The changes which technological developments and market liberalisation have wrought on telecoms services are truly staggering. The quality and choice of products and services is constantly improving. So much so that it is sometimes difficult to remember what life was like before these changes.
But as these new opportunities become available to more and more of us, we have a duty to ensure that no one is left behind. We must ensure that no one is needlessly excluded from the social and economic opportunities which modern telecoms services provide. Equally, we must ensure that the value of the telecoms network is enhanced for everyone who uses it by ensuring that it covers the whole country. That is what `Universal Service' is all about.
Three previous rounds of consultation have developed and refined our ideas for the provision of universal service from 1997 onwards. We have looked at how we might increase the number of people connected to the telephone network and at the sorts of services which should be available to them all. We have examined how to ensure that everyone is within convenient reach of a public call box. We have discussed the costs (and the benefits) for telecoms operators in providing these services and have looked at ways of ensuring that any net costs are shared fairly amongst them. We have also looked at the services which ought to be available to specific groups of users such as disabled people.
Oftel has been very encouraged by the level of universal service provided already, through judicious regulation and through competition. The proposals in this document aim to make it even better.
I will be making formal proposals later this year to translate the ideas into actions, but it is not too late to make helpful suggestions. We think that the proposals in this document will help ensure that everyone who wants to can get access to a telephone and to the services and opportunities that go with it. We look forward to hearing your views.
Looking further forward, I am committed to a review of the universal service arrangements in 1999. As with these proposals, I would wish to confirm that the relevant Secretaries of State were content with any revision of the universal services arrangements that might emerge from that review.
1 This document is about universal service for telecommunications - the level of telephone service which everyone in the UK should be able to receive. Telephone service is increasingly important to social and business life and a basic minimum level of service at an affordable price should be available to all on reasonable request. Equally, the more universal a telecoms service network is, the more valuable it is to everyone using it.
2 Oftel considers that UK consumers currently get a good level of service through a combination of judicious regulation and an increasingly competitive market. However, opportunities still remain to make the situation even better, and this document makes a number of proposals to do that.
3 Oftel is now beginning its fourth stage of consultation on what this level should be, how it should be delivered, whether there are any additional costs associated with delivering universal service and how universal service policy should be monitored and reviewed. Oftel welcomes responses by 25 April 1997 and particularly to the questions which are listed at the end of this Summary. This will provide important input to the final decisions. Oftel plans to issue a policy statement by July with associated amendments to BT's licence for statutory consultation.
4 Oftel considers that the basic level of service to be universally available to all in the UK on reasonable request for the period to 2001 should encompass:
5 Consumers should also be able to access 999/112 services free, receive itemised bills, be able to choose selective call barring, and have access to operator assistance and directory information. Oftel also considers it important that consumers should have the opportunity to repay debt while on an outgoing calls barred service, as an alternative to disconnection.
6 Oftel believes that, while universal service provision in the UK is generally of a very high standard, a small number of concrete measures should be taken in order to improve the situation further:
7 Around 93% of households have a home phone, leaving about 1.6 million households without a fixed line phone. An estimated 0.25m of these households have access to a mobile phone. Some two thirds of those without access to a phone would like a home phone but are deterred from having one, mainly because of the cost. Thus, a potential 0.9 million households would like to get connected to the telephone network.
8 Bringing these people into the network gives them greater social and economic opportunities and, at the same time, adds to the value of the telephone network for everyone else by increasing the number of people who can be contacted by telephone.
9 Oftel proposes to amend BT's licence so as to require them to offer a `Lifeline' service package. This would be low cost and would enable people who cannot presently afford the standard service to get incoming calls and make emergency outgoing calls. Existing customers who are worried by the size of their phone bills could also make use of `Lifeline'. Oftel proposes to amend BT's licence later in the year in order to make `Lifeline' available to everybody.
10 Oftel also proposes that BT should replace its existing `Low User Scheme' with an alternative service package which would give customers greater control over their phone costs. Two options are suggested - a fixed fee rental/call allowance package or a pay as you go type service. There are technical difficulties associated with introducing services of this kind and Oftel expects BT to devote sufficient resources to the problem to find a solution within the next two years.
11 Oftel continues to be concerned about the high level of disconnections from the network of customers who are having difficulties paying their bill. A simple means needs to be found of keeping people on the network for emergency and incoming calls while recovering debt.
12 BT has agreed to introduce improvements in its policy towards customers with payment difficulties which should result in lower disconnection levels. In particular, they will offer an outgoing calls barred service with a repayment plan, as an alternative to complete disconnection. Other companies have agreed to publish statements of policy on disconnection to be incorporated in their Consumer Codes of Practice. Oftel believes that, given the willingness of the industry to work constructively with Oftel to reduce disconnections, formal regulation in this area may not be needed.
13 Public call boxes (PCBs) are an essential service for everyone, but particularly for people who cannot afford to have a telephone in their own homes. While competitive provision is starting to take place in some towns and cities, BT remains by far the dominant provider, with responsibility for universal service of PCBs in its licensed area. Oftel has been concerned to ensure that the procedures for locating public call boxes are straightforward and simple, while taking the views of local communities into account. This applies equally to the removal and re-siting of existing boxes and the installation of new ones. Oftel's overriding objective is to ensure that reasonable access to PCBs is available throughout the UK.
