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The Impact of Telecommunications Deregulation on People with Disabilities

John Gill
Tony Shipley
February 1997


A REVIEW FOR COST 219 BY THE UK GROUP

© Copyright reserved, 1997

Reproduction of this document, except for the purposes of the RNIB and COST 219, is forbidden without prior permission. Permission is hereby given for the quotation of short extracts, provided that the source is duly acknowledged. The information and comments are presented in good faith but readers intending to act upon them are advised to obtain independent confirmation of critical points before so doing.


CONTENTS

Preface
Summary
Winners and Losers
Safeguards for Disabled Users
Universal Service - What is it?
The Market in Terminal Equipment


ANNEXES

Annex 1: Liberalization of Telecommunications
Annex 2: Telephone Terminal Equipment
Annex 3: The European Single Market

Annex 4: Opening Up the Telecommunications Market


PREFACE


The Scientific Research Unit of the RNIB in London has prepared several commentaries on European Telecommunications liberalization, jointly with the UK Group of COST 219. Some of these are now appended as Annexes, with some slight revisions as necessary, to accompany a strategic review of the state of Telecommunications deregulation in as far as it is likely to impact upon the use of the Telecommunications networks by people with disabilities.


SUMMARY


The liberalization and deregulation of Telecommunications services in the European Union will be largely completed by 1 January 1998, introducing full competition to services which had originally been operated by national monopolies. The need to protect vulnerable consumers in a fully competitive environment has been recognised, chiefly by the definition of an obligatory set of service levels to be known as Universal Service. Although Universal Service allows national regulators to make specific provisions for disabled users, and in a proposed revision of the relevant Directive these permissive powers will be made compulsory, there is no statement or guidance as to what these provisions might be. While this may make for some welcome flexibility when regulators are considering what action to take, it leaves them with the option of implementing the barest minimum. Disabled people, and the organisations which lobby on their behalf, will need to present a well-argued action list to their national regulators if a fair and balanced set of provisions is to be achieved. While the rate of progress may vary between the European Member States, consistency of objectives is necessary if the European Telecommunications networks of the future are to be fully accessible to people with disabilities.

A particular difficulty has arisen with the liberalization of terminal equipment supply, which has been addressed separately from the deregulation of network services. In consequence, the continued availability of terminal equipment with facilities that are vital for disabled users is left to the operation of market forces. It is not impossible that maintenance of availability of such equipment could be brought within the scope of the Universal Service provisions, using powers already granted in outline and without conflicting with the fundamental free trade objectives of the Single Market. Whether it is by this route or any other, it is vitally important that some assurance of continued supply is obtained. Firm action to achieve this objective will be entirely consistent with the much emphasised policies of the European Union supporting the independence of people with disabilities.

Organisations which participate in the COST 219 programme, being particularly well-placed to promote these issues with legislators, national regulators and standardization bodies, should take every opportunity to do so.


WINNERS AND LOSERS

The Single Market has been at the core of Europe since the founding of the European Economic Community with the Treaty of Rome in 1957. From the original Common Market of six members to the present Union of 15 Member States, the same free-trade objective has been consistently pursued. The fundamental aim as set out in the Treaty has been described as the realisation of four freedoms - to allow unhindered movement throughout the Community for people, for goods, for services and for capital. The goal, which has by now been very largely achieved, is a Community where companies can trade, people's skills can be employed and investors' resources can be utilised without regard to national boundaries.

This Community has a home market-place of 370 million people, large enough to provide a sound commercial and industrial base from which to challenge and compete with the other major world trading blocks. The importance of this for Europe's continuing prosperity is evident, as is the very deliberate and determined structuring of the Single Market as a fully competitive and highly deregulated economy, in dramatic contrast to the interventionist policies adopted in earlier economic programmes, such as that for agriculture. This market-driven economy brings with it the benefits of consumer empowerment, with consequent wide freedom of choice and keen pricing, as suppliers of goods and services from all over Europe compete for customers. Innovation is encouraged and the enthusiastic introduction of new technologies can proceed unhindered by protectionist regulatory restraints. The rapid growth of information technology and the advent of the "Information Society" create the opportunity for massive exploitation of technological innovation in the Telecommunications sector. For the consumer, deregulation of Telecommunications should bring untold opportunities and expose new horizons as these new developments are brought to the market place.

Unhappily, that view will hold true only for those consumers whose requirements are comparable with those of a majority of their fellows. Manufacturers and service companies are promoting new mission statements to their employees and agents with the message that the customer is King, and that satisfying the consumer is the only way to pay the wages. In an environment of free trade and full competition, the supplier who does not satisfy the customer does not stay in business. This market philosophy of addressing the needs of the paying client tends to fail when clients require something out of the ordinary, unless they happen to be rich enough to pay a special price for a customized product or service.

People with disabilities often have need of a product which is in some way special, in order to be able to access facilities which other people take for granted. At the same time, people with disabilities tend to have less disposable income, and more pressing claims on their financial resources, than others. In a highly regulated and non-competitive business sector, such as that of the former state Telecommunications monopolies, any special needs of disadvantaged consumers could be taken care of, whether by accident or design, because the economic costs of so doing were either unknown or discounted.

For consumers, the winners in a competitive environment are those whose custom is eagerly sought. They will find the best choice of goods and services, and benefit from the best bargains on prices. The losers will be those whose requirements are unusual or are costly to meet. Without a safety net of some kind, their already difficult position will be made worse. The services which they have come to rely upon may be at risk, through being commercially unviable, and their customer profiles may be too far removed from that of the target audience for them to be considered when new developments are planned. They form the population of the niche markets and as such are reliant upon suppliers who are prepared to operate in that uncertain territory.

Identifying these losers, in order to establish a safety net, requires some care. It would, for example, be quite wrong to imply that a group which might be described as "people with disabilities" is synonymous with Telecommunications users with special needs. Some disabled people, particularly those with mobility problems, will welcome the deregulated era of Telecommunications as tantamount to liberation. Access difficulties with telephone kiosks vanish when you can use a mobile from a wheelchair, and a home workstation connected to the information highways means that there is no need to battle with physical barriers in order to communicate with the world, or even to order the groceries. Even those with the most severe of speech and mobility difficulties, who could not hope to use a standard telephone or even a text terminal in real time, cease to be disabled when they join the company of data senders, such as Email: subscribers or Internet users. Those who are at real risk of disadvantage are the people with sensory impairments, who would expect to be able to communicate in real time with all other users of the voice Telephony networks, but who need some special equipment or network facilities in order to do so. Their position is not obviously different from that of the subscriber who is geographically remote from the nearest lines, but would use the network if a connection could be made. In the one case it is the provision of several miles of line or a radio link which is required, in the other it is a modified telephone terminal or a network that can recognise text protocols.

The free trade philosophy is the bedrock of the European Single Market and it has been, and no doubt will continue to be, vigorously defended both by the Commission and by those commercial operators who are keen to expand their markets within Europe. From time to time, Member States may attempt to protect some national interest by maintaining or introducing provisions which act as barriers to trade; the Commission will then intervene to remind them of their treaty obligations as members of the European Union. At the same time, the Commission acts to support the policies of the European Union of avoiding discrimination and maintaining equality among the citizens of Europe. There is a clash of doctrines here, with the free trade view - which is that the market will provide - set against the interventionist view - which is that it will not. For the consumers who become the losers in the free market, there is no doubt that some intervention is necessary. If the purpose of the Single Market is Europe's greater prosperity, then some protection or recompense is owed to the losers. That much is common ground and the only question - and the justification for setting out here what is already beyond contention - is that of how to achieve it.

