU-
27  is  not  yet  a  mature  market  but  rather  one  characterised  by  innovation  and  dynamic 
evolution. Technological, competitive and regulatory developments, e.g. the decreasing costs 
of  wireless  technologies  and  the  digital  dividend,  are  likely  to  expand  broadband  coverage 
considerably. 

While  fixed  broadband  networks  are,  on  average,  available  to  95.1%  of  the  EU  population, 
this  figure  is  only  82.8 %  in  rural  areas  across  the  EU  and  60 %  or  less  in  rural  areas  of 
Bulgaria, Slovakia, Poland, Romania and Cyprus (see section 4.1). The cost of rolling out or 
upgrading broadband infrastructure in underserved areas is significant. A study commissioned 

9 
10 
11 
12 
13 

14 
15 

COM(2010) 245. 
COM(2010) 472. 
OJ L 251, 25.9.2010, p. 35. 
COM(2010) 471. 
OJ  C  235,  30.9.2009,  p. 7.  Under  this  instrument,  almost  € 3.5  billion  of  aid  has  been  authorized  for 
pro-competitive broadband projects up to the end of October 2011.  
COM(2011) 500. 
See also the Audiovisual Green Paper: COM(2011) 427. 

EN 

4 

   EN 

 
                                                 
by  the  Commission16  estimates  the  total  EU-wide  net  cost  of  ensuring  the  availability 
(coverage)  and  affordability  (subsidised  social  tariffs)  of  a  2  Mbps  broadband  connection17 
through USO to be approximately €

 13.6 bn over a five-year period. 

 2.7 bn annually, which represents 
According to the study, this total sum translates into some €
approximately 0.69 % of the turnover of the EU telecoms sector as a whole18. This percentage 
varies significantly among Member States, being higher in countries with a sparse population, 
difficult terrain or less developed infrastructure. The highest cost ratio would be in Romania 
(4.6 %) and the lowest in Luxembourg (0.08 %).  In  absolute terms, the  EU average cost per 
 30  in  Romania.  This 
household  would  be  approximately  €
compares with current annual costs per household of between €0.05 and €
 4.19 in the seven 
Member States that have established USO funds19. 

 14.40  per  year,  ranging  up  to  €

The  2009  Telecom  Package  recognises  the  increased  diversity  in  the  EU-27  by  giving 
Member  States  the  flexibility  to  determine  the  data  rates  for  USO  in  the  light  of  national 
conditions, and to finance the associated net costs from public funds and/or from a fund to be 
financed by the sector. 

However,  it  is  clear  that  if  USO  were  to  be  extended  to  broadband  EU-wide,  the  need  for 
sectoral  funding  and  "cross-subsidisation"  between  groups  of  consumers  of  a  given  country 
would increase significantly, with the burden on industry and the impact on consumer prices 
being  greatest  in  Member  States  with  currently  low  broadband  coverage  and  income  levels. 
Moreover, to prematurely mandate broadband at EU or national level risks distorting markets 
and holding up private investment in broadband. While telecoms companies can be expected 
to invest in profitable new networks, a fundamental question arises whether extensive USO, 
placing  a  heavy  burden  on  the  sector  alone  in  the  interests  of  social  inclusion,  would  be 
appropriate  and  sustainable,  while  other  private  and  public  entities  and  society  as  a  whole 
draw benefit from ubiquitous broadband. 

4. 

THIRD PERIODIC REVIEW OF THE SCOPE OF UNIVERSAL SERVICE AT EU LEVEL 

The USD calls on the Commission to review the scope of universal service every three years 
in the light of social, economic and technological developments, taking particular account of 
mobility  and  data  rates.  Annex  V  to  the  USD  establishes  certain  considerations  to  be  taken 
into  account  by  the  Commission  in  deciding  whether  certain  services  should  be  included  in 
the scope, namely: 

1. 

Are specific services available to and used by a majority of consumers and does the 
lack of availability or non-use by a minority of consumers result in social exclusion? 

