Section 44: Review of costs of universal service obligations
212.Section 44 provides that OFCOM may from time to time review the extent of the financial burden for a universal service provider of complying with its universal service obligations. These are defined as the obligations imposed on it by a designated USP condition. As part of any such review OFCOM must consider the extent to which the universal service provider is complying with those obligations cost-efficiently. No review under this section may be carried out for five years from the day this section comes into force unless the Secretary of State directs otherwise.
213.OFCOM must apply the method of calculating the burden set out in designation regulations (section 35), where those regulations require the financial burden to be taken into account in the designation decision and provide for a particular method of calculation. Where the regulations under section 35 do not provide for a particular method of calculation of the financial burden, subsection (4) provides that the financial burden shall be taken to be the net cost of compliance after allowing for market benefits of being the designated universal service provider. The conclusions of this review, and a summary of the audit, must be published.
214.This section together with section 46 transposes new Article 7 of the Directive. This new article expands the provision of former Article 9(4) to clarify a range of alternatives available to Member States when there is a need for external financing of the universal service obligations. The financing alternatives include the establishment of a compensation fund with contributions from service providers (and user’s fees), where the Member State has determined that universal services obligations entail a net cost which represents an unfair financial burden on the universal service provider(s).
