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National financing of universal service in telecommunications

On 27 November 1996, the European Commission published the criteria it intends to use for the assessment of national schemes for financing the provision of universal service in telecommunications.

The Commission communication, presented by Mr. Martin Bangemann, Commissioner r...
On 27 November 1996, the European Commission published the criteria it intends to use for the assessment of national schemes for financing the provision of universal service in telecommunications.

The Commission communication, presented by Mr. Martin Bangemann, Commissioner responsible for telecommunications and information technologies, in agreement with Mr. Karel Van Miert, Commissioner for competition, provides detailed guidelines for Member States wishing to introduce specific financing systems to compensate for losses to operators associated with the provision of a universal telecommunications service.

Universal service ensures that every citizen of the European Union enjoys guaranteed access, at an affordable price, to a defined set of telecommunication services including: access to emergency services, directory information, operator services and the availability of public payphones and special services for users with disabilities. Member States are free to determine whether or not to introduce specific universal financing systems.

The Commission's criteria aim at developing best practice amongst Europe's telecoms regulators with regard to key practical issues, such as: how to calculate the cost of universal service; how to decide who contributes; and how much each contributor pays. The most important of these criteria are:

- National Schemes may only cover the "net cost" of universal service obligations as defined in Community law (i.e. the cost associated with the provision of the public fixed telephone networks and publicly available fixed telephone service). The calculation should take account of both costs and revenues;

- It would be disproportionate for National Schemes to be used to recover costs associated with activities which are not within the scope of universal service, for example the cost of implementing specific measures required for purposes of public security or the provision of communication services outside the scope of universal service to schools, hospitals or similar institutions;

- National Schemes must identify those organizations which are required to contribute to the net cost of universal service. Member States wishing to impose contributions on new entrants, or on mobile telephony operators, must sufficiently detail the justifications for such extension;

- The Commission will examine whether any specific mechanism created to fund universal service operates in an objective, non-discriminatory, transparent and proportionate manner;

- National Schemes should apportion contributions amongst eligible market players according to their activity in the relevant market;

- Payments via National Schemes must be made in a proportionate, non-discriminatory and transparent manner to organizations subject to universal service obligations.

Member States are required to notify their national schemes for universal service, to the Commission, before 11 January 1997.
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