16 

17 
18 

19 

EN 

Impact  of  EU  Policy  options  for  revision  of  the  universal  service  provision,  Van  Dijk  Management 
Consultants  et  al.,  October  2010:  http://ec.europa.eu/information_society/policy/ecomm/library/ 
ext_studies/index_en.htm. 
Based on a mix of wired and wireless technologies. 
The study estimate is based on an annual telecommunications turnover of €394  bn. In relation to actual 
EU-27 turnover in 2009 (€
 332 bn), documented in the Digital Agenda Scoreboard 2011, the annual net 
costs would amount to approximately 0.81 % of the revenues of the telecom sector in 2009. 
Total USO costs in these Member States range between €

 0.5 million and €

 70 million. 

5 

   EN 

 
                                                 
2. 

Does the availability and use of specific services convey a general net benefit to all 
consumers  such  that  public  intervention  is  warranted  in  circumstances  where  the 
specific  services  are  not  provided  to  the  public  under  normal  commercial 
circumstances? 

Moreover,  recital  25  USD  indicates  that  to  be  included  in  the  scope  the  relevant  services 
should already be available to a substantial majority of the population. The previous reviews 
in  2005/06  and  200820  concluded  that  these  criteria  were  not  met  with  regard  either  to 
mobility or to broadband, and thus the scope was not changed. 

4.1. 

Broadband 

Fixed  (DSL)  broadband  networks  were,  on  average,  available  to  around  95 %  of  the  EU 
population at the end of 201021. 

Figure 1. 

Fixed broadband network coverage in the EU as % of the population, 2010 

100%

90%

81% 82% 83%

80%

77%

89% 89%

92% 92% 92%

94% 95% 95.1% 96% 96% 96% 97% 97% 97% 98% 98% 98% 99% 99% 99% 99% 100% 100% 100% 100% 100%

70%

60%

50%

40%

30%

20%

10%

0%

58% 18% 60% 55% 69% 67% 62% 84% 85% 80% 86% 82.8% 89% 90% 86% 96% 45% 91% 93% 94% 92% 94%

99% 99% 100% 100% 100% 100% 100%

PL BG RO SK LT

LV EL

SI CZ EE

IS EU-
27

IE

FI

IT NO CY DE HU AT SE PT MT NL ES UK BE DK FR LU

Rural DSL coverage

National DSL coverage

Source: IDATE, 2010 

There  were  approximately  133  million  fixed  and  36  million  mobile  broadband  subscriber 
lines  in  the  EU  at  the  beginning  of  2011,  which  shows  that  mobile  is  now  contributing 
strongly to growing broadband take-up. 

70 %  of  EU  households  now  have  internet  access  and  61 %  have  a  wired  or  wireless 
broadband connection22. However, broadband usage rates vary considerably between Member 
States. Broadband take-up ranges from 23 % of households in Romania and 26 % in Bulgaria 
to 80 % in the Netherlands and Denmark and 83 % in Sweden. 

20 
21 

22 

EN 

COM(2005) 203; COM(2006) 163; see also footnote 1. 
Due  to  its  extended  reach,  the  footprint  of  DSL  can  be  used  as  a  reasonable  proxy  to  monitor  the 
availability  of  fixed  broadband  coverage.  However,  other  fixed  technologies  can  also  provide 
broadband connectivity. 
These  figures  for  broadband  household  penetration,  based  on  the  Eurostat  ICT  household  survey, 
include 
16-74 
aged 
least 
(http://ec.europa.eu/information_society/digital-agenda/scoreboard/library/index_en.htm). 

households 

member 

with 

one 

at 

6 

   EN 

 
 
                                                 
Figure 2. 

