European USO could interrupt government plans

The European Commission yesterday launched a consultation looking at the
future of universal service in the digital market. The current EU Directive on
universal service states that basic Internet access must be provided but that
it should be “sufficient to permit functional Internet access” which
effectively equates to a dial-up modem connection. With the advent of broadband
and the technology boost which has come with it, this universal service
obligation (USO) is quite outdated.

Fixed broadband coverage is by no means ubiquitous and plans to increase
this will go a long way to provide an equality of service to people across
Europe. In the UK, BT coverage is claimed at over 99% which would probably
equate to around 600,000 people who can’t access it. Across Europe, the numbers
are lower with 93% of Europeans at the end of 2008 able to get broadband, but
in rural areas this falls to about 77%. The other main point of a USO is what
speed to set for a universal service. 2Mbps, the speed chosen by the UK
government, gets a mention as something that over 80% of Europeans can
currently get, and therefore may be a target which they are pushing toward.

Question 1: In today’s competitive environment, can the market be
relied on to meet demand for basic e-communications services from all sections
of society, thereby ensuring social inclusiveness?

Question 2: If not, what is the best policy to allow disabled
consumers, those on low incomes and those living in geographically remote or
isolated areas to access and use basic e-communications services?

Question 3: Broadband for all is a widely-stated policy objective at
national and European level. What role if any should universal service play in
meeting this objective?

Question 4: What impacts could an extension of the role of universal
service to advance broadband development have in relation to other EU and
national policies and measures to achieve full broadband coverage in the EU?
What other impacts would be likely to arise regarding competition, the single
market, competitiveness, investment, innovation, employment and the
environment?

Question 5: If universal service obligations should prove necessary
to achieve the policy objective of broadband for all, at what level (EU or
national) should such obligations be defined, taking into account the different
levels of market development across the current Union of 27 Member States?

Question 6: If a common harmonised universal service needs to be
defined at EU level, should a mechanism be put in place to balance the need for
national flexibility and a coherent and coordinated approach in the EU?

Question 7: Irrespective of the scope of universal service, are
mechanisms whereby funding is provided by the sector appropriate in the context
of a regulatory environment that seeks to eliminate distortions of competition
and promote market entry?

Question 8: In the context of the roll-out of broadband in Europe, is
it still appropriate to limit the financial arrangements of universal service
to market players in the e-communications sector, while this provision would
have wide-ranging benefits outside the sector, for instance, the delivery of
information society services and digital content? Are other means of financing
more appropriate?

Questions posed by EU Consultation on USO

The questions suggest that there may be flexibility in the roll out of a
USO, allowing some leeway for national implementations. Equally, there could
however be a USO introduced pan-Europe which encourages faster services, and
may throw a spanner in the works of the current government plans to introduce a
2Mbps broadband USC by 2012. One point of major importance is that the EU is
looking at obligation rather than the weaker commitment that work
should have started on in the UK by now.