Court case-law on financing of universal services.

The Court of Justice today rendered two landmark decisions in BASE and others and Commission v. Belgium. Both cases relate to the financing of universal service obligations. They are particulraly interesting on the need to take the situation of each operator into consideration.

The first case, is a preliminary ruling requested by the Belgian Constitutional Court. The case focus on (i) the possibility for the State to act as an NRA, (ii) the possibility to determine the existence of an "unfair burden" on the basis of the incumbent's costs and (iii) the need to make an analysis for each operator.

In particular, the CJEU held that:

- the Universal Service Directive does not in principle preclude, by itself, the national legislature from acting as national regulatory authority within the meaning of the Framework Directive provided that, in the exercise of that function, it meets the requirements of competence, independence, impartiality and transparency laid down by those directives and that its decisions in the exercise of that function can be made the object of an effective appeal to a body independent of the parties involved, which it is for the national court to determine.

- Article 12 does not preclude a national regulatory authority from determining generally and on the basis of the calculation of the net costs of the universal service provider which was previously the sole provider of that service that the provision of universal service may represent an ‘unfair burden’ for those undertakings designated as universal service providers.

- Article 13 precludes that authority from deciding in the same way and on the basis of the same calculation that those undertakings are effectively subject to an unfair burden because of that provision, without having undertaken a specific examination of the situation of each of them.

The second case is an infringment procedure. The Court held that Belgium failed to fulfil its obligations under the Universal Service Directive by

– failing to take into consideration, in the calculation of the net cost of provision of the social component of universal service, the market benefits, including intangible benefits, accruing to the undertakings responsible, and

– making a general finding on the basis of the calculation of the net costs of the erstwhile sole provider of universal service that all undertakings now responsible for the provision of universal service are in fact subject to an unfair burden on account of that provision and by having done so without carrying out a specific assessment both of the net cost which the provision of universal service represents for each operator concerned and of all the characteristics particular to each operator, including the quality of its equipment or its economic and financial situation