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Discussion papers



Telecottages, a way of meeting Universal