SAFEGUARDS FOR DISABLED USERS

There are some who would argue that the economic circumstances of the supply of goods and services of any kind should take no account at all of the needs of disabled or disadvantaged people. The free market, on this model, would be fully consumer-driven and free of subsidy or any other kind of economic distortion. People who are deprived of consumer power, by reason of low income, disability or special needs, would be compensated by means of a social income from the State, to restore their spending power to something approximating to the national norm. In this way, trade would flourish and everyone would enjoy a wide range of consumer choice and the status of a valued customer. This argument accommodates the free trade and the interventionist doctrines so neatly that it has been put forward by supporters on both sides. The taxpayer has yet to give a view on it and mechanisms for putting it to practical test are as yet only embryonic. It might appeal to the European Commission as a way forward, allowing as it does of the separated development of trade and social policies, but for the fact that the Single Market is almost complete while the Social Programme has hardly commenced. In practice therefore, and for the foreseeable future, any protection to be offered to consumers who are put at a disadvantage as a result of the advent of the Single Market must be found by making adjustments to the mechanism of that market itself.

In the Telecommunications sector, the need for adjustment has been recognised and the principle has been set out in the form of Universal Service. Starting from the basis that the less profitable customers could be marginalised by service providers who were fighting powerful competition, Universal Service has been developed into a charter for the right of everyone to have basic telephone services at an affordable price. This stage was not reached without a great deal of argument and it still leaves the questions of what are basic services and what is meant by affordable. It has proved easier to define the basic levels of service for customers who might be uneconomic, perhaps because they live in remote areas or make very little use of the service, than it has for those who have special needs on account of disability or other reasons. It is no doubt for this reason that the European Directives bringing about liberalization and deregulation have very little to say about the practicalities of ensuring that discrimination against disabled users of the Telecommunications services is avoided.

The commitment of the European Commission to the avoidance of discrimination is well documented. Nevertheless, the impression may be gained from a study of the detailed proposals for legislation that this commitment is lacking in substance. Those Directives on Telecommunications which have already been enacted do no more than recognise the principle that particular provisions for disabled people may be required. The revisions to these Directives which are currently proposed include a requirement for appropriate provisions to be made without giving any indication of what they might be. There is a real risk that, because of the way in which the legislation has been assembled, the proposed revisions will fail to address a very crucial area of difficulty. The ability of many disabled people to use the telephone network depends more upon the availability of telephone instruments of appropriate performance than on the services provided by the network operator. Universal Service obligations written into legislation governing network services will not be binding upon the equipment supply sector, which has been liberalized quite separately. For very large numbers of people with disabilities, the right of access to the networks which Universal Service sets out to guarantee will mean very little if they cannot continue to obtain the necessary equipment. For them, the line socket may represent a newly-created barrier rather than a gateway to the freedom of the network.

The Telecommunications sector is one of great technological innovation, and liberalization is intended to provide freedom and encouragement for the rapid application of developing technology. Inevitably, as the rate at which information can be transmitted and presented increases and the stores of information available for retrieval expand massively, the technical sophistication of terminal equipment will also increase in order to cope. Technology-driven developments can very easily lead to the unintentional exclusion of people who have some impairments of hearing or vision, when the pressure to present data for rapid assimilation places greater demands upon both senses. COST 219 has frequently drawn attention to the very large numbers of people across Europe who have some form of disability. If these people are not to become the lower tier of a two-tier Information Society (a situation which the European Commission is pledged to avoid), the Telecommunications industry must accept that its technology must be shaped to fit the users, and that not all users will wish to communicate at the same fast pace.

However, it is only right that disabled people should expect Telecommunications experts to be expert in Telecommunications technology, not in disability. It must be the responsibility of disabled consumers, and of those who lobby on their behalf, to make their requirements clear. This poses the difficulty that the consumer can only speak from experience of familiar technology while the technologist is looking forward to the unfamiliar. The tendency then is to try to preserve the obsolescent, with the doubly unfortunate result that innovative opportunities are missed and a connection between disability and obsolescence is reinforced. It is more important than ever for technologists who have experience of disability across its wide range to act as intermediaries between the system planners and the customers. Programmes such as COST 219 have a particular part to play in assisting legislators and standards makers to ensure that practical safeguards for disabled consumers are introduced.

UNIVERSAL SERVICE - WHAT IS IT?

The definition of Universal Service, as contained in the proposed revision of the 1995 Open Network Provision Directive, is "a defined minimum set of services of specified quality which is available to all users independent of their geographical location and, in the light of specific national conditions, at an affordable price".

That proposed minimum set consists of the following elements:

  • the right to have, upon reasonable request, a connection to the fixed public telephone network at a fixed location and access to publicly available services,
  • the facility to make and receive, by means of that connection, national and international telephone calls supporting speech, Fax and/or data communication,
  • directory services including availability of printed and/or electronic directories and directory enquiry services,
  • provision of public payphones to met reasonable needs, ie in terms of numbers and geographical coverage,
  • specific (but so far unspecified) measures to ensure access and affordability of telephone services for disabled users and others with special needs.

All of the above facilities are to be "affordable" within national criteria, and service providers may be granted a degree of subsidy for providing items of service which would otherwise be regarded as commercially uneconomic. This subsidy will be derived from a levy on operators of public Telephony services, and thus in effect from their customers, under a Universal Service funding scheme.

Other facilities which might be regarded as part of a universal service are covered in other parts of the Directives. There is a requirement that all subscribers connected to the fixed network shall be able to access emergency services at no charge. Itemized billing, tone dialling and certain other technical facilities are required to be available and measures are included to address the problems of users who have difficulty in paying their bills (such as the operation of an "incoming calls only" facility while the debt is reduced).

The connection to the network and access to its services will be made through "network termination points", ie plug and socket connections enabling the user to connect any terminal equipment which complies with the Terminals Directive. The network operator no longer has responsibility for terminal equipment, other than public payphones or telephone equipment which has been rented from that operator. Therefore the practical extent of access to the network facilities available to the user will depend upon the nature of the equipment which has been obtained and connected (including any equipment which the user has continued to rent from the network operator). The concept of Universal Service applies only to the network and does not extend to equipment on the user's side of the socket.

The fixed public telephone network (ie those parts of the public switched Telecommunications network which support voice Telephony) is traditionally a medium for real-time speech communication. While it can also support transmission of facsimiles, and data via modems, it is essentially the conduit for two-way conversation. Even subscribers who have no speech, or no hearing, can use it in this way if they have suitable text terminals; they can also communicate with other subscribers through relay services. The concept of Universal Service as described above should therefore cover access to network services by these text terminal users. Operator assistance, emergency services and directory enquiries should be available to them on the same numbers, and on the same terms, as for other users. Network tone signals and announcements should be also be made compatible with text terminals. It is, additionally, desirable that the relay services should be supported as a Universal Service provision.