14 BT's Licence will be amended and new Guidelines agreed whereby BT will not remove an existing PCB except with the agreement of the Local Planning Authority or Parish Council. For those PCBs which BT is obliged to remove, BT will consult the Local Planning Authority and Parish Council and agree alternative provision where appropriate. BT will work to criteria agreed with Oftel for new PCB provision which take account of new housing developments and provision of PCBs to meet community need. Local authorities will be able to submit applications for new PCBs or request re-siting of a PCB.
15 Oftel believes that, given the emergence of competition in the liberalised PCB market and the continued requirement on BT to offer geographically averaged PCB tariffs, BT's PCB charges should not be brought into price control. Current charges, which have fallen substantially since privatisation, are reasonable and most users consider that PCBs represent good value for money.
16 Oftel has carefully considered whether the current and future provision of universal service impose a net cost on operators charged with the obligation. A net cost is incurred only if overall financial performance is worse than it would be without the obligation. Work on the financial costs of meeting the current and proposed universal service obligations for BT has been carried out. In addition, further analysis of the indirect benefits of universal service provision, including life cycle effects (customers who are currently unprofitable may become profitable in the longer term), ubiquity (customers moving to a new area are more likely to take service from the universal service provider, even if there is a competitor who could provide service, simply because they know that the universal service provider can provide service), enhancements to corporate reputation, marketing and brand recognition, has shown these to be significant. Oftel concludes that, after benefits, the current net cost involved in the provision of universal service in the UK is not proven and does not justify setting up a universal service funding mechanism in the short term. Oftel intends to review fully universal service arrangements in 1999 and will consider then whether it is appropriate to put in place a specific universal service funding mechanism.
17 While Oftel does not consider that there is any need at present to establish a funding mechanism, it recognises that there may be such a need in the future. Oftel has therefore given consideration to the kind of mechanism which might be most appropriate.
18 Oftel considers that the most efficient means of paying for universal service would be for the telecoms operators to settle accounts for the provision of universal services between themselves according to standard rules set by Oftel for the calculation of the costs and for determining the services which are `fundable'. This mechanism would be transparent and proportional and result in the sharing of any net universal service costs fairly across the industry.
19 Oftel has also given some consideration to ways of introducing competition into the provision of universal services and has outlined ways in which these services might in the future be put out to tender or subject to `pay or play' type arrangements. Further detailed work will take place on these issues over the next two years.
20 Oftel proposes to work with the industry, the Department of Social Security, DIEL and other relevant user groups within the statutory framework provided by the Disability and Discrimination Act 1995, to ensure that an appropriate range of essential services are available to customers with disabilities. Oftel proposes that licence conditions and/or a Code of Practice could be established within that statutory framework which could include the following list of services which should be available to all disabled customers: an enhanced and extended text relay/rebate service to give deaf and speech impaired customers access to basic telephony; equivalent access to 999/112 emergency service; network recorded voice messages made accessible to deaf textphone users; billing and other basic printed customer information in formats accessible for blind and sight impaired people; and reasonable access to PCBs for wheelchair users and other disabled people including access to public textphones in public places for deaf/speech impaired people. Oftel will take this work forward together with the Department of Social Security and will consult further on what services should be included in the provisions and how these should best be enforced.
21 In addition, and in consultation with Oftel, BT is intending to enhance the text relay service, which allows deaf and speech impaired customers to use the telecoms network if they have a textphone, to make it more cost effective and attractive to a wider market.
22 Oftel believes that the package of measures put forward in this document is consistent with the requirements of emerging European Community legislation in this area. This framework will, in due course, define a set of services which should be universally available throughout the EC, set out how universal service should be costed, and permit Member States to set up a funding mechanism if the imposition of universal service obligations results in a net cost to an operator. Any funding mechanism would have to satisfy certain requirements designed to ensure that any universal service burdens are shared in a transparent and fair way.
23 Oftel is nearing the end of this phase of consultations on the concept of Universal Service in telecommunications. A number of specific proposals for improving what is already a good level of universal service provision are now put forward for comment.
24 Oftel has come to the conclusion that there is no immediate need to establish a funding mechanism for universal service, but has committed itself to a full review of the situation in 1999.
Each chapter of the consultative document concludes with a number of questions. Responses are welcome on all aspects of the document, but the questions below may help readers to focus on the key issues.
The initial consultation period will run until Friday, 25 April 1997. There will then be a further period up to Friday, 9 May 1997 during which comments are invited on any submissions made to Oftel during the initial period. Comments are invited in particular on the questions highlighted in the text of the document and listed at the end of the Summary.
Written comments should be sent to :
Paul West, Oftel, 50 Ludgate Hill, London EC4M 7JJ. Fax : 0171 634 8893.
Written comments will be made publicly available in Oftel's Library unless confidential. Respondents are therefore asked to separate out any confidential material into a clearly marked annex. Appointments to view written comments in the Library must be made in advance (tel : 0171 634 8762/8765, fax : 0171 634 8946).
Comments can also be sent to Oftel on the Internet via Oftel's Web pages or by using the following e-mail address : press.office.oftel@gtnet.gov.uk
Oftel intends to set up a link between this document on Oftel's Web pages and any comments about it placed on respondents' own Internet pages. Please contact Cate MacPherson at Oftel on 0171 634 8752 to organise this.
Visually impaired customers who wish to have access to the text
on computer disc should contact Barbara Powell
(tel : 0171 634 8773).