European concepts of Universal service

1. 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, Glöckner

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 : « Glöckner », « 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