24-document 6.1-ms.birkett.ppt [read-only] · regulatory approach of the package uidentify markets...
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Scope, funding mechanisms and challenges of universal service and access
Alison BirkettEuropean Commission
ITU Regional Regulatory Seminar: Dalian, China, 5-8 August 2002
EUROPEAN COMMISSIONEUROPEAN COMMISSION
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ContentsContents
I The EU approach to universal service- The new EU regulatory framework- Where are we today on US, and why change?- What’s in the US Directive?
II How will accession candidates (new EU Member States) deal with US?
III Universal service in emerging economies and developing countries
- Universal service or access?- Policy options- Issues
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AudioAudio--visualvisual TelecomsTelecoms
ITIT
MultimediaMultimedia
The Challenge of ConvergenceThe Challenge of Convergence
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Service
Network
Terminal
Voicetelephony
FixedMobile
Telephone/Handset
Data
Fixed
PC
Broadcasting
CableSatellite
Terrestrial
Television
Today - separate networks, separate rules
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Data
Fixed
PC
Broadcasting
CableSatellite
Terrestrial
Television
Voicetelephony
FixedMobile
Telephone/Handset
Service
Network
Terminal
Convergence is a reality
Wireless Satellite Cable Telecoms
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DEALING WITH CONVERGENCEDEALING WITH CONVERGENCE
1. All content can be delivered over all networks;network-dependent rules are being overtaken by technology; markets are merging; so:- coherent regulation of communications infrastructures
and associated services
2. Content and transport are different, so:- separate regulation for transport and for content, while
recognising the links between them
3. Regulation should be kept to a minimum, so:- only impose regulation where competition not effective
and where competition law isn’t enough
Content Services - outside scope of new framework
(e.g. broadcast content, e-commerce services)
Electronic communications Electronic communications networks and services networks and services -- ScopeScope
Communications services (e.g. telephone, fax, e-mail)
Communications networks (fixed, mobile, satellite, cable TV, powerline systems, networks used for radio and television broadcasting)
and associated facilities (e.g. CAS)
Regulatory approach of the packageRegulatory approach of the package
u Identify markets
wproduct markets (eg call termination)
wgeographical markets (eg local, national, global)
u See whether there are dominant operators on those markets (Significant Market Power)
wminimal and linked to degree of competition
w flexible BUT harmonised at a European level
w technologically neutral
u Regulate only where an operator has a dominant position in an identified market where competition is not effective
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Data Protection Directive
Unbundled local loopRegulation
SpectrumDecision(Art. 95)
The new packageThe new package
LiberalisationDirective(Art. 86)
Framework Directive(Art. 95)
Authorisation Directive
Access & Interconnection Directive
Universal Service and Users’ Rights Directive
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ContentsContents
I The EU approach to universal service- The new EU regulatory framework- Where are we today on US, and why change?- What’s in the US Directive?
II How will accession candidates (new EU Member States) deal with US?
III Universal service in emerging economies and developing countries
- Universal service or access?- Policy options- Issues
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PSTN/ISDN PenetrationPSTN/ISDN Penetration
PSTN/ISDN penetration (2001) 56
% 75%
65%
61%
48% 63
%
52%
54%
114%
73%
44% 54
% 66%
70%
59% 64%
102%
97% 10
9%
96% 10
8%
108%
95%
96%
221%
120%
107%
96%
94%
100% 105% 110%
0%
50%
100%
150%
200%
250%
B DK D EL E F IRL I L NL P A FIN S UK EU
% of population % of householdsSource: IDC 2001
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Mobile PenetrationMobile Penetration
Mobile subscribers and penetration rateTotal EU subscribers: 263 millions
55.1
7.0
26.8
33.7
47.1
0.37
11.9
6.6
7.6
6.7
43.42.67.
0
3.9
4.0
05
1015202530354045505560
B DK D EL E F IRL I L NL A P FIN S UK
Milli
ons
of s
ubsc
riber
s
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Pene
tratio
n
Subscribers Penetration
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Internet PenetrationInternet Penetration
Household penetration of internet access (October 2000-June 2001)
0%
10%
20%
30%
40%
50%
60%
70%
B DK D EL E F IRL I L NL A P FIN S UK
October 2000 June 2001 EU average June 2001Sources: Eurobarometer
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Need for change ?Need for change ?
wMonitoring ReportswConsultancy studies
u No need for substantial modifications, but need to simplify, clarify, and take into account convergence
u Scope is broadly the same
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ContentsContents
I The EU approach to universal service- The new EU regulatory framework- Where are we today on US, and why change?- What’s in the US Directive?
II How will accession candidates (new EU Member States) deal with US?