These and other specific requirements of disabled users need to be set out and agreed as a target to be aimed for by national regulators, using the powers and duties conferred upon them by the liberalization Directives. Some of these requirements will be of a technical nature, such as the ability of the network to respond to text signals, while others will be economic and will include facilities such as free use of directory enquiries services for visually-impaired or physically disabled subscribers who cannot make use of printed directories.

It is recognised that the concept of Universal Service will evolve, as the acceptance of what is meant by basic Telecommunications services develops with time. Regular review is therefore essential to ensure that the concept keeps pace with the growth of facilities for disabled users that technological advance should bring about. However, it is a matter of immediate and critical importance to ensure that some measures are taken to ensure the future availability of appropriate terminal equipment.

THE MARKET IN TERMINAL EQUIPMENT

Liberalization of the supply of telephone terminal equipment was achieved by means of a separate Directive effective from the end of 1992. This followed very closely the form of other Single Market Directives for goods, with the ultimate objective of the elimination of all national technical barriers to trade. Immediate achievement of this objective was not possible, however, because the differing technical requirements of national telephone systems made full compatibility across Europe impractical. Member States were and still are permitted to retain some national technical requirements, but only to the extent necessary to maintain the safety and proper functioning of the network.

Because the ability of disabled people to make use of the public telephone network is so often critically dependent upon their having appropriate terminal equipment, and because the availability of that equipment is now dependent on the willingness of the market-place to provide, there is concern that some equipment may either cease to be available or may become prohibitively expensive. Some means of amending this situation is now needed, within the parameters of Community law.

A possible approach, which is being discussed, would be to amend the Terminals Directive so that certain features of importance to disabled users could be added to the essential requirements as mandatory performance features. An alternative is to add such features to European equipment standards, so that although these are not normally mandatory there would be a presumption that manufacturers would follow the guidance. Neither of these proposals is entirely satisfactory.

The range of features which may be needed in some combination, but not all at the same time, is large. It will include amplification of incoming or outgoing speech, inductive coupling to hearing aids, socket provision for an additional earphone, visual indication of tones, loud or frequency-adjustable ringer, tactile identification of keys, colour contrast of keys, enlarged key-pads with finger-rests or barriers, enlarged numerals, handset grips and supports, hands-free operation, socket provision for external microphone/headset, text terminal (keyboard) facilities, non-slip feet, etc, etc. Some of these features might be regarded as desirable components of any well-designed product, while others would be useful only to a very specific customer group. In the structure of European Single Market Directives, any mandatory features would either have to apply to all telephones placed on the market in Europe, or to telephones intended by the manufacturer for specified purposes. The choice, if the mandatory approach is followed, is of the inclusion in all telephone terminals of such of these features as would be commercially acceptable, or of a more extended range in telephone terminals intended (by the manufacturer) for the use of disabled people. Neither would guarantee the availability of any features beyond those which the market would be most likely to offer without prompting.

Inclusion of particular features in standards gives no better guarantee of product availability but it does allow for setting performance characteristics that will ensure that the facility, if offered, is useful. Furthermore, standards are easier to review and update than legal Directives and they have been chosen by the European Union as the preferred method of adding technical detail to the broadly stated essential requirements set out in Single Market Directives. Some additional incentive is nevertheless needed to make certain that the facilities described are offered by some manufacturers, at least.

Member States and their agencies of government are inhibited from acting as purchasers in a way which would lead to distortion of the free market. No such inhibition applies to purchasers remote from government, such as the deregulated Telecommunications service providers. Since many of these have long engaged in the business of equipment supply, and are not prevented from continuing to do so, it might seem a reasonable use of the powers given to regulators to make this a specific requirement. The larger service providers could be placed under an obligation, as a condition of their operating licences, to ensure the availability of telephone terminal equipment for domestic subscribers - including a range of terminals suitable for users with disabilities. The extent of the range could be a matter of agreement between the service provider and the regulator and, as the powers of the regulator to do this derive from the Universal Service section of the proposed Directive, uneconomic provision would create eligibility for support from the fund and affordability would be assured.

While it is possible that intervention of this kind will prove unnecessary, because service providers may conclude - as British Telecom does now - that it suits the company's overall interests to offer such facilities, some confirmation of the regulator's ability and willingness to take such steps would provide considerable reassurance to disabled people and relieve their fears that equipment upon which they are heavily reliant will cease to be available.


Annex 1


LIBERALIZATION OF TeleCOMMUNICATIONS


A Review of European Directives


INTRODUCTION

Liberalization and deregulation of Europe's Telecommunications services are widely seen as essential to the support of a strong and innovative trading base. The Telecommunications sector, which is acknowledged to be critical to the overall competitiveness of the European economy, is itself generating as well as facing dramatic technological advances. Its success in the promotion of evolutionary change, and in coping with revolutionary challenges to its own businesses, is crucial if Europe is to maintain a leading position in a global trading market. The national monopolies which have traditionally provided Telecommunications services have all too often proved resistant to change and are in danger of being outflanked by more thrusting and dynamic operators, using technologies which can circumvent present licensing restrictions. In those European Member States which have already moved towards deregulation, the advantages of greater innovation and enhanced consumer power are beginning to emerge from a re-vitalised industry.

National Telecommunications monopolies are typically state-owned, or state-controlled, and are often linked with postal services in a Posts, telephones and Telegraphs type of organisation. Having evolved in this way since the early days of voice Telephony, each one presides over a technological infra-structure which has a national identity and utilises nationally adopted technical specifications and protocols. Although a very considerable degree of harmonization has taken place, in order to facilitate cross-frontier traffic and international subscriber dialling, the national networks still retain much of that individual legal, technical and cultural identity. As a result, it has proved difficult to reach the European objective of opening Telecommunications services to full competition as part of the Single Market. A target date of 1 January 1998 has been set for achievement of this objective, although a few Member States will be granted additional time to arrive at full compliance.

STEPS TOWARDS LIBERALIZATION

As first step Member States needed to separate their postal and Telecommunication services, prior to removal of the exclusive rights granted to the monopoly Telecommunications providers. These moves allowed competing organisations to enter the market subject to national licensing rules, which are to be further relaxed in the later stages to remove any limits on the number of licences that may be granted. Selling-off State-owned service providers is not a requirement of the liberalization programme, but most are likely to pass wholly or partly out of State ownership. Even in those countries, such as the United Kingdom, Sweden and Austria, which have proceeded furthest along the route of liberalization in advance of European Directives, additional dramatic changes are likely to be seen as full competition ensues.

The legal instruments adopted by the European Union to bring about full competition in this complex area are themselves complicated. The issue has been addressed by three inter-linked strategies. Firstly, the slightly easier question of liberalization of telephone equipment supply was dealt with in a set of Terminal Equipment Directives, consistent with the "New Approach" adopted for the introduction of the Single Market. The second and third parts were the broadly simultaneous introduction of two enabling Directives: to remove regulatory barriers to competition, and to open up the Telecommunications infrastructure to new operators.

Since the existence of national Telecommunications monopolies was itself arguably in breach of the common market provisions of the Treaty of Rome - to which all EU members have assented - some of the liberalization measures could legitimately be introduced by the Commission in its role as guardian of the Treaty. Others needed specific assent and were therefore presented as New Approach Directives, requiring majority acceptance by the EU members in Council. The pattern of Telecommunications liberalization is therefore a mixture of Commission Directives and Council (and Parliament) Directives. Most of these measures are subject to a review of their outcomes as the EU moves gradually towards its goal of full competition in the provision of Telecommunications services and equipment.

