EU Launches Consultation on Telecoms Universal Service Laws

The European Union (EU) has announced it plans to revise rules governing the right of access to telecoms services, in order to expand them to cover broadband.

The EU's executive, the European Commission (EC), has now launched a consultation on the 2002 Universal Service Directive, which states that access to basic telephone and Internet services is a fundamental human right, along the same lines as education and healthcare. However, the commission is concerned the rules are now outdated and should now be expanded to cover broadband access.

The current EU rules were drawn up in the late 1990s, and were designed to act as a safety net where the market alone could not deliver basic services. The universal services laws require member states to ensure that citizens must be able to connect to the public phone network at a fixed location and access public phone services for voice and data communications with functional access to the Internet. The directive also covers access to directory enquiry services and directories, public payphones and special measures if they are disabled.

The commission has announced a consultation period between now and 7 May, and is asking for the views of consumers, industry stakeholders, policy experts and other interested parties, before drawing up any legislative proposals before the end of the year.

Outlook and Implications

• Broadband for All—But Who Pays? As well as addressing the issue of changing the definition of universal service from something which guarantees traditional voice telecoms connectivity to a broader concept of data transfer access, the commission also needs to raise the issue of finance. The EU has long been a proponent of free market forces, and has come down heavily on dominant incumbent operators who have attempted to resist the natural development of competition. However, the universal service laws are partly designed to guarantee access to telecoms in areas where it has not been commercially viable to construct networks, due to geographical boundaries or low population density. These roll-outs must inevitably be government-funded but there is also a question whether this is done under government-based contracts or via favourable partnerships with of funding to existing operators. Existing operators have the technological know-how and the commercial drive to rapidly roll-out networks but the EU is also against any kind of favouritism towards certain operators—especially the big incumbents, which are the very ones best-placed to take on such challenges. Spain is in the process of following Finland in making broadband access a fundamental right (see Spain: 18 November 2009: Spanish Government to Propose Broadband Access as Universal Service), and Romania has recently allowed the reallocation of spectrum for data service use as it ponders universal service legislation (see Romania: 26 February 2010: Romanian Regulator Opens 900 MHz for Data, RCS&RDS Requests Refarming and Romania: 10 December 2009: Romanian Regulator Progresses in Universal Service Review). Elsewhere, the United States is on the verge of releasing its own national broadband plan, which could be partly funded by an overhaul of its US$8-billion-a-year Universal Service Fund (see United States: 19 February 2010: FCC Outlines U.S. Broadband Plan Priorities). As well as bringing broadband to all, the EU must also develop a strategy to allow government funding to underserved regions while maintaining competition.

• Boosting the Economy and Bridging the Digital Divide: The EU recently announced that broadband connections rose 5% year-on-year (y/y) in the first half of 2009, and although it missed its target for one-third connectivity by 2010, it is largely satisfied with the growth of high-speed Internet access across the 27-nation bloc. However, recent figures estimate that 23% of people in rural areas still do not have access to fixed broadband networks—representing the so-called "Digital Divide" in the region. Former EU telecoms commissioner Viviane Reding has stated said that high-speed broadband, whether via fibre networks or wireless, is a pre-condition for a strong digital economy in Europe and for European leadership in new technologies and applications, adding that broadband was a strategic priority in the European Digital Agenda that is currently being prepared in the Commission. The EU is desperate to drive the economy to bring it out of the current downturn and rival the emerging giants of Asia, and sees the high-tech market for Internet-based products and services as a key area in which to compete—and it must boost broadband connectivity to achieve this.

• The Anti-Piracy Issue: The consultation follows the EU's Declaration on universal service to the European Parliament during the negotiation of the 2009 telecoms reform package. However, this latest contained a significant climb-down on the key issue of Internet disconnection, with several states in the bloc seeking to pass strict new laws allowing the removal of access for illegal file-sharing, without judicial review (see Europe: 6 November 2009: EU Agrees Telecoms Regulation Package But Backs Down on Internet Rights Issue). The EU has recently threatened legal action against Spain if the country moves to adopt a law which allows cutting off the Internet access of pirates, following the passing of a similar law in France (see France: 23 September 2009: French Parliament Passes Controversial Anti-Piracy Law). The EU has so far failed to adopt a strong legislative stance on broadband access rights—and any change in the law is likely to put it on a crash course with domestic regulators, many of whom are seeking to toughen anti-piracy legislation with the threat of disconnection.