Broadband penetration at home, % of EU households, 201023 

% of households having a broadband connection
Year 2010

h
h
%

100

80

60

40

20

0

Iceland

Norway

Sweden

Denmark
Netherlands

Finland

Luxembourg
Germany

Belgium

Malta

France

Estonia

Ireland

Spain

Czech Republic
Poland
Lithuania

Latvia

Hungary

Croatia
Cyprus
Portugal
Slovak Republic

Italy

Greece

Turkey

Bulgaria

Romania

Austria

Slovenia

European Union - 27 countries

European Commission Digital Agenda Scoreboard

Consequently, at household level, the threshold of broadband usage by a (simple) majority of 
consumers  in  the  EU  has  been  reached,  but  this  is  not  yet  a  ‘substantial  majority  of  the 
population’, as described in recital 25 USD. More importantly, given the significant national 
disparities in take-up and the fact that take-up levels in 5 Member States are below 50 %, the 
costs of EU-wide USO for broadband would fall disproportionately on telecom providers and 
ultimately  consumers  in  those  Member  States.  Indeed,  survey  data24,  including  households 
aged 75 and above, indicate 12 Member States below 50 %. The costs of ensuring universal 
broadband coverage would be particularly high in countries with a sparse population, difficult 
terrain  and/or  less  developed  infrastructure.  As  indicated  above,  the  average  cost  per 
household in Romania is likely to be more than twice the EU average. Therefore, including 
broadband access within the scope of universal service at EU level, at this stage, would not 
meet the second criterion in the USD, namely conveying a general net benefit to all European 
consumers. 

4.2.  Mobility 

Mobile  networks  cover  over  95 %  of  the  EU  population  on  the  basis  of  national  mobile 
licences25. Overall mobile subscriber penetration reached 124.2 % in October 2010. 

23 
24 

25 

2010 data for UK not available; 2009 figure for UK was 69.5%. 
Special Eurobarometer 362: http://ec.europa.eu/information_society/digital-
agenda/scoreboard/docs/pillar/studies/eb_ecomm/final_reports/reporteb751sp362infsoecommunications
_en_final.pdf. 
COM(2005) 203. 

EN 

7 

   EN 

 
 
 
                                                 
Figure 3. 

Mobile subscribers and penetration rate at EU level, 2004- 2010 

Source: Digital Agenda Scoreboard 2011 — electronic communications market indicators 

89 % of EU households have mobile and 71 % fixed telephone subscriptions, so that 98 % of 
all EU households now have telephone access. 

Figure 4. 

Telephone access at home, % of EU households, 1999-2011 

2011
2011

2007
2007

2003*
2003*

1999*
1999*

71%71%

89%89%

70%70%

83%83%

82%82%

81%81%

92%92%

98%98%

95%95%

97%97%

42%42%

*) EU-15

Fixed
Fixed

Mobile
Mobile

Total
Total

Source: E-communications household surveys, July 2011 

As  to  affordability,  the  average  monthly  price  of  a  low  usage  basket  of  (pre  and  post-paid) 
 9.07 in 2010, down approximately 30 % from 200626. 
mobile services in the EU amounted to €

26 

Report on Telecoms Price Developments from 1998 to 2010, Teligen, Strategy Analytics Ltd, December 
2010. 

EN 

8 

   EN 

 
 
 
                                                 
Since  the  last  review,  growing  take-up  and  declining  prices  of  mobile  services  can  be 
observed.  This  confirms  the  analysis  in  earlier  reviews  that  the  competitive  provision  of 
mobile  communications  has  resulted  in  consumers  having  widespread  affordable  access  to 
these services so that there is no risk of social exclusion. The criteria for including mobility 
within the scope of universal service at EU level are therefore not met. This does not exclude 
wireless technology being used to provide connection at a fixed location under USO. 

The  Commission  will  continue  to  monitor  the  special  needs  of  persons  with  disabilities, 
including in particular issues related to mobile telephone services27, and report its findings in 
the next review. 

5. 