THE LIBERALIZATION DIRECTIVES

In 1990 two Directives crucial to the objective of liberalizing European Telecommunications services were adopted. The Full Competition Directive, 90/388/EEC (also known as the Services Directive), was tabled by the Commission under Article 90 of the Treaty of Rome, in effect to remind Member States of their obligations under that Treaty. It required them to cease to grant special or exclusive rights to national Telecommunications organisations, as this practice was viewed as an improper restriction of trade. However, certain services, including voice Telephony, were exempted from this Directive in recognition of the problems posed by deregulation and the additional time required to find solutions.

The parallel Directive, on Open Network Provision, was a Council Directive brought under Article 100a (ie the New Approach procedure using qualified majority voting). This created the conditions for allowing other operators to gain access to the national Telecommunications networks on fair and non-discriminatory terms and thereby to compete with the established organisations while sharing their infrastructure. This Directive was adopted in June 1990 and came into effect at the start of 1991.

Both Directives are essentially framework Directives, requiring further legislation to achieve the objective. A number of amending and extending Directives have been introduced, using both Article 90 and Article 100a procedures, as well as Council Decisions on harmonized technical regulations. Because these are all so closely inter-related in both scope and content, it is convenient to consider the overall effect at the present time, without specific reference to particular items of legislation.

The original Open Network Provision Directive anticipated the gradual introduction of measures which would allow open and efficient access to public Telecommunications networks. This process would cover, in stages, liberalization of the following facilities (but not necessarily in this order):

- leased lines

- packet-switched and circuit-switched data services

- Integrated Services Digital Network (ISDN)

- voice Telephony services

- Telex

- mobile services

- new forms of network access (eg data over voice on the subscriber loop)

- broadband network access.

Of these, voice Telephony services would prove the most resistant to deregulatory pressures and were therefore to be left until last in the moves to liberalization.

SUMMARISED OUTCOMES OF THE LIBERALIZATION DIRECTIVES

The liberalization process consequent upon the two Directives 90/387/EEC and 90/388/EEC has, or will have, achieved the following aims.

1. Setting-up of national regulatory bodies which are independent of the Telecommunications operators.

2. Abolition of special or exclusive rights granted by governments to their national Telecommunications organisations.

3. Liberalization of all Telecommunications services, including voice Telephony, and of the use of the infra-structure, by 1 January 1998 (with some deferments allowed for Spain, Ireland, Greece and Portugal).

4. Establishment of tariffs for services and for use of the infra-structure based upon fair and objective cost-oriented criteria, supported by transparent cost-accounting systems and subject to supervision by the national regulator.

5. Granting of the user's right of access to the public telephone network, by means of a termination point (ie line socket) to be provided upon request within a reasonable period, for the connection and use of any legally approved terminal equipment.

6. Definition of the limited circumstances in which access to the network may be interrupted or restricted.

7. Obligatory publication of information about the types of service available, their tariffs, conditions of contract, performance targets and quality indicators.

8. Obligatory availability of features such as tone dialling, direct dialling-in (for private branch exchanges), call diversion and calling line identification, with further facilities to be introduced subsequently. [Utilisation of these features may depend upon the users having appropriate terminal equipment].

9. Discretion to allow discounted tariffs and low usage schemes.

10. Itemised billing to be available upon request.

11. Regularly updated directories of subscribers to be made available, subject to data protection legislation and the right of any subscriber not to have an entry; coupled with an obligation on service providers to supply directory listings to other publishers on fair and reasonable terms.

12. Reasonable provision of public payphones to be ensured; emergency calls from these to be free of charge.

13. Pre-payment cards conforming to a European standard to be made available.

14. Authority for Regulators to introduce specific conditions to aid disabled users and others with special needs.

15. An obligation for Regulators to manage national numbering plans in a way that ensures fair competition, with transparent procedures for number allocation.

16. A requirement for Member States to authorise, and publish, measures related to non-payment of bills and disconnections.

The need for further amendments to these Directives was still being stated in December 1995 (in Directive 95/62/EC, which set out the detail of most of the objectives described above) and proposals for a further amending Directive followed in January 1996. By September 1996, the volume of suggested amendments had become so large that a proposal was introduced to repeal Directive 95/62/EC in favour of a new piece of legislation. This proposed new Directive would also contain a framework for Universal Service obligations which had been referred to, but not specified, in the previous measures. Also, a Directive on Interconnection of networks was being negotiated during 1995 and 1996, in order to address the situations where competition in service delivery would be desirable but would be resisted by the incumbent network operator (for example because it would not be commercially attractive in terms of additional traffic).

REVISION OF THE OPEN NETWORK PROVISION DIRECTIVE

The proposal to repeal Directive 95/62/EC and replace it with a new one, which would also set out the basis of Universal Service, is contained in a Commission paper [COM(96)419]. This addresses some of the problems which have arisen with the earlier Directives, notably the questions of the tariff re-balancing necessitated as national organisations plan the move away from geographically averaged tariffs towards the cost-oriented structures that are imposed by the Directives and are consistent with the advent of local competition. Users who have high provision costs and no choice of service provider could have faced steep price rises as the one-time monopoly provider phased out cross-subsidies; under the new proposals, the Regulator would be allowed to retain a price cap mechanism to control the pace of such rises. The concept of "affordability" is specifically mentioned as a key aspect of the definition of Universal Service. As with the present Open Network Provision Directive, the proposal will not apply to mobile telephone services.

The proposed revision would remove some provisions on network interconnection and on management of numbering allocation, as these will be covered in the Interconnection Directive now under negotiation. Dates will be set for the compulsory availability of the facilities of tone dialling and itemised billing; selective call barring is also added to this list of facilities. Provisions for use of international, European and national standards are to be included in a revision of the Framework Directive 90/387/EEC and would be dropped from a revised Open Network Provision Directive. The requirements relating to telephone pre-payment cards are dropped. Universal Service obligations are set out more explicitly.

UNIVERSAL SERVICE PROVISIONS

State monopoly service providers are under little pressure to identify "item-of service" costs very closely. Instead, it has become the practice to bundle up costs over wide sectors of business and to set charges in relation to these aggregated costs. In this way an element of cross-subsidy arises, in which the more profitable customers subsidise the others. As well as being convenient to the service provider to have common tariffs, regardless of the customer's geographical location or revenue contribution, this form of universal service is arguably to be desired for other reasons, both commercial and social. A close parallel is the way in which the postal services set standard rates by class of service and not by location of either originator or recipient. However, this arrangement breaks down as soon as competition is introduced and the more profitable customers are targetted by other service providers offering the choice of cheaper or better facilities. The need to protect vulnerable users of the Telecommunications services, that is those who would have little consumer power in a free market, has been acknowledged from the start in the European liberalization measures. The problem has been, and still is, how to protect them without strangling competition in its infancy. The concept of a defined Universal Service has been written into the Directives in order to address this, but the details are only beginning to appear now, in the proposed revision of the Open Network Provision Directive.

