Reviewing the Universal Service Directive – challenges in including broadband in its scope

Reviewing the Universal Service Directive – challenges in including broadband in its scope

The European Parliament published this week a briefing referencing the difficulties in revising the EU Universal Service Directive, which sets the criteria for a universal service obligation in the telecoms sector. As part of its review of the EU Telecoms Regulatory Framework, the European Commission is considering extending the scope of the Directive to include broadband. However, the briefing makes clear that setting EU-wide conditions for the introduction of a Universal Service Obligation (USO) for broadband is not without challenges.

According to the Universal Service Directive, a universal service should be available, affordable and accessible. The Directive includes a requirement for EU Member States to ensure that reasonable requests for a connection at a fixed location sufficient to permit “functional internet access??? are met. In transposing the Directive at national level, Member States are free to set the details of the USO such as the funding mechanism and the speed necessary for “functional access???.

As part of its ambitious review of the EU Telecoms Regulatory Framework, the European Commission is considering reviewing the scope of the Directive to include broadband as a universal service. Some EU countries, such as Finland, Romania and Spain have already taken steps to introduce or implement a (basic) broadband USO with various levels of speed access and funding mechanisms.

In considering whether the scope of the Directive should be reviewed, the European Commission has to take into consideration a number of factors such as technological, social and market developments, the social exclusion that may result to the minority that do not have access, and the general benefit to all. As referenced in the paper, some experts also suggested considering whether the service would (i) be essential to education, public health and safety, (ii) be used by a substantial majority of citizens, (iii) be deployed in public telecommunications networks, (iv) be consistent with public interest, convenience and necessity.

Given that there are still significant differences across Member States on the common access speed, and the percentage of households having access to and taking-up broadband, and its affordability, it is clear to see the difficulties in setting an EU-wide requirement to introduce a universal service for broadband. Allowing Member States to continue to decide if, when and how to introduce a USO could still considered a relevant policy option.

Including broadband in the scope of the Universal Service Directive, and/or creating a new universal service regime would inevitably raise questions about the appropriate funding mechanism. The Directive foresees that when operators are designated to guarantee the provision of the USO, and when this constitutes an unfair burden on them (on the basis on market conditions and level of competition), they could be compensated for the net cost of providing the service (from Government funds or through a Universal Service Fund).

The review of the Directive, depending on its extent (and if it actually takes place), could have knock-on effects on the ongoing UK debate on the introduction of a broadband universal service obligation, both in terms of the definition of a (good quality) broadband service, and its funding. It is also worth noting that other upcoming EU regulatory reforms could have the potential to encourage investment and competition in the telecoms sector. Some may argue that these reforms might be enough to encourage the deployment of broadband networks and consumer take-up, without the need for a broadband USO…