DTI/OFTEL SECTOR WORKSHOP
1999 Review of European Union Telecommunications Legislation
1 Feb 1999
- Linda Lennard, National Consumer Council,
Introduction
First, it is vital to emphasise the essential nature of telecommunications for participating
in everyday life. The National Consumer Council represents the interests of domestic
consumers and we have a specific brief to represent the interests of disadvantaged
consumers. In the context of the telecomms area, the Review is of crucial importance for
consumers' interests, including disadvantaged consumers (such as those in remote areas,
on low incomes, disabled consumers). Policy-makers and industry must recognise the
centrality of consumers' interests for the Review. Regarding competition, for example, it
is vital to base policies on the reality of the situation facing consumers, and the real
differences between situations for different groups of consumers. It is also necessary to
reiterate that we ourselves are also at an early stage of thinking about the various detailed
and complex issues.
Universal service:
The importance of telephone service to social and economic life has been recognised by
European Commission and by Oftel: so that all consumers can have access to good quality
basic voice telephony services at affordable prices. Of course, there are disagreements
over how to achieve this objective. But the overall premise is widely accepted that the
market is unlikely to deliver these objectives left to itself, and some form of sectoral
regulation is required. Some key points to consider:

How to define affordability: BEUC's study of `Universal Service in
Telecommunications: European Consumers' Rights to Telecommunications
Services' (published last November) looked at the state of play as of mid-June
1998 in 14 EU Member States on the implementation of universal service in
telecommunications legislation. This was two weeks before Voice Telephony II
Directive due to come into force. But the study also looked at whether Member
States had made necessary preparations to integrate the new legislation, and
showed wide variations in the degree of implementation.
No definition of affordability has been provided at a European level. Some
countries have adopted their own definitions: eg. in Austria, it is apparently
defined as the prices as of 1 January 1998! This, of course, very much
presupposes that what the operators charge is automatically affordable - an
assumption unlikely to find favour with consumer representatives. The definition
adopted in Denmark is quite detailed, and specifies maximum prices linked to
average consumer's expenditure on telecomms services and the General Price
Index.
In UK, we do not have a specific definition but rather a set of elements which are
seen as crucial to the concept of universal service, including `Lifeline' and other
low cost services, alternatives to disconnection, public call box provision, free
emergency services, itemised billing etc.
Concept of affordability: bedrock of universal service. But how should it be
defined? Whether at European level as part of overall framework, or left up to
national governments and regulators? Based on some form of indexation, or on a
combination of factors, or some other method still to be found?
BEUC's findings on the effects of tariff rebalancing (contained in the same study)
are highly relevant here. The benefits of liberalisation have still not reached many
residential consumers, and rebalancing of tariffs has led to increases in installation
and rental costs, as well as in local call charges, in a number of areas. This picture
demonstrates the complexity of ensuring that competition develops effectively for
all groups of consumers. Tariff changes also directly inter-link with concepts of
universal service and affordability.

Who should set the level of universal service? Setting universal service levels
is a matter of public policy and should be set overall by government/EU.
Indeed, the Government Green Paper on ` Regulating Communications' (produced
jointly by the DTI and DCMS) states that setting the level of universal service is
properly a matter for government; it is then the regulators' duty to secure delivery
of that provision. NCC supports this approach, in line with government's
proposals on utility regulation (for government to set social and environmental
objectives for regulation).

Should the concept of universal service be expanded to cover new media: if
so, which ones? Green Paper on `Regulating Communications' recognises that
definition might need to be widened to include a selection of digital services.
Current definition in Article 5 of the Voice Telephony II directive: `the
connection provided shall be capable of allowing users to make and receive
national and international calls, supporting speech, facsimile, and/or data
communications.' But no provisions regarding speed of bandwidth for data
transmission. BEUC considers a specification of minimum bandwidth for
transmission of data, and minimum transmission rate for frequencies, should be
included in legislation. Some countries already include this (Belgium, Denmark,
Germany, Italy).
Issues raised include: at what point should new services be included? If it is
taken at the proportion of people using new services, what proportion should be
adopted? However, basing the extension of universal service to new advanced
media on a proportion of uptake across the population is an arbitrary approach,
which ultimately depends on subjective decisions. It may be preferable instead to
concentrate on deciding what outcomes we want to achieve, and then consider
how this should be done.

