14 May 1997
Press statement

Publication of the decree on financing the universal service in the telecommunications sector


The decree setting out calculation methods for the cost of the universal service and the mechanism for payment of these obligations by all telecommunications operators appeared this morning in the Official Journal ( text of the decree - in French ).

It defined a finance mechanism for the universal service, which is both fair for all operators, and proportional to the obligations of universal service imposed on France Telecom. The evaluation methods are those recommended by the report of the group of economic experts chaired by Mr Paul Champsaur following significant methodological work and after consulting the different interested parties in the sector.

The total surcharge brought about by these obligations may be roughly estimated at 5 to 6 billion French francs (see estimation in appendix), and will be the subject of detailed annual calculation by the Authority for the regulation of telecommunications. It will be shared, on a pro rata basis linked to their real traffic, by all telecommunications operators in the French market (and therefore in the first place by France Telecom).

This decree demonstrates that it is possible to reconcile a genuine strategy for liberalising the telecommunications sector with the maintenance and even the development of an ambitious public service financed on a perennial basis. The creation and the finance of social tariffs for the under privileged thus constitutes a new stage in national solidarity. It responds thus to the commitment given by Mr François Fillon, minister for postal services, telecommunications and space, during the discussion on the law on telecommunications regulations a year ago, to ensure that reform would be of benefit to all categories of users.

One month after the publication of the interconnection catalogue, the decree published today reinforces the credibility of the calendar published a year ago.


APPENDIX

Approximate estimation of the cost of the universal service

1) Cost of equal geographic access: equal geographic access, which guarantees that tariffs for connection, subscription and communications be set without geographic discrimination, is at the heart of equal treatment for users throughout the country. The decree guarantees long term finance for these obligations, by identifying two elements :

- cost of non-profitable areas, i.e. areas with low population density: the decree defines a framework for the country which corresponds to the local network. The total deficit for non-profitable areas financed in this way is in the region of 2 billion French francs.

- cost of subscribers in profitable areas who are structurally non-profitable, i.e. those subscribers who would not be provisioned by an operator who is not subject to the obligations of universal service: based on international comparisons, this cost should be less than 1% of the revenue of non-mobile telephony, or 900 million French francs.

2) Cost of tariff inequality: this is the result of the difference between the reference subscriber tariff (65 French francs without tax per month, which represents an equalised tariff structure), and the current price of the base subscription, for a total cost of 2 billion French francs.

3) Social tariffs: from 1998 a social tariff will be offered to almost two million people designated by social organisations and should concern the under privileged such as those receiving social assistance, or handicapped adults receiving benefits; this represents a 500 FF reduction in the annual subscription or 40 FF per month, at a cost of 700 million French francs.

4) Cost of country-wide provision of public telephone kiosks: approximately 48,000 kiosks must be maintained as part of the universal service in the least populated areas of the country; they correspond to a total cost of between 200 and 500 million francs.

5) Cost of the telephone directory and the information service: these activities do not bring about a deficit today which renders financial compensation necessary, but the decree allows for their continuation.

© Secretary of State for industry - France