Universal Service has come to be defined as a minimum set of services of specified quality which is available to all users independent of their geographical location and, in the light of specific national conditions, at an affordable price. Member States will have an obligation to ensure that this defined minimum set is available throughout their territory and, in particular instances where the provision is considered to be commercially uneconomic, they will be able to set up funding schemes to share the costs. The proposed Directive will require national regulators to maintain the affordability of service to users in rural and other high cost areas, as well as to groups such as elderly and disabled people, and low volume users. To facilitate this it allows for the use, for an appropriate period of time, of price cap mechanisms which would otherwise be inconsistent with the move to cost-oriented tariff structures.

This proposal reflects the expectation that nationally-averaged levels of charges will be replaced by cost-linked tariffs, under which charges to profitable users would be forced down by competition while other users lose their cross-subsidy. Universal Service, as defined in the European Directives, does not extend to geographical uniformity of tariffs throughout each Member State. The minimum set of services has to be universally available, and affordable.

THE ELEMENTS OF UNIVERSAL SERVICE

In the proposed Directive, the elements of Universal Service are set out as the availability of the following facilities throughout each Member State, at a cost which is affordable in the context of the economic conditions in that State.

1. Access to the public telephone network at a fixed location, through a connection which allows the user to make national and international calls supporting speech, Fax: or data communication.

2. Directory enquiry services (covering all listed subscribers) for all users, including users of public payphones, and printed (and electronic) directories which are regularly updated.

3. The right to have an entry in public directories and to verify and if necessary correct that entry; also the right to request removal of that entry.

4. Reasonable provision, in terms of numbers and geographical coverage, of public payphones; emergency calls (999 or 112) from public payphones to be free of charge.

5. Specific measures (not specified in the proposed Directive) to ensure access to and affordability of telephone services for disabled users and others with special needs to be implemented by Member States.

Where provision of these services would not be commercially viable, the net cost of ensuring that this level of universal service provision is made may be shared through a Universal Service Fund. However, commercial viability can be defined in many ways. Service providers may be fully prepared to offer rebates to low volume users, for example, in preference to loading their tariffs in an attempt to recover the fixed costs of providing the connection. By so doing, such users are encouraged to stay as part of the network and may thus generate a traffic volume far in excess of that which they themselves originate. The proposed mechanism for sharing the net cost of serving unprofitable users would require the service provider to take into account the revenues generated as a result of the connection. This would seem to imply that the eligibility for funding of Universal Service will be determined case by case, rather than by user groups. The calculation of revenues generated by incoming as well as outgoing calls, in addition to fixed charges, could prove complex. While this would be primarily a matter to be settled between the service provider and the Regulator, there is room for concern that an unwieldy mechanism would deter potential service providers from offering provision to users whose freedom of choice is already minimal.

UNIVERSAL SERVICE FOR DISABLED PEOPLE

Access to telephone services means the provision of a connection, usually in the form of a line socket. The proposed Directive does make it clear that the connection must allow of the use of appropriate terminal equipment, and through it to be able to access operator assistance and directory enquiry services. Free of charge access to emergency services, through 112 and any other national emergency dialling code, would also be a mandatory provision. Although not stated, this could be read as requiring all operator assistance points, including 112/999 operators and directory enquiries operators, to be able to deal with deaf subscribers using text telephones. By extension, network tone signals and announcements might need to be made compatible with text telephones. These points remain to be confirmed in a Directive which is, as yet, merely a proposal.

However, any such obligations can apply only to the provision of network services and not to the provision of terminal equipment, which has become the responsibility of the user. Furthermore, the obligations referred to above apply only in the case of users provided with a connection to the network, which would exclude users of public payphones. In the United Kingdom, it is probable that the requirements of the Disability Discrimination Act will cause public payphone service providers to make reasonable provision of text terminals and other facilities for disabled users. Similar obligations will apply to the managers of premises to which the public have access and places of employment. However, it does not follow that this will constitute a sufficient market to ensure the commercial viability of all the types of telephone terminal which disabled people might wish to purchase for domestic use. Since their access to the telephone network is governed by the performance of their telephone terminal to the same or greater extent than by the performance of the network, a concept of Universal Service which excludes terminal equipment will prove hollow. It could be an appropriate specific measure for national Regulators to impose an obligation upon service providers to ensure the availability - and affordability under Universal Service provisions - of a range of terminal equipment that would enable disabled people to make use of the connection to which they have a legal right.

KEY POINTS FOR DISCUSSION WITH NEGOTIATORS

q Establish a target list of network service provisions which represent priority needs of disabled users.

q Ensure that mandated work in the European standardisation bodies (particularly ETSI) takes full account of the needs of disabled users and exploits opportunities for addressing them as technologies stabilise.

q Look to the progress of the Directive replacing 95/62/EC [proposal in COM(96)419] and ensure that ambiguities concerning access for disabled people are resolved and that targets for specific national measures are clarified.

q Confirm that a Universal Service obligation to sustain the availability and affordability of terminal equipment for disabled subscribers is consistent with both the letter and spirit of the proposed Directive.


Annex 2


TELEPHONE TERMINAL EQUIPMENT


A Review of European Liberalization Measures


INTRODUCTION

The United Kingdom was one of the first European Community Member States to liberalize the marketing of telephone terminal equipment and the resulting wide consumer choice of such equipment has become an accepted norm. Subsequently, the Commission proposed a series of Directives with the objective of bringing this sector into the competitive internal market, as the restrictions on the marketing of telephone equipment still imposed in many Member States were deemed to be in breach of the Community's founding treaty. Once adopted, these Directives are binding upon all Member States with the result that even those whose liberalization pre-dated the Directives must now operate within the common European framework. Therefore, any action necessary to protect the interests of consumers whose needs may not be adequately met in a competitive market must be ratified at a European rather than a national level. People with disabilities are particularly vulnerable in a highly competitive market driven by rapidly advancing technology; for them the telephone network is a vital communication link but their ability to use it may be critically dependent upon the availability of telephone terminals with special features, and at affordable prices. Their needs, along with those of other groups in the community, must be taken into account as the Telecommunications networks expand and develop, not out of charity but in recognition of their status as informed and discerning members of the customer base.

THE COMPETITIVE TELECOMMUNICATIONS MARKET

Telecommunications services have traditionally been provided by national monopolies, usually State-owned and often linked with postal services. In Europe, dismantling and de-regulation of these monopolies has progressed furthest in the United Kingdom, Finland and Sweden, but almost all Member States will be ready for full competition by the target date of 1 January 1998. Monopolistic Telecommunications services providers have been in a very strong position to influence the market in terminal equipment (such as telephones) either through monopoly control of equipment supply or by dictating the procedures for approving the equipment which may be connected to the networks. Such monopoly powers, especially when supported by Member State governments, are arguably at variance with the declared objectives of the Treaty of Rome but the nature of the Telecommunications infrastructure has tended to inhibit the introduction of free competition. Although full competition in service provision will not be possible in most European States until 1998, the introduction of liberalization and competition in terminal equipment supply presents fewer problems and it has already been achieved to a very large extent.

The result of this process is to separate Telecommunications service provision and terminal equipment supply, bringing about a number of consequences which may not all be immediately obvious:

1. The service provider is no longer responsible for the terminal equipment (unless it is a public payphone or it has been rented from that provider) and the service network is deemed to end at a termination point, ie the line socket.

2. Manufacturers of terminal equipment cease to be primarily contractors to the service providers, but are free to develop their products for normal commercial markets; product innovation is less constrained by the policies of the service providers.

