How is the Universal Service Obligation in Finland to be funded?
Last week, we reported that Finland had declare broadband a human right and would be imposing a Universal Service Obligation which guaranteed that all residents and businesses would be able to receive a 1Mbps service downstream by July 2010. This may not sound like a huge step, but considering the UK is providing a "commitment" (rather than obligation) of 2Mbps by 2012, it is nevertheless a stronger step. Finland also expected to offer 100Mbps to everyone by 2015.
Rather than merely talking about connection speeds, the Finnish government is quoting actual performance as part of the universal service, which in practice sets a minimum bar for all Internet services:
"The average speed of downstream traffic must be at least 75 per cent of the required speed in a measuring period of 24 hours. In a four-hour measuring period the speed must be at least 59 per cent of the required speed."Ministry of Transport & Communications, Finland
Who will pay for it?
We asked the government department responsible who would be meeting the cost of the obligation, and if this was to be funded by service providers, what prevented them from charging prohibitive prices for such services? In response, they said that they would expect the USO to be funded by telecommunications operators who will be designated for this purpose by the end of the year. They also stated that the service providers may choose which technology to use (e.g. wireless vs. DSL) to deliver this service and pointed out that 1Mbps wireless services are already possible across the country so should be possible to implement at a reasonable cost. They further suggested that the government would assess a possible increase in the USO speed during 2010.
"The aim is that no public funding needs to be used, but according to Communications Market Act 'If it is evident that the provision of universal service constitutes an unreasonable financial encumbrance to the universal service operator and if the operator so requests, the Finnish Communications Regulatory Authority must calculate the net costs of universal service. The part of the net costs constituting an unreasonable financial encumbrance with regard to the size of the operator, type of business activities, turnover of the operator's telecommunications, directory inquiry service, and telephone directory service, or other similar elements shall be compensated to the universal service operator from state funds, if the operator so requests.'"Statement by Ministry of Transport and Communications, Finland
The spokesperson also confirmed that they would expect the USO connections to be provided at a "reasonable price" and that FICORA (the Finnish Communications Regulatory Authority; equivalent to Ofcom in the UK) would monitor the pricing, although the legislation did not in itself include any pricing ceilings.
The press statement issued by the ministry suggested that "some variation will be allowed in universal service connection [speeds]" to allow for mobile operators to provide part of the solution.