Call for cash to plug gap in telecoms

Date: 24/09/1998

By Peter Chapman

THE six leading applicants for membership of the EU are struggling to meet Union rules requiring them to guarantee their citizens access to a basic telephone service.

“These countries must be able to guarantee that anyone who requests a phone service can be given one at an affordable price,” said a telecoms official at the European Commission. “But the problem is the level of investment is just not high enough. Only 50-60&percent; of households have phones. The other 40&percent; or so, living mainly in poor rural areas, do not.”

Private cash from telecoms operators and financial institutions such as the European Bank for Reconstruction and Development (EBRD) is pouring into these accession countries. But the funding is unlikely to be enough to ensure universal service as investors tend to focus on more profitable projects.

Even where the private sector extends networks into rural areas, firms often only invest in return for exclusive rights in the sector. This includes the right to set tariffs, which the Commission fears may be too high for many citizens. “Commercial investment will only go so far. A certain amount of grant support will be needed for the years to come to make sure we get universal service,” said the official.

Meanwhile, the Commission is pushing the candidate countries for investment plans to show how they are going to plug this telecoms gap before they join the EU.

But the picture is not all doom and gloom as the applicant countries struggle to match the EU's complex package of telecom rules governing its newly opened markets.

Overall, said one official, the Commission is “very impressed” by the situation in Estonia, the Czech Republic and Hungary, while Slovenia is “also quite reasonably placed”. The jury is still out on Poland and Cyprus is “struggling to be ready” within five years, he added.