3. Regulation of the terminal equipment sector will follow the pattern of the Single Market

for goods, diverging from the services market, and the regulatory regimes will differ significantly (even where the same regulatory body is responsible for both sectors).

4. Any concept of universal service which may be applied to Telecommunications services provision will not be binding upon terminal equipment manufacturers.

5. National governments and regulators are inhibited by other Directives relevant to the Single Market in goods from introducing measures which would constitute barriers to trade, other than for the purposes set out in the Terminal Equipment Directives (ie of ensuring the safety and integrity of the national networks).

In this competitive market, the availability of terminal equipment for purchase or rental is determined primarily by market forces, since no government or regulator can dictate what manufacturers shall produce. The production of terminal equipment with special features, for example to suit the needs of disabled users, may not always be commercially viable. Even so, Member States are not permitted to bring government influence to bear in a way that would distort the free market. Consequently, use of the mechanisms of government subsidy or public sector purchase to maintain availability of particular types of equipment is not a ready option.

THE TERMINAL EQUIPMENT DIRECTIVES

In the United Kingdom, telephone terminal equipment supply was liberalized in the early 1980s, so the effects of that measure have been largely independent of the European Directives which were introduced subsequently with the objective of extending the liberalization process across the whole of the European Union. There have been several such Directives, commencing with a 1986 measure on the mutual recognition of test and approval procedures which has since been repealed. The general approach was established in 1988 by the Commission Directive 88/301/EEC, which essentially reminded Member States of their treaty obligations deriving from the Treaty of Rome and established a timetable for implementing more specific measures. This Directive required Member States to dismantle any arrangements which gave special or exclusive rights to any undertaking (such as the national Telecommunications service provider) in respect of the marketing, connection or maintenance of terminal equipment. It gave to users the right to have a termination point - a line socket - installed upon request and within a reasonable period. It recognised that there had to be some control over the apparatus which users might connect to the networks but required that this control should be independent of suppliers of services or equipment, and it determined the dates by which Member States had to submit their type-approval proposals for scrutiny under established Community procedures.

The major piece of Community legislation followed in 1991, with the Council Directive 91/263/EEC. This was an example of the "New Approach Directive" procedure specifically introduced to facilitate the introduction of the Single Market. A more complete explanation is given in Annex 3. It follows the pattern of the Single Market Directives quite closely, but with an important exception. Normally, these Directives require compliance with a single set of Essential Requirements and, once conformity has been demonstrated anywhere within the Community, the product may be legally marketed everywhere in the Community. It has not yet been possible to reach this degree of deregulation in the case of telephone terminals however. The differing operational protocols historically adopted by the voice Telephony networks across Europe prevent full interchange of terminals and, as proper inter-working with the apparatus of the national network is legitimately seen as an essential requirement, Directive 91/263/EEC has to permit the continued use of mandatory national technical specifications which would in other circumstances be outlawed in the Single Market.

Member States are restricted as to what they may include in their national technical specifications in furtherance of the essential requirements. The defined scope of these is limited to matters of personal safety, network safety and integrity, electromagnetic interference, radio spectrum usage and inter-working with other apparatus. There will be a presumption of compliance with the personal safety requirements if the equipment conforms to appropriate European Standards, as is the case with most Single Market Directives. There is also scope for the Commission to introduce "common technical regulations", again based upon European Standards, in order to harmonize other aspects of the essential requirements. As these are to be used only in cases where a unique technical solution is demanded, they will be given mandatory force.

Directive 91/263/EEC became effective in November 1992 and from that date Member States were inhibited from adding further technical requirements and from restricting the open marketing of any terminal equipment which conformed to the Directive. They also acquired a duty to ensure that equipment which does not comply with the appropriate requirements is not placed on the market in their territories, or connected to their public networks.

THE INFORMATION SOCIETY

For the majority of users of the Telecommunications services, liberalization of terminal equipment has delivered the promised benefits of extensive freedom of choice coupled with competitive pricing. A wide range of added-value facilities has become available in telephones, answering devices, Fax: terminals and modems. Commercial users have been able to select from state-of-the-art technology in switchboards and internal networks. Concurrent major innovations in network facilities have matched technological developments in terminal equipment, to create a situation where each supply sector in turn puts pressure upon the other to offer further facilities. A new culture in the use of computers is emerging which is creating its own rules and practices, and changing very dramatically the way in which we utilise national and international transmission networks. Technological change is proceeding at such a fast rate that it is difficult to oppose the view that deregulation is no longer a choice but a necessity.

The old telephones and Telegraphs services are evolving into the Information Society with important consequences for all users. To quote the European Commission:

"To be able to communicate and interact whether by telephone, Fax, Email or electronic media is a crucial and decisive factor for every citizen and business. The policy of the European Commission towards the information society has from the beginning taken into account the need to avoid a "two-tier society", divided between those who have access to the new possibilities and are comfortable using them and those who are excluded from fully enjoying their benefits".

These new possibilities are very exciting for disabled people but there is a need to guard against the inadvertent creation of barriers which exclude them not only from the new opportunities but also from the traditional services.

DISABILITY AND EXCLUSION

Exclusion from full enjoyment of the benefits of the information society may arise from several causes: lack of technical access, inability to afford the costs, prevailing cultural barriers and the effects of disability are all potential factors. The Commission's proposals will directly address the issues of service penetration and affordability and will go some way to encourage a culture of wider acceptance of technology. Disability is a more difficult cause of exclusion, especially because it is not a single issue. There are, for example, many disabled people with very severe impairments of speech and movement, who could not expect to use any voice or text telephone but who can communicate very effectively through Email or the Internet. They are comfortable with electronic media because they are not handicapped in using these. But there are far greater numbers of people with impairments of hearing who would expect to be able to make full use of the voice Telephony services, given the availability of terminal equipment of appropriate specification. They would not view the voiceless services of Fax, Email or electronic media as acceptable alternatives, although they might wish to make use of them whenever appropriate and convenient. Even those people with very severe hearing impairments who can obtain little or no auditory information are nevertheless able to conduct real-time face-to-face conversations through other modalities, and have the reasonable expectation to perform the Telephony equivalent, using text terminals for example.

For all of these people, and for those with impaired vision, real-time conversations conducted across the voice Telephony networks and with access to all other subscribers to those networks will be the expected norm. Only those whose disabilities are so severe that face-to face real-time communication is exceptionally difficult are likely to adopt other Telecommunications services as the option of first choice. For the majority who expect to have access to the voice Telephony service, the availability of suitable terminal equipment is crucial and without it they will be excluded from full use of Telecommunications systems which increasingly rely upon acuity of both hearing and vision.

AVAILABILITY OF TERMINAL EQUIPMENT

According to the principles of the Single Market, manufacturers and importers of terminal equipment would be guided solely by market forces when determining which market sectors to enter and with which products. The design and specification of those products would be determined by them in response to their evaluation of the commercial prospects in a highly competitive arena, subject only to the basic level of technical regulation set out in the essential requirements of any relevant Directives.