III Universal service in emerging economies and developing countries
- Universal service or access?- Policy options- Issues
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Scope of Universal Service:Scope of Universal Service:General General
uSet of servicesumust be available under some conditions:
waffordability (type of users, and geographical locations)wquality
uScope linked to financing mechanism -Member States can go further with the general budget
uPossible review
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Scope of Universal Service:Scope of Universal Service:Different servicesDifferent services
uProvision of access at a fixed locationwsufficient for functional Internet accessw technologically neutral (wire or wireless) on
connection at fixed locationwno extension to mobile
uDirectories and directory enquiry servicesuPublic pay telephonesuSpecial measures for disabled users
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Scope of Universal Service:Scope of Universal Service:ConditionsConditions
uAffordability of tariffswLow income or peripheral regions
uFacilities permitting control of expenditure
uQuality of services: Publication and performance targets
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Means: Designation of USO Means: Designation of USO providersproviders
u If necessary, Member States may designate one or more USO providers
wUse of efficient, objective, transparent, and non-discriminatory mechanismw to ensure that USO is provided in a cost-
effective manner and may be used as a means of determining the net costwDesignation for all or part of the different
services, all or part of the territory
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Means: Determination of the cost Means: Determination of the cost of USOof USO
uWhen representing an unfair burden, NRA shall calculate the net cost of USO
uEither calculation of the net costwAvoidable cost - provision at non-commercial
conditions - take into account intangible benefits
uOr, cost revealed during designation process (eg: auctions)
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Means: Financing the USO costMeans: Financing the USO cost
uThe net cost of USO can be financed in two ways
uGeneral government budget and/oruSectoral Fund
wShould respect principles of transparency, least possible market distortion, non-discrimination and proportionalitywContributors: providers of electronic
communications networks and services
uTransparency
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ContentsContents
I The EU approach to universal service- The new EU regulatory framework- Where are we today on US, and why change?- What’s in the US Directive?
II How will accession candidates (new EU Member States) deal with US?
III Universal service in emerging economies and developing countries
- Universal service or access?- Policy options- Issues
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Applicability to EU candidate Applicability to EU candidate countriescountries
u Main lines per 100 population (1999, WIK)w35.4 average in candidate countriesw54.9 average in EU15
uAvailability of universal servicewFlexibility to permit use of lower data rates (eg
to allow use of wireless technologies)
uDesignation of undertakings to provide universal servicewdesignation methods do not exclude auctions or
tenders
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ContentsContents
I The EU approach to universal service- The new EU regulatory framework- Where are we today on US, and why change?- What’s in the US Directive?
II How will accession candidates (new EU Member States) deal with US?
III Universal service in emerging economies and developing countries
- Universal service or access?- Policy options- Issues
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Emerging economies and Emerging economies and Developing countries (1)Developing countries (1)
uUniversal service or universal access?
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Emerging economies and Emerging economies and Developing countries (2)Developing countries (2)
uPolicy optionswPublic access policies wUniversal service fundswCompetitive bidding systemswLow interest loans and microcreditwUse of service requirements
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Emerging economies and Emerging economies and Developing countries (3)Developing countries (3)
u IssueswSustainabilitywPricingwFunding
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Possible sources of revenues for Universal Possible sources of revenues for Universal service/access funds service/access funds (World Bank study)(World Bank study)
Source ofRevenues
Definition/Description Characteristics/Examples
Interconnectlevies
Incumbent operator carriesa universal service oraccess obligation
Interconnection surcharge may beopaque and operator has noincentive to reduce costs.Example : US
Operatorrevenuecontribution
All operators charged apercentage of revenue
Levy generally varies between 1-2%, eg Peru and DominicanRepublic. In Guatemala, 70% ofrevenues from spectrum auctionsgo to the fund
Governmentbudget
Funds for UA provided bytreasury
Eg Chile
Seed finance bydevelopmentbank or agency
Funds for UA come frominternational organisations
Eg WB recent project in Nicaraguaincludes a small portion of seedfinancing for the rural developmentfund. Similar schemes underdiscussion in Nepal and Nigeria.
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Examples (1)Examples (1)
uChilewUniversal service fund (national budget)wEligible projects (areas to be served) selectedwPublic competitive bids invitedwNon-exclusive 30 year licences awarded to
winnerswLicensees set retail prices of most servicesw1994 to 2002: reduction from 15% to 1% of
proportion of population living in places without access to voice telephony
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Examples (2)Examples (2)
uSouth AfricawNetwork rollout obligations in licencewFinanced through cross-subsidy of incumbent
during 5 year monopoly periodwUniversal service fund (financed by telecom
licensees)wEstablishment of telecentreswHuman resources fund (financed by telecom
licensees)
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Examples (3)Examples (3)
uChina?wUp to now: China Telecom cross-subsidieswNow: break-up of China TelecomwSoon: Universal service fund?wContributions from market participants?
For more information ...For more information ...
On the European Commission:http://europa.eu.int/
On DG Information Society:http://europa.eu.int/information_society/topics/
telecoms/index_en.htm
On the new legislation:http://europa.eu.int/information_society/topics/
telecoms/regulatory/new_rf/index_en.htm