ART estimates the cost of telecommunications universal service at FRF 4,871 million for 1999

5 January 1999

Autorité de régulation des télécommunications (ART) has just submitted to the Secretary of State to Industry the estimated cost of universal service and of operator contributions for 1999.

ART emphasizes the following:

  • The figures have no impact on the content of universal service, as it is defined by law
  • Estimates for 1999 are provisional. The final figures will not be available until 2000, based on available data at that date, and the contributions to be paid by operators will be adjusted at that time.

The cost components of universal service for 1999

  • ART has estimated the charges for universal service at FRF 4.871 billion for 1999. These are broken down as follows:

- the cost related to the current structural imbalance of France Telecom's tariffs: FRF 2.027 billion

This component is temporary, covering the price rebalancing phase for the France Telecom subscription and will be eliminated by 31 December 2000 at the latest. Mobile operators are exempt from this cost in exchange for national coverage obligations.

- the cost of geographic averaging: FRF 1.550 billion

This is the cost of covering the entire country to ensure that all subscribers have telephone access at an affordable price.

- social tariffs: FRF 1.105 billion

This is the estimated cost of offering reduced tariffs to certain social categories based on their income or handicap.

- national coverage with telephone boxes installed on public land: FRF 189 million

- the cost of the obligations of providing universal telephone listings, in both paper and electronic format, and the related directory assistance. However, given the revenues generated by this service, ART estimates that the charge for this is null.

Estimated of universal service over two years

  1998 (estimate) 1999 (estimate)
Components Financing Cost (FRF m) Financing Cost (FRF m)
France Telecom's structural pricing imbalance Interconnection
(FRF 0.8/min.)
2,242 Interconnection
(FRF 0.62/min.)
2,027
Geographic averaging Interconnection (FRF 1/min.) 2,717 Interconnection (FRF 0.47/min.) 1,550
National coverage with telephone boxes Funds 163 Funds 189
Social tariffs Funds 921 Funds 1,105
Telephone listings and directory assistance Funds 0 Funds 0
Total   6,043   4,871
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Geographic averaging will be decreased from FRF 2.717 billion in 1998 to FRF 1.550 billion in 1999. The decrease is due to:

  • For unprofitable subscribers, the change from a fixed-fee based evaluation to a model created by ART to determine the actual cost more precisely
  • For unprofitable areas, the use of a refined model and rules for cost allocation between areas

Operator contributions

Estimated operator contributions for new entrants will be FRF 215 million, compared with FRF 95 million in 1998. This increase is the result of the combined effect of the decrease in the cost of universal service and of the increase in expected operator traffic volumes.

They will be collected in two ways:

  • The cost of the first two components (France Telecom pricing imbalance and geographic averaging) will be covered by an increase to the interconnection charge of about FRF 1.09/min.

For operators (except those belonging to the France Telecom group), this will mean a global contribution of about FRF 124 million, given current estimates for interconnection traffic and the exemption of mobile operators from part of this additional charge.

  • The cost of the last three components will be covered by payments to a fund managed by Caisse des dépôts et consignations; and which will be repaid to France Telecom by this body.

The total amount paid operators (except those belonging to the France Telecom group) will be about FRF 91 million.

The Secretary of State has also received the final figures for universal service and operator contributions for 1997.

This cost was calculated by applying the transitory and fixed measure instituted by the decree dated 13 May 1997, which states that the costs of the components of universal service for 1997 are calculated as a percentage of sale of public telephone services between fixed France Telecom points.

Financing of universal service 1997

 

1997 (final)

Components

Financing

Cost (FRF million)

France Telecom's structural pricing imbalance Interconnection

(FRF 0.68/min.)

1,824
Geographic averaging Interconnection

(FRF 1.02/min.)

2,736
National coverage with telephone boxes    
Social tariffs Funds 456
Telephone listings and directory assistance    
Total   5,016
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The estimated cost was FRF 4.829 billion, whereas the final figure is FRF 5.016 billion.

The higher figure is due to the difference between France Telecom's estimated sales for public telephone service between fixed points (FRF 87.8 billion) and actual sales (FRF 91.21 billion).

Thus, for universal service, France Telecom will receive some FRF 53 million from its competitors for 1997.


Linked documents

 Decisions no. 98-907 (pdf - 294 Ko)  (universal service 1999) and  no. 98-952 (pdf - 31 Ko)  (universal service 1997)