Volume 10 Issue 2

Telecommunications Law and the Policy of Universal Services Obligation in Europe, Australia and the United States

JOHN BAHRIJ*

Telecommunications law and policy in Australia, the United States and the European Union amongst other jurisdictions has evolved from a position where the provision of telecommunications services has been monopolised by government owned carriers or a few companies given sanctioned control of the market to a situation where there is active competition in a more deregulated environment. This paper will analyse the development of this trend particularly in regard to ‘liberalisation’ and the concept of ‘universal service obligations’ (USO) , a concept which is often at odds with the promotion of competition in general. It is interesting to compare the various approaches being taken by the jurisdictions in question with regard to the definition and regulation of the USO. It would appear that the same catalysts that have created the need to foster competition in a global market place, such as convergence , are driving the need to advance the USO definition to account for technological developments such the Internet and digital data transmission. This is even more relevant with the recognition being given to the concept that we are now an ‘information society’ that values information as a commercial commodity that has both economic value and provides the ability for individuals to better their quality of life as telecommunications services are becoming the backbone for the delivery of the information society developments.

Up until fairly recently telecommunications law had followed the general characteristics of law in industrialised countries where specific areas are regulated by a wide variety of legislation and rules. In telecommunications the joint aims have been to regulate players and “provide the degree of coordination necessary for the achievement of national service, in which each subscriber could communicate with each other ”.

This had often resulted in state run monopolies. For a number of reasons this has changed. As Flynn states:

The improvement of the telecommunications infrastructure and of the telecommunications services is seen as a pre-condition for economic growth. At the same time, the numbers and identities of the firms which constitute the telecommunications system and the structure of industry regulation have been changing rapidly. There is a growing recognition worldwide that telecommunications cannot be viewed as synonymous with a government run monopoly post, telegraph and telephone service.

Further, whilst telecommunications law traditionally dealt with regulation of the carriage of messages and areas such as broadcasting law dealt with control of content the effects of convergence are blurring the distinctions. Flynn also points out that telecommunications is growing in importance because of the increased economic value now placed on information.

information is a ‘techno-economic key factor’ an input into a wide range of products and systems which permits a quantum jump in potential productivity in almost all of the economy and creates a wide range of new investment and profit opportunities. Telecommunications has therefore been widely identified by many commentators as one of the industries of the future, as the backbone of the information society.

The growth of the ‘information society’ is certainly having an impact on telecommunications regulation. Member states of the European Union consider it so economically important that they have agreed to ‘harmonise’ their national laws to liberalise their telecommunication markets. In the United States and Australia new telecommunications regimes have been implemented that have economic concerns and growth of the telecommunications services industry as key policies.

‘Liberalisation” involves the removal of statutory monopoly rights, and the removal of special and exclusive rights, to allow in third parties and create a competitive sector. Weir D The International Experience. 1-21. In Telecommunications Post 1997. Melbourne BLEC 1995 at page 9

A good general explanation of Universal Service is

“a public policy to spread telecommunications to as many members of society as possible, and to make available, directly or indirectly, the funds necessary to support the policy.”

Noam, E Will Universal Service and Common carrier Survive the Telecommunications Act of 1996? (1997) 97 Columbia Law Review 955-975 at page 957

Convergence is the combination of both new and existing media eg broadcasting, cable, fiber optics, satellite into one integrated system for the delivery of video, voice and data. Botein, M Cable/Telco Mergers and Acquisitions: Antitrust vs Telecommunications Act Approaches. In Practising Law Institute. New York, PLI 1996 at page 481

Another definition introduces the PC

“At the transport level, convergence means data networks also carrying voice, video and images. At the user interface level, it means PC’s becoming telephones and mobile phones becoming devices that can browse the web and send email. At the infrastructure level, it means PBX’s and other phone switches being replaced or augmented by servers. Thyfault, M Resurgence of convergence. Information Week April 13th 1998 at page 1 of 2 (available on Lexis: ABI/Inform)

Crago defines the internet as “ a global amalgamation of computer networks connected by a common communications protocol.” Crago, P Fundamental Rights on the Infobahn: Regulating the Delivery of Internet Related Services within the European Union (1997) 20 Hastings International and Comparative Law Review pages 467-503 at 474

Scott, C The Proceduralization of Telecommunications Law: Adapting to Convergence. (1997) 3 The Journal of Information Law and Technology 1-16 at 2 (available at http://elj.warwick.ac.uk/jilt/wip/97_3scot

Flynn, L European Union Regulation of the Telecommunications Industry. (1996) 10(1) International Review of Law Computers and Technology 9-26 at 9

In Europe the telecom services markets of member states of the European Union are worth ECU 141,000 million and growing at 8.2% annually. Third Report on the Implementation of the EU Telecommunications Regulatory Package.( IP/98/165) Brussels, European Union 1998 at page 1

In Australia the telecom services industry is estimated to have grown by 7.3% in 1994-1995 alone. Xavier, P Monitoring telecommunications deregulation through international benchmarking. (1996) 20(8) Telecommunications Policy 585-606 at 586

The Telstra (Transition to Full Private Ownership) Bill 1998 (preamble page 2) also states in no uncertain terms the economic reasons behind privatisation

“ In today’s highly competitive, global communications environment, it does not make commercial sense, nor is it good public policy, for telecommunications companies to be owned by government.”

Hurley, A Convergence in Communication and the Law. In Wedemeyer, D (ed) Pacific Telecommunications Council Seventeenth Annual Conference. Proceedings. Hawaii, Pacific Telecommunications Council 1995 pages 366-369 at 367

Loc cit Flynn at page 10

Hammond believes a better metaphor should be ‘national nervous system’ as telecommunications is now necessary for basic functions within society. Hammond, A Universal Service in the Digital Age (1997) 50 Federal Communications Law Journal 179-214 at 184

Whilst as stated the telecommunications sector itself represents ECU 141,000 million according to Ungerer the information sector overall represents ECU 450 billion. Some estimates, he states, forecast that worldwide this will grow to US $ 3 trillion by the end of the decade.

Ungerer, H EC Competition Law in the Telecommunications, Media and Information Technology Sectors (1996) 19 Fordham International Law Journal 1111-1176 at 1112

A recent Australian article states this is now $1.8 trillion already. Butler, G Telecommunications Fuels $1.8tr Juggernaut Australian Financial Review August 7th 1998 at page 53

The European Commission declared it’s progress in this regard. “ The Community telecommunications regulatory framework, which has as its objective the creation of a liberalised and harmonised European market on the basis of Articles 90 and 100a of the European Treaty, is now nearing completion.”. European Commission. Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the Implementation of the Telecommunications Regulatory Package. (PBR/ALC/HLH/pbr D(97) draft\ratrep3) 22nd May 1997 at page 1

This development has been further enhanced by the World Trade Organisation’s Agreement on Basic Telecommunication Services that took effect on the 5th February 1998. In that agreement to which Australia has signed international carriers can compete in national markets.