The role of mobile in delivering universal

service

European Ministerial Conference on the Information Society

Ljubjana 4 June 2002

Dan Lloyd

Vodafone

Global fixed and mobile penetrationSource: ITU

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Fixed

Mobile

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

Vodafone’s international experience

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 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 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 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

Services delivered

commercially

Digital divide /

potential USO

Influence of mobile

Theoretical 100%

penetration

No fixed7%

Fixed93%

Unphoned15%

Mobile and satisfied

85%

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 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 delivering Remaining challenges

Disabled customershard of hearing - hearing aid compatible neck

loop, vibrating alert, SMS poor sight - directory connect services, voice-

activated dialling

Under-developed areasCommunity Mobile as payphone substituteBut must retain control over pricing

So question the utility of mobile universal service

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 design

Scope of services

Recovery mechanism

Tech. neutrality

Pay or play

Industry fund

Cost/benefit

Burdensome

Internet? Consider removing adverse

regulationEligibility test

General taxation

Who receives?

Universal

service

fund

Transparent, efficient costing

Including intangible benefits

Transparency on customer bills

Universal service fund design

Regular independent audit of fund

Conclusions 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