WAY FORWARD 

Given  the  large  sums  needed  to  ensure  broadband  coverage  through  USO  and  the  potential 
impact on industry and consumers, Member States need to carefully analyse whether national 
conditions warrant the extension of USO to broadband, taking into account the risk of social 
exclusion as well as possible distortion of competition and undue burden on the sector. 

In  view  of  the  risk  of  divergent  approaches  to  implementing  the  USD  and  the  potential 
financial implications for industry, the Commission considers that further guidance is needed 
to  ensure  that  implementation  is  in  accordance  with  consistently  applied  principles  while 
taking into account the different stages of development of the markets in the Member States. 
Such guidance will help to tackle the risk of social exclusion while at the same time avoiding 
a disproportionate burden on the sector. 

This  responds  to  the  requests  for  clarification  from  stakeholders  in  the  consultation  and  the 
call from the European Parliament for the Commission to ‘provide guidelines on how best to 
implement and enforce the revised USD, avoiding market distortions and, at the same time, 
allowing Member States to adopt the provisions that best suit their national circumstances’28. 

The  Commission  is  of  the  view  that  consistent  implementation  of  USO  calls  for  a  coherent 
approach  to  the  criteria  for  defining  ‘functional  internet  access’  at  broadband  speeds, 
designation  mechanisms,  financing,  and  measures  for  end-users  with  disabilities.  The 
Commission  intends  to  engage  in  further  discussions  with  Member  States,  European 
Parliament and other stakeholders on these matters. 

- Scope of USO relating to ‘functional internet access’ at broadband speeds29. 

When  Member  States  consider  whether  to  define  the  network  connection  permitting 
‘functional  internet  access’  at  broadband  speeds  at  national  level,  a  set  of  coherent  criteria, 
reflecting the criteria for changing the scope of universal service at EU level30, could help to 
ensure consistency and minimise market distortion, while meeting the objective of preventing 
social exclusion. 

27 

28 
29 

30 

www.eaccessibility-monitoring.eu;  ongoing  EC  pilot  project  Reach112  on  accessible  alternatives  to 
traditional voice telephony (www.reach112.eu). 
See footnote 7. 
See  the  interpretative  document  (COCOM10-31)  presented  by  Commission  services  to  the 
Communications Committee. 
Article 15, Annex V and recital 25 USD. 

EN 

9 

   EN 

 
                                                 
For instance, Member States could be called on to make a prior assessment of the impact of 
such a decision, which could include assessing overall national broadband take-up in terms of 
the percentage of national households with broadband and the percentage of households with 
a broadband speed equal to or above the minimum speed envisaged. 

Reflecting  the  notion  in  recital  25  USD  that  the  services  covered  should  be  available  to  a 
‘substantial  majority  of  the  population’,  certain  thresholds  could  be  applied  to  determine 
whether  the  required  critical  mass  of  broadband  take-up  is  achieved.  The  Commission 
believes  that,  at  this  stage,  Member  States  could  be  asked  to  consider  including  broadband 
connections in USO where the data rate in question is used at national level (i) by at least half 
of all households and (ii) by at least 80 % of all households with a broadband connection31. 

Member States could also be advised, when making their decision, to identify their specific 
social and economic objectives and desired outcomes. This could include an assessment of: 

– 

– 

– 

– 

the expected market availability of broadband without public intervention; 

the  social  and  economic  disadvantages  incurred  by  those  without  access  to  a 
broadband connection, including disabled end-users; 

the cost of public intervention via USO and comparison of this cost against the use of 
other approaches; 

the benefits of public intervention and its effects on competition, market distortions 
and broader policy objectives. 

Thus, intervention would only occur where overall benefits outweigh overall costs. 

- Common approaches to designation 

Finding the most appropriate mechanism for designating universal service providers can help 
minimise market distortions and enhance efficiency. Territorial coverage requirements set at 
the  outset  of  a  designation  process  can  unduly  restrict  the  number  of  eligible  undertakings. 
Likewise,  a  designation  mechanism  that  allows  Member  States  to  consider  all  technical 
options  for  the  provision  of  universal  service  is  likely  to  produce  the  most  cost-effective 
outcome. 

