EU Takes France to Court over Universal Services

BRUSSELS (04/27/2000) - The European Commission will take France to the Court of Justice over its failure to comply with rules on the financing of universal services to telephone customers, the Commission announced in a statement today.

The Commission asserts that the French method for financing universal services, which refers to the basic telephone services that must be made available to all customers at affordable prices, places an excessive financial burden on new operators competing with the former national monopoly, France Telecom SA. Under French law, France Telecom is responsible for providing universal services, but its competitors must help finance the service.

France is the only member state in the European Union which has imposed such a financing scheme, according to the Commission. Other member states believe that the advantages accrued from providing universal services in terms of access to customers more than compensates for the cost.

The Commission has taken exception to various aspects of the French financing system, notably the fact that it was introduced in 1997, a full year before France opened its telecom market to full competition. Complaints also focus on the fact that operators' contributions are not made public and that they are partially calculated on a flat-rate basis regardless of an operator's volume.

Moreover, according to the Commission, "some of the methods used err on the side of overestimating the net cost" to France Telecom of providing universal services. For example, while the cost of providing universal services stood at 5 billion francs (US$800 million) in 1997, after an initial Commission warning, it had fallen to 3 billion francs in 1999 and 2 billion francs in 2000.

Although the Commission acknowledges that France has made various corrections to the scheme, it still has serious reservations because France has never offered to reimburse operators for any excessive payments.

A procedure before the Court of Justice is the last stage in the EU's three-stage infringement proceedings against EU countries.

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