For most products - the exception in the case of telephone terminals has been noted - compliance with those essential requirements needs to be demonstrated only once in order to gain access to the entire European Union market-place. Although Member States can impose specific national technical requirements in the case of telephone terminals, the scope of these national regulations is restricted to protecting the proper functioning of the national network. There is however nothing to prevent organisations which are distant from government from laying down additional specifications for telephone terminal equipment which they, as quantity purchasers, wish to obtain. British Telecom, for example, has maintained the supply of telephones with special features for disabled users by bulk-purchasing these and offering them for sale or rental through its retail shops.

Largely because of this service from British Telecom, availability in the UK of telephones having necessary features for disabled users has continued after liberalization. Nevertheless, some adverse effects of the 1991 Directive have been observed. A particular instance affects blind people who have trained for employment as switchboard operators, since suppliers of Private Branch Exchange equipment can no longer be obliged by national regulations to make provision for use by people without sight.

NEXT STEPS

Because the availability of suitable terminal equipment is crucial to the utilisation of the Telephony network by disabled people, any process which might diminish that availability is a cause of the utmost concern. Terminal equipment which is provided in public places, or for use in employment, will be subject in some measure to the access requirements of the Disability Discrimination Act in the UK, for the managers of such premises will have an obligation to avoid discrimination against disabled people. This ought to create a viable market for terminal equipment having the more commonly needed facilities, and it should resolve the problem faced by the blind switchboard operators, but it will not primarily address the needs of the domestic telephone user. The continuing involvement of major service providers in the retail equipment supply business seems to offer the best form of safeguard, backed up by national regulators using powers conferred upon them by other Telecommunications Directives.

An alternative would be to introduce some form of regulation in a revised Terminals Directive. Some revision of that Directive will be necessary to achieve the desirable extension of harmonization across Europe and the removal of non-harmonized national requirements. However, it is difficult to see what could usefully be added to a Single Market Directive to ensure the availability of performance features which are not universally required and are at risk of technological obsolescence. The structure and permanence of a major Directive does not readily allow of the inclusion of such requirements except in the form of general statements.

Broad statements of the need to consider the requirements of disabled users are helpful in as much as they provide a link to more specific indications contained in standards or guidance notes, but they have to recognise that some equipment will legitimately be designed and marketed for specialised purposes which exclude people with certain disabilities. Even in the general sector of terminals intended for domestic use, mandatory inclusion of specific technical requirements could prove to be counter-productive in the longer term, as the time-scales for framing and revising such legislation tend to be out of synchronism with the pace of technological development. More crucially, such requirements as might be accepted as mandatory would inevitably be those of benefit to large numbers of disabled people and also capable of implementation at modest additional cost. No-one could seriously contemplate, for example, the mandatory inclusion of text sending and receiving facilities in every domestic telephone instrument. Therefore the facilities which might be acceptable as mandatory provisions would be the very ones that are most likely to present a commercially viable level of demand. If legislators were to address the needs of disabled users in this superficial way, the plight of those with less common needs would be serious indeed.

SUMMARY

The liberalization of telephone terminal equipment supply has brought significant advantage to industry and to the majority of the people of Europe, through unfettered technological advance and through the freedom of choice and competitive prices brought about by a free market. For many users with disabilities, for whom the availability of telephone terminals with specific features is crucial to their ability to use the telephone networks, the advantages are less obvious. Choice of equipment and competitive pricing are linked to consumer power, such that consumers whose needs are out of the ordinary are not only denied these advantages but they may even find that the equipment upon which they are critically dependent ceases to be available. The Treaty obligations of the European Member States to abide by the principles of the Single Market hinder national measures to correct this imbalance, so the provisions which are necessary to prevent these disabled users from experiencing further disadvantage must be agreed - in principle, if not necessarily in detail - at a European level. In so doing, care has to be exercised that the needs of one sector of the disability spectrum are not addressed at the expense of others.

KEY POINTS FOR DISCUSSION WITH NEGOTIATORS

q Ensure that there is awareness of the range of facilities that are required in domestic telephone terminals to satisfy the needs of people with various forms of disability.

q Develop a means of maintaining availability of appropriate types of terminal equipment (at acceptable prices) to suit the widest possible spectrum of disability.

q Provide for the evolution of any regulatory controls to take account of technological developments which create new opportunities and render other solutions obsolete.


Annex 3


THE EUROPEAN SINGLE MARKET

The Single Market has occupied a central place in European Community policies from the original signing of the Treaty of Rome by the six founder nations in 1957. Among the most fundamental objectives set out in that Treaty were the "four freedoms", defined as freedom for unhindered movement within the European Community for people, goods, services and money. Unhindered movement, in this context, does not mean a complete removal of controls but rather a harmonization of regulatory processes so that the controls that are applied in any one European country are no less, and no more, than in any other. Linked to this is a system of mutual recognition whereby compliance with the regulatory requirements demonstrated in one Member State is valid in all the others. The intended outcome is that a European manufacturer of a product, for example, who has shown in his own country that the product complies with Community law, may market it in all 15 Member States without further hindrance. Equally, an importer of a product made outside Europe has only to show once that it conforms in order to offer it for sale across Europe.

This desired outcome is close to achievement in the case of the movement of goods, but it has taken much time and negotiation. Each Member State, including all of those who joined the Community after 1957, has had to agree to withdraw or amend its own regulatory controls in favour of harmonized sets defined in European Directives. In so doing, inevitably some States have been required to accept relaxations from the degree of control they had formerly applied while others have had to adopt more rigorous regulation. In order to speed progress towards the objective, the Member States agreed upon a New Approach to be adopted in Single Market Directives. The crucial feature of the New Approach was the adoption of majority voting, so that no one State could exercise a veto. This proposal was ratified in 1987.

The overall impact of the Single Market Directives is intended to be deregulatory and this is underlined in another feature of the New Approach. The content of these Directives is deliberately confined to matters of essential importance, with technical detail being left to the European standardization bodies to consider. Such technical matters as are incorporated in the Directives are primarily those related to safety, and even those are stated in terms of general principles. This practice reduces the risk that the Directives will inhibit development and it also minimises the need to re-negotiate a Directive in order to up-date its technical content, both of which are important considerations in a deregulatory environment. A practice of mandating standards has been adopted, whereby the European Commission can mandate the preparation of standards on particular topics. Standards have no automatic mandatory force, but because compliance with a listed harmonized standard is acceptable as evidence of conformity with the relevant parts of a Directive, they will provide the normal route for demonstrating conformity.

It usually remains as an option for a manufacturer or importer to show that, despite non-compliance with a harmonized standard, the product nevertheless conforms with the principles of the essential requirements. However, in the particular case of Telecommunications Terminals, the Commission may adopt a harmonized standard and give it mandatory force where it is evident that the standard describes a unique set of conditions that must be obtained for the proper inter-working of the equipment with the network. This mechanism for enforcing a standard, or parts of a standard, is known as a Common Technical Regulation.


Annex 4


OPENING UP THE TELECOMMUNICATIONS MARKET


Proposal for an EC Directive on Interconnection in Telecommunications

COM(95)379 July 1995


INTRODUCTION

This is a European Commission proposal for an Article 100A Directive, as typically used to establish the "level playing field" essential for the development of the Single Market. It seeks to open up competition in Telecommunications service provision and "to enable new market entrants to access existing business and residential customers". It follows the normal format of a "New Approach" Directive in requiring Member States to dismantle national barriers to trade and to accept instead a pan-European regulatory framework based upon harmonized technical criteria. The details of the Directive have yet to be negotiated by the European Member States, but it is usual in New Approach Directives for an element of compromise to be sought between potentially conflicting national viewpoints. The teams of officials who conduct the negotiations will have the objective of reaching a "common position" which their Ministers could support in the Council. In order to achieve this, most Member States will have to concede some points which they would have wished to see carried into the Directive but which did not command majority support. No Member State has a right of veto in an Article 100A Directive.