What are the objectives of public policy? If government/Parliament is setting
overall objectives for levels of universal service, it is vital that there is clarity
about what we are trying to achieve in short, medium and long term. It is
necessary to distinguish between:
Universal service: a broad concept encompassing principles of universality,
equality, affordability, and quality. Implicit in universality is aim of including all
individuals.
Universal access: narrower concept covering supply of physical connection on
equal terms to everyone.
Public access: similarly a narrower concept, covering requirements for physical
access in public places for connection to specific communications services.
Public service: again a broad concept. It is about the specific needs of information
and communication of a given society, including affordability and quality. But in
itself, this is not universal service. Public service in communications means
supply through public places: libraries, schools (though need to question whether
they are really publicly accessible), community facilities, but not individual
homes. If this is what we decide is a short-term objective, along the road of a
longer term objective of full universal service, OK but we need to be clear this is
public service provision, not universal service.
(The above concepts and distinctions have been explored in detail by Dr Jan van
Dijk in Working Paper for the European Information Society Forum, on
`Universal Service from the Perspective of Consumers and Citizens.)
And public policy objectives also need to consider whether specific groups of the
population should be a high priority in enabling extension of new services, for
instance, disabled people with mobility problems, people in remote areas, or
remote from decent transport.

Financing universal service: Another issue relates to costs: if universal service is
extended to new advanced IT services, how do we determine the extra
costs/benefits/. If there are significant extra costs - how should these be financed taxation? Spread across consumers? If the latter - which consumers, all
consumers? Should consumers who do not use (or want) advanced IT services
have to bear some of the costs? On the other hand, extending demand should
theoretically bring prices down.

Public service broadcasting: Given converging technologies and the increasing
involvement of companies across traditionally separate communications sectors,
its is also necessary to look at the future of public service broadcasting: how it
should be defined, funded and delivered, and what are the implications for other
communications services?
Consumer protection:
Linked to universal service concepts. How to ensure that people can get access to, and
stay connected, to telecommunications services, and are treated fairly. We need to
examine most effective ways of achieving this. Issues include:

How to deliver effective consumer protection - whether through
legislation/licence conditions and/or codes of practice/voluntary agreements (`soft
law').
Consumers need clarity about their rights and confidence that regulation will make
sure they are delivered. Codes of practice and voluntary agreements are not
especially satisfactory solutions for consumer organisations. They tend to form a
grey area which lacks clarity and relies too much on discretion and goodwill. Also
achieving voluntary agreements can be very time-consuming. In general, we
prefer levelling-up of services to defined goals.
Regulators also need a range of effective powers and sanctions. It is often difficult
to put these into practice when dealing with fudgy area of codes of practice and
voluntary agreements/ statements of intent.

What should be included at European and/or national levels?
We need to consider, for instance, schemes to ensure people can stay connected to
lifeline services, full range of payment options available, free itemised
billing/degree of detail (whether all calls, calls over certain amounts,
national/international), free selective call barring, provision of public payphones,
access to payphones for disabled people, and services generally for disabled
people.
Consumer information:
There is a major problem for consumers in getting hold of comprehensible tariff
information so they can make informed choices between operators. We strongly support
Oftels actions to ensure this happens in the UK.
Quality:
It is especially important for there to be clear targets and information on performance as
competition develops. Should performance indicators be statutory or voluntary (prefer
former)? BEUC argues that quality targets and quality indicators should be set at
European level so that quality of service can be measured in comparable way throughout
EU. At present, actual setting of targets left to Member States who are, however, required
to publish these targets.
Consumer representation and redress:
Consumers need dispute resolution systems which are accessible, easy to understand and
negotiate, and free of charge. We need to look at the adequacy of Voice Telephony
Directive II in this and other respects.
Consumer representative bodies are urgently needed which are independent and
adequately resourced to represent interests of domestic consumers and small businesses:
to advocate their interests, even more vital in rapidly changing world of communications.
NCC supports the government proposal for Telecommunications Consumer Council.
But it needs to be set up sooner rather than later, and have its terms of reference extended
to cover all communications services, including broadcasting and IT services. NCC is
taking an initiative to explore setting up a Communications Consumer Forum (NCC
response to `Regulating Communications being published next week, 10 February).
Consumer consultation: Oftel and DTI must ensure consumer groups are consulted in
detail for the 1999 Telecomms Review. While welcoming opportunity for NCC and CA
to be represented on the Oftel/DTI Focus Group and to speak at this Workshop, we are
disappointed that space for consumer representatives on the Focus Group is limited to 2.
Economic and competition issues are just as important to consumers as industry - these
issues affect prices, access, fairness of terms and conditions. Oftel urgently needs to look
at the process for involving and consulting consumer representatives at each stage of the
review.