An  unduly  long  or  indefinite  designation  period  may  also  a  priori  exclude  other  operators 
from being designated32. For instance, transparency and non-discrimination can be promoted 
through limited time periods for USO designations (as e.g. in Greece and Poland). A thorough 
evaluation  of  potential  options  (including  all  available  technologies)  and  their  impacts  will 
help identify the most efficient means of providing universal service, which may lead to more 
frequent  designation  of  alternative operators (as e.g. in Estonia), or the designation of more 
than one undertaking (as e.g. in the Czech Republic and France). To avoid discrimination, a 
designation could be designed in such a way that it does not last longer than is necessary to 
recover the relevant investment costs and does not exceed a maximum duration (for example 
10 years). 

31 

32 

According  to  the  study  (footnote  16),  on  average  more  than 80 %  of  EU  fixed  broadband  subscribers 
have broadband speeds above 2 Mbps today. 
C-154/09 Commission v Portugal. 

EN 

10 

   EN 

 
                                                 
- Consistent approaches to calculating the net cost of universal service provision 

for  business  valuations, 

In  order  to  ensure  cost  efficiency  and  a  level  playing  field  for  operators  across  the  EU,  the 
approach  followed  by  national  authorities  to  calculate  the  net  costs  of  universal  service 
provision  is  of  key  importance.  Efficiency  could  be  enhanced  by  setting  out  the 
methodological approach for calculating the net cost of  USO in advance of any  designation 
process, and by consulting publicly on it. Carrying out a specific net cost calculation for each 
designated  undertaking  would  also  ensure  transparency  and  accuracy.  The  Court  of  Justice 
has  identified  specific  elements  that  should  be  taken  into  account  when  evaluating  the 
intangible  benefits  arising  from  USO.  They  should  be  established  in  line  with  calculations 
life 
used 
effect, 
include 
cycle 
marketing/sales/advertising  benefits,  brand 
recognition/corporate 
reputation,  benefits  from  provision  of  other  services  on  a  commercial  basis,  access  to 
subscriber  data,  and  information  and  technical  and  commercial  benefits  arising  from  the 
increased extent of the network. It is also important to clarify the principles to be applied by 
national  authorities  when  assessing  whether  USO  constitute  an  unfair  burden33  on  the 
provider. In this regard, NRAs should examine all relevant characteristics particular to each 
designated  undertaking,  such  as  technical  and  economic  characteristics  of  the  equipment  it 
uses for the provision of universal service, its economic and financial situation, and its market 
share34. 

e.g.:  ubiquity, 
loyalty  and 

image, 

and 

- Financing 

Any  sectoral  financing  mechanism  for  universal  service  must  be  transparent,  objective, 
proportionate and non-discriminatory, and seek to minimise distortion to competition and user 
demand.35 

Using  general  taxation  to  finance  USO  can  be  seen  as  less  distortive  than  sectoral  funding, 
since  it  reflects  more  accurately  the  general  nature  of  the  ensuing  social  and  economic 
benefits and the ability of consumers to pay. Finland, Sweden and the Czech Republic provide 
for these costs to be covered from public funding alone, while Malta and Portugal allow for a 
mix of public and sectoral financing. 

Given the potentially higher costs of USO extended to broadband connections, Member States 
may consider, as is currently the case in certain countries, an appropriate mix of public and 
sector-specific funding to finance the provision of universal service. 36  

They could also set limits on contributions from telecom operators to a sectoral compensation 
fund.  

Such limits may take two forms. First, as stated by Article 13(3) USD, Member States may 
choose not to require contributions from undertakings whose national turnover is less than a 
set limit (de minimis threshold). A number of Member States make use of this provision. A 
common de minimis threshold could be applied by reference to the revenues of the operators 
concerned. This could be set as a fixed monetary amount (e.g. €5 million)  or a percentage of 
the national turnover of the sector as a whole. 

