European concepts of Universal service Paul Nihoul Louvain (Be), Groningen (Nl)

2 I. Introduction

3 « European » Yes./. Member States Concept does not exist at national level – maybe UK ? No otherwise Europe, public services, public ownership, « no regulation », no need for universal service, instructions to board of directors US, « same services », private ownership, public involvement, regulation, universal service Example : AT&T European universal serviceY= going American application, in Europe, of a concept originating in the US

4 « Concepts » One concept … Meaning Availability of a service To all members of a community At reasonable + equal conditions Cause deemed essential to that community Variation in time and space

5 … But not an easy one Terminology Polyphony Interdisciplinarity

6 Terminology Communication 1996 Universal service Public service Service of general (economic or non economic) interest Afterwards « Ambiguity » continues SIG used in case law SU in some regulations Public service in others

7 Polyphony Several speakers Commission : liberalisation Art. 86 EC Directive 1996 Communications 1996, 2003 Parliament/Council : ONP 90/387 as amended ECJ On regulation Or on EC Ttreaty « universal service without a name » Corbeau, Gl ö ckner

8 Interdisciplinarity, several sectors Telecom > electronic communications Postal services Energy? Transportation? « public utilities »

9 … « interdisciplinarity » Public utilities Electronic communications postal services Energy ? Transportation ? Social security Health Pensions Invalidity, etc.

10 II. Universal service

11 Electronic communications Current situation - One directive – Mechanism Step 1.- Definition of services which must be made available to all members of a community at certain conditions What are they ? Can the list evolve ? Role of Member States

12 … Step 2.- Who will ensure their provision ? Market forces If not, authorities Step 3.- How will they act ? Market forces : free markets Authorities : Designation of undertakings Subsidies : authority, fund Step 4.- How do they have to be performed ? Quality Prices

13 Postal services 97/67 as amended lately What is the US in that sector ? 3 and 5 Content ? 3.3 and 3.4 How will it be provided ? …

14 Until 2008 Non universal service activities Activities = free, general authorisations Universal service activities Some cannot be reserved, g.a. or individual licences Some can Division of activities in 3 categories

15 Now Non universal service activities Activities = free, general authorisations Universal service activities general authorisations, individual licences possible > Division of activities in 2 categories

16 Other sectors Public service obligations Electricity Gas Transportation

17 III. Peculiarities

18 « Revolution » Beforehand The authority as source of all activities « Fiefs » Summa divisio One part for markets, economic rules One part for authority, political rules Change The part of authorities is opened to markets

19 « New articulation Markets- Authorities » Market failure Economic theory Markets first, authorities only if former fails (subsidiarity) Universal service Legal theory Authority first*, Markets second**, authorities third*** * Define services covered by the regime and conditions under which they must be provided : who ? Quality ? Prices ** provision *** Where not provided satisfactorily by markets Authorities decide Authorities « provide » (designation, subsidy)

20 « LDP » No relation to « P » : privatisation Public undertakings still possible Submitted to the rules of competition Derogation if SGEI – to the same extent as private firms No relation to « D » : deregulation Beforehand : public monopolies one firm > no need to organise markets Public ownership > no need for regulation Now : private firms Several firms > instruction to board Private ownership > need for regulation

21 … Relation to « L » : liberalisation Suppression of monopolies Abolition legal barriers to entry Diminution economic barriers to entry More firms carrying out activities at market conditions Need for authorities to determine objectives it wants to pursue in terms of accessibility of service Universal service Cqfd : liberalisation => universal service

22 « The issue of monopoly » EC Treaty, 86 « GI » : general interest « E » : economic « Conflict of rules » Internal market, service <= remuneration Competition, service = economic activity, no remuneration requested

23./. SGIs Is there a universal service for SIGs : « Services of general (non economic) interest » ? Activities which are not economic in nature Case law 1.- Prerogative of sovereignty : police, army 2.- Solidarity essentiel : social security These activities are, by nature, governed by the concept of universal service Available to everyone at reasonable and equal conditions

24./. SGEIs (a) ECJ Corbeau, Gl¨ckner « supplier must provide service to everybody at derogatory conditions » These derogatory conditions may be financed through monopoly On the relevant market : « Gl ö ckner », « Afval », social security cases On adjacent markets : « Corbeau »

25 (b) regulation Derogatory conditions, financing ? Electronic communications 1.- auction Least asking undertaking 2. Subsidy Public budget or authority administered budget Extent of subsidy communication, decision, state aid provisions

26 … Postal directive 7, 4.2.

27 … Compatibility between both ? Regulated sectors Designated undertakings may not have an exclusive right So much the better if other firms provide service without subsidy Non regulated sectors Firms may jhave an exclusive right to the extent necessary of conditions 86 EC are fulfilled