No Innocents Here: Using Litigation to Fight Against the Costs of Universal Service in France

Abstract:     
Liberalization of utility sectors is often said to bring the benefits of competition to customers, but it also creates a risk of manipulation of the new system by powerful industrial actors. Litigation is one tool available to such actors to undermine or delay effective regulation, and has been used by U.S. communication companies in dealing with the FCC. This paper demonstrates a similar development in telecommunications liberalization in France. In 2001 the European Court of Justice declared the French system of funding universal service in telecommunications untreaty, and ordered the French to redesign it. The commission and observers understood the case as a triumph of open market over the French government's narrow protection of the "national champion" French Telecoms. This paper suggests an alternative interpretation that fits the data better, describing the case of universal service funding in France as the story of successful use of litigation by powerful industry actors to reduce burdens put on them as part of the liberalization system and to delay the implementation of rules that worked to their detriment. The paper addresses the real tension between the need to provide regulated actors with a way to call agencies to account and the concern about abuse of such mechanisms by the regulated industry.

Number of Pages in PDF File: 43

Keywords: universal service, administrative law, France, Comparative law, regulation

JEL Classification: l50, l59, l96

working papers series