33 
34 
35 
36 

In accordance with Article 12 USD. 
C-222/08 Commission v Belgium, C-389/08 Base NV and others v Ministerraad. 
See Article 13(3) USD and Article 6 (1) of Directive 2002/77/EC.  
In any event, funding of USO shall be in line with the rules governing State aid. 

EN 

11 

   EN 

 
                                                 
Secondly,  in  order  to  respect  the  principle  of  proportionality  explicitly  referred  to  in 
Article 13(3) USD  and  Article 6 (1)  of  Directive  2002/77/EC,  a  number  of  Member  States 
have considered it appropriate to set a ceiling on the individual contributions of operators. A 
maximum common limit may be set on operators’ individual contributions, with the balance 
of the net cost financed from public funds. This limit may be expressed as a percentage of the 
operators’ national annual turnover from the provision of electronic communication networks 
and  services.  The  percentage  could  be  within  a  range  (e.g.  from  0.40  to  0.65%  of  annual 
turnover)  to  reflect  the  anticipated  costs  of  USO  provision,  including  broadband,  by  an 
efficient operator, but cannot exceed the actual net costs of USO provision in a given country. 
A  number  of  Member  States  already  provide  in  their  national  legislation  for  a  maximum 
ceiling on individual contributions, set by reference to either gross or net revenues. 

- Measures for end-users with disabilities 

In  view  of  the  strengthened  provisions  in  the  revised  USD  relating  to  disabled  end-users, 
Member  States  could  also  be  encouraged  to  take  due  account  of  the  needs  of  such  users  in 
designing  their  national  USO,  in  accordance  with  the  principle  of  ensuring  equivalence  of 
access. 

6. 

CONCLUSIONS 

The Commission currently does not see a need to change the basic concept and principles of 
universal service as an instrument for preventing social exclusion. At this stage, it would not 
be appropriate to include mobility or mandate broadband at a specific data rate at EU level. 

The 2009 Telecom Package gives Member States the flexibility, in line with the principle of 
subsidiarity, to define the appropriate data rate for network connections delivering ‘functional 
internet  access’  in  the  light  of  national  conditions.  Basic  broadband  access  can  therefore  be 
part  of  USO  at  national  level  in  justified  cases,  particularly  where  market  forces  and  other 
policy  tools  and  financing  instruments  have  not  led  to  universal  broadband  coverage.  To 
minimise  market  distortions,  Member  States  should  take  full  account  of  public  intervention 
tools  other  than  USO  to  ensure  broadband  availability.  Member  States  thus  have  the 
possibility, but no obligation, to include access to broadband connections within the scope of 
national USO. 

However,  there  is  a  risk  that  divergent  national  approaches  to  implementation  in  the 
broadband environment could distort markets and put an unreasonable burden on the sector. 

The  Commission  considers  that  it  would  be  advisable  to  follow  a  common  approach  in 
applying the relevant provisions of the USD in the broadband context. This will make USO 
arrangements  more  efficient  and  boost  regulatory  predictability  for  the  sector,  so  that 
investment  and  competition  in  the  Digital  Single  Market  will  work  to  the  benefit  of 
innovation,  consumer  choice  and  affordability.  The  Commission  will  engage  in  discussions 
with  the  Member  States,  European  Parliament  and  other  stakeholders  in  the  light  of  this 
Communication. 

The Commission will also, based on a review of the various options, make proposals in the 
first  quarter  of  2012  to  ensure  that  public  sector  websites  and  websites  providing  basic 
services to citizens are fully accessible for disabled users by 2015.  

EN 

12 

   EN 

 
The importance  of broadband access  for European citizens is expected to continue to grow. 
While its inclusion  now  within  USO  at EU level would be premature, the Commission will 
continue to monitor broadband market developments, including in their social context. It will 
take these developments into account when it next reviews the scope of universal service. 

EN 

13 

   EN