Applicants struggle to provide phones for all

Date: 16/07/1998

Peter Chapman
SIX would-be EU members are struggling to meet Union rules designed to guarantee that their citizens have access to a basic telephone service.

Concern about the leading applicants' ability to meet universal service obligations is growing as European Commission officials continue to screen Poland, Hungary, the Czech Republic, Slovenia, Estonia and Cyprus to gauge their readiness to join the Union.

"These countries must be able to guarantee that anyone who requests a phone service can be given one at an affordable price. There is a social dimension to this. It is not just about getting phones to business," said one Commission telecoms official. "The problem is the level of investment is just not high enough. Only 50-60% of households have phones. The other 40% or so, mainly in poor rural areas, do not."

Private cash from telecoms operators and also from financial institutions such as the European Bank for Reconstruction and Development is pouring into the applicant states.

But this funding is unlikely to be enough in itself to ensure universal service, as projects tend to focus on higher value-added services or updating existing run-down networks.

Even where the private sector extends networks into rural areas, firms often invest only in return for exclusive rights in the sector, including the right to set tariffs.

The Commission fears these charges may be too high to bring phone services to poor populations. This means public sector solutions may have to be found to encourage these operators to offer universal service at an affordable price.

"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.

In the meantime, the institution is pushing the would-be member states to come forward with investment plans to show how they are going to plug this telecoms gap before they join the Union.

"What we need to see are investment plans showing how the public sector is going to act, plus any details of private sector top-ups that might be needed."

But Commission sources insist the telecoms picture is not all doom and gloom. Four of the six leading applicants are well on the way to putting into place most of the telecoms sections of the body of EU law (the acquis communautaire).

These rules include the need to appoint an independent telecoms regulator and an obligation to open up the voice-telephony market to competition. "We were very impressed by the overall situation in Estonia, the Czech Republic and Hungary, while Slovenia was also quite reasonably placed," said one.

Estonia has promised to comply with its obligations by the time it joins the EU. Hungary and Slovenia should be ready by 2002, and the Czech Republic by 2001.

But the jury is still out on Poland's preparations since the country's change of government late last year, while officials say Cyprus is "struggling to be ready" within five years.