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The role of mobile in delivering universal service. Dan Lloyd Vodafone. European Ministerial Conference on the Information Society Ljubjana 4 June 2002. Key themes. Importance of telecoms and mobile

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The role of mobile in delivering universal service

The role of mobile in delivering universal service

Dan Lloyd


European Ministerial Conference on the Information Society

Ljubjana 4 June 2002

Key themes
Key themes

  • Importance of telecoms and mobile

  • Importance of investment, competition & regulatory environment - more important than universal service

  • Universal service mechanisms can’t make, but can break, a competitive telecoms market

  • Focus on the specific problems involved in the digital divide, not specific traditional solution - universal service

  • Mobile is already addressing the digital divide commercially - question the need for mobile inclusion in universal service schemes

Importance of telecoms and mobile
Importance of telecoms and mobile

  • Large and increasing contribution to GDP

  • Enabler of commerce, e-commerce services

  • Key contributor to innovation and productivity growth in services

  • Increasingly important to international competitiveness

  • Approach to universal service, and regulation generally can have a substantial impact

  • Mobile increasingly vital to telecoms sector - global mobile penetration: 1991 - 1%; 2001 - 18.75%; 2008 - 36% (est)

Digital divide
Digital divide

  • But access to telecoms services not spread evenly within or between countries

  • Certain services considered so basic to social and economic inclusion - should be universally available

  • Generally driven by desire to foster social and economic inclusion, not economic efficiency

  • (But network externalities should also be taken into account in regulatory decision making)

  • Sometimes leads to regulation of universal service obligation (USO)

Digital divide1
Digital divide

  • Designed to address 3 basic categories of exclusion:

    • Poor - customers too poor to buy

    • Uneconomic - to expensive to serve (often geography)

    • Special needs - disabled, deaf, poor dexterity

  • Excluded from what?

    • Telephony - fixed, pay phone, directory, emergency

    • QOS

    • Mobile?

    • Internet?

    • Broadband?

Let the market work where it can
Let the market work where it can

  • Key to maximising access to communications services is not USO

  • Stable environment for investment - regulatory accountability, transparency, independence and predictability

  • Removal of artificial barriers to investment and to providing universal services

  • Effective competition law regime

  • Which enables a competitive telecommunications market

Mobile is already delivering
Mobile is already delivering

Influence of mobile

Digital divide /

potential USO

Services delivered commercially

Theoretical 100% penetration

Mobile is already delivering uk
Mobile is already delivering - UK

  • Mobile clearly minimising the telephony digital divide without regulation. In the UK:

  • Leaving less than 1% unphoned - probably practical limit of universal service

Mobile is already delivering1
Mobile is already delivering

  • Mobile advantages:

    • pre-pay

    • often low/no connection and/or monthly access charges

    • often network coverage beyond fixed line

    • often averaged connection and call charges even for those in uneconomic areas

    • often geographically insensitive

    • benefits of price competition in the most competitive areas are received by all even where only one network

    • social inclusion - voting

  • Mobile addresses poor and uneconomic commercially

Mobile is already delivering2
Mobile is already delivering

  • Remaining challenges

    • Disabled customers

      • hard of hearing - hearing aid compatible neck loop, vibrating alert, SMS

      • poor sight - directory connect services, voice-activated dialling

    • Under-developed areas

      • Community Mobile as payphone substitute

      • But must retain control over pricing

  • So question the utility of mobile universal service

Universal service scheme design
Universal service scheme design

  • Guiding principles of EU legislation to be supported:

    • Least market distortion

    • Dynamic approach

    • Incentives for efficiency

    • Transparency

    • Non-discrimination

    • Competitive neutrality

    • Not more burdensome than necessary

Universal service scheme design1
Universal service scheme design

Consider removing adverse regulation

Scope of services


Eligibility test

Who receives?

General taxation

Recovery mechanism


Industry fund


Tech. neutrality

Pay or play

Universal service fund design
Universal service fund design

Transparent, efficient costing




Including intangible benefits

Transparency on customer bills

Regular independent audit of fund


  • Focus on general environment, not universal service

  • Focus on the problem (access for poor, uneconomic and special needs) not a particular solution

  • Examine carefully whether problem being resolved by commercial mobile services

  • Examine critically whether regulation will produce better results than market forces

  • Design of any regulated universal service scheme critical