INTERCONNECTION OF NETWORKS

This proposal relies upon commercially negotiated agreements between operators to achieve the further interconnection of networks, with a limited regulatory role for Member States through their national authorities. Existing operators with significant market power would be required to negotiate agreements upon reasonable request from potential competitors and the ability of Member States to limit the number of network operators in their territory would be curtailed. The concept of rights matched with obligations is introduced, so that a new entrant who negotiates extensive running powers over an existing network would also acquire the obligation to provide a high level of service. This proposal is seen by the Commission as a key part of legislative reform of the Telecommunications sector and it would be an essential step towards full competition in telecommunication service provision and infrastructure, which is envisaged by January 1998.

The proposal recognises that access to most telecommunications customers is controlled by the existing service providers through their management of the network infrastructures. Replication of the infrastructure (especially for wired systems) would involve start-up costs of a magnitude sufficient to deter competition and would bring with it environmentally disruptive construction work. Significantly, a medium-term objective of "number portability" is described, in which end-users could contract with a different service operator while retaining the same subscriber number. A regulatory environment is proposed which would ensure open access to networks by bona fide operators, such that Telecommunications companies would have a legal right to obtain interconnection with the networks of others. If these proposals come into effect, it seems inevitable that the role of the regulator in the UK will shift considerably, with the supervision of network access agreements becoming a major activity.

TECHNICAL STANDARDS

The interconnection arrangements, including the technical arrangements, would be determined by these commercially negotiated agreements. Network integrity and security would not be seen as valid arguments for denying access to another operator (although that operator would have to demonstrate that his activities would not degrade the network). The regulatory authorities would be as much - probably more - concerned with ensuring that fair and reasonable agreements were reached as with setting system technical standards; national technical requirements and specifications would be displaced in the hierarchy of:

1. European standards - ETSI, CEN, CENELEC

2. International standards - ITU, ISO, IEC

3. International industry norms

4. National standards/specifications.

(Note: this hierarchy is a familiar one in the EC Single Market, except for (3). This reference to industry norms has been dropped in later drafts).

Proposals to start work on new national standards or specifications would be subject to the procedures of the 83/189/EC Directive, which has the objective of preventing Member States proceeding unilaterally with technical specifications which could become barriers to trade. Arguably this is already the case for standards which refer to products as distinct from services, but it will gain greater significance when national telecommunications networks are subject to full competition.

STANDARDS OF SERVICE

Existing network operators are commonly subject to licensing obligations to provide loss-making services such as rural lines, emergency services, operator assistance, public payphones, directory enquiries and facilities for disabled customers. The proposals recognise that such obligations must be retained under an open competition regime, otherwise the unprofitable services might not survive. However, it does not follow that all service providers will have to offer the full range of these unprofitable services; some providers will cater for niche markets only. Provision is made in the proposals for the cost of certain services - which will be specified as "universal service" - to be shared if they appear to create an inequitable burden for the network operators who do provide them. It is presumably open to the existing provider to seek to include some or all of these services in the negotiated agreements with others but, apart from ensuring that universal service is available from one or more providers, it does not appear to be an area where the regulator can intervene. The mechanism of cost-sharing calls for close attention, as it has a direct bearing upon the standards of service available to customers whom the service provider might regard as "unprofitable".

UNIVERSAL SERVICE OBLIGATIONS

The regulator will have to ensure that service providers offer, or contribute to the cost of, that range of services defined as "universal service". It is not clear whether universal service will be defined nationally - in each Member State - or uniquely throughout the EU. It must be noted that the service provider's responsibilities stop at the line socket; there is no obligation to supply terminal equipment (except as public payphones) as part of universal service. Oftel is currently engaged in determining what should constitute universal service in the UK.

It is probable that those service providers who do not - for whatever reason - offer the full range of universal service will be required to pay into a fund to support the activities of those who do. This is the principle of "pay or play". On present very approximate costings, the fund would require contributions equivalent to 0.5% - 0.8% of all revenues, which would then be applied to reimburse the "players". Clearly, the calls upon the fund will increase if the extent of defined universal service is enlarged, bringing a risk that modest but vital special services may be marginalised. For the UK, Oftel has proposed a broad definition of universal service, with the option to create more specific definitions (that may be varied from time to time) for different customer groups. It will be a matter of concern, as the details of this Directive are negotiated, to see how the concept of universal service is to be managed.

THE NEXT STEPS

The Interconnection Directive is due to come into force by the end of 1997. It now has to be negotiated by Member States and the Commission, in order to turn the draft proposals into a workable framework. Organisations of disabled people will want to ensure that the UK stance in negotiations adequately reflects their needs and that accepted and valuable areas of service which they now enjoy will not be put at risk because they are not widely known outside the UK. They may also wish to emphasise priorities for consideration as universal service and to prevent the extension of that concept to include services which could be funded by their consumers (eg public sector authorities) at an economic level.

In a fully competitive environment, network and service operators will risk commercial vulnerability. Customers reliant upon special services may be faced with a restricted choice (because there will be fewer "players" than "payers") and that choice could decline further if operators see "paying" as a commercially more attractive option. It would seem desirable to reserve some powers for the national regulators to determine certain minimum levels of service (which might include some technical criteria) that must be seen to be embraced in the commercially negotiated agreements for interconnection.

KEY POINTS FOR DISCUSSION WITH NEGOTIATORS

q Maintain sufficient powers for national regulators to set minimum levels of service (including where necessary the imposition of technical standards) from operators gaining access to networks, thereby maintaining some choice for end-users dependent upon uneconomic services (ie restrict "pay or play" option to cases where universal service obligations would be unreasonable).

q Press for the adoption of clearly defined and restricted categories of universal service, so that the contributory fund is applied only to services that are vital and genuinely uneconomic. Query why the revenues derived from Telecommunications users should be applied to subsidise education and other public services. Ensure that special services for disabled people figure as a prominent category in universal service obligations.

q Obtain assurances that UK services that are important to disabled users will not be omitted from universal service obligations solely because they are not commonly provided by other telecommunications operators in the EU.

q Consider whether the leasing of special terminal equipment at affordable rentals for use by disabled people could be made part of universal service.

q Maintain regular contact with the UK negotiators and with officials in the EC, to ensure that new proposals arising in the course of negotiating the Directive are made known so that their potential impact upon disabled users can be considered.

q Make available a "shopping list" of special telecommunications services known (or expected) to be of value to disabled persons. Distinguish between services that have to be supplied as part of the network and those that rely solely upon the availability of appropriate terminal equipment. [Look for other ways, including disability discrimination legislation, of ensuring that appropriate terminals are provided in public places]. Prioritise special network services for immediate or eventual inclusion within the universal service obligation.


[Note. This commentary was prepared in February 1996, since which time the proposals in respect of universal service, in particular, have been refined and clarified. The Interconnection Directive is still being negotiated]

 



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