Universal Service Current Implementation ERG/BEREC Project
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1 Universal Service Current Implementation ERG/BEREC Project USO Workshop Brussels 30 Mar 2010
2 Introduction As part of the 2009 Work Programme, ERG commenced examining issues surrounding Universal Service and this work will continue in the 2010 BEREC Work Programme The intention is that BEREC will be in a position to contribute to the debate on all relevant aspects of proposals which may be made As part of the process the PT circulated a questionnaire among ERG member and observer NRAs The purpose was to have an overview of the general principles governing the implementation of Universal Service, as laid down in the 2002 Directive How was the Directive applied and what national circumstances applied Responses were received from 27 out of 34 (24 EU; 3 non EU). This remains work in progress
3 Overview In the vast majority of surveyed countries there is an Universal Service Obligation (USO). However, there is a very limited number of countries where there is no USO or where, despite there being an USO, it has not been imposed on any undertaking (4 countries). The vast majority of responses indicated that all of the services included in the scope of the Universal Service as per the USD were included in the USO at national level. However, in some countries there are services which are not or no longer included in the USO, particularly directory services and Public Pay Telephones. Four responding NRAs reported that in their countries the scope of the USO has been extended to include deliverables outside Chapter II of the Directive
4 Current status of USO In the 27 countries of the NRAs that responded to the questionnaire, the USO is provided by law. Specific USO elements, particularly quality and affordability of the USO are generally laid down in decrees or NRA decisions. This is explainable because the rules and parameters concerning quality and affordability can change, so it has to be possible to adjust them with relative ease. In some cases however they are established by primary law. In many cases performance targets as mentioned in Annex III of the Directive are set out by NRA decisions or decrees. Some NRAs introduced extra performance targets for the universal service providers whether by tender documentation or by designation decisions. In the majority of the countries there is an obligation for the USP to report to the NRA about the quality of the Universal Service. There are a variety of measures taken to ensure the affordability of the US. In general the NRA is the entity entrusted with the enforcement of the USOs. In most cases, the NRA is empowered to apply fines when an undertaking does not comply with its USO.
5 Designation of USP Different practices have been adopted based on national circumstances and needs Single USP or multiple USPs Types of designation direct designation - public consultation tender Possibility to designate multiple USP(s) used in limited cases Various criteria used for selecting USP depending on metric Duration of designation varies A number of Member States anticipated changes in the scope of USO
6 Net Costs Methods used for the calculation of the USO net cost are described in Article 12(1) USD: Method (a) which calculates the difference between the net cost for the USP of operating with the USO and operating without the USO, taking into account any market benefit which accrues to the USP is used by the vast majority of the responding countries Method (b) which makes use of the costs identified by a designation mechanism is only used in 2 responding countries, in alternation with method (a) Net cost calculations have been conducted in only 8 countries. The intangible benefits are hardly quantifiable. Certain benefits were mentioned by the majority of respondents (ubiquity, life-cycle effect, brand enhancement and corporate reputation, advertising on public telephone booths, customer database). 10 countries have included a reasonable rate of return in the net cost calculation. The majority view is that economies of scope should be considered for the total net cost Where an USP is designated as a result of a tender which also identifies the net cost, a controversial issue is whether the NRA can verify ex post if the net cost claimed was the real net cost incurred and whether the NRA can make adjustments in case the two are different.
7 Financing USO Art 13 provides for two types of financing mechanism Public funds or Sharing mechanism Three conditions have to be met for setting a financing mechanism: A finding of an unfair burden by the NRA, based on a net cost calculation as per Art. 12 USD A request from a designated USP A decision of the NRA to launch the financing mechanism USO financing mechanisms have been activated in 8 countries. No common understanding as to what is deemed to constitute an unfair burden. In most cases, the NRA has discretion to decide. Elements considered in the analysis relate to market conditions and degree of competition in the market. Overwhelming preference is for the sharing mechanisms, based on contribution by e-communications providers in proportion to turnover (exemptions possible under certain threshold). NRA are responsible for administering the Universal Service Fund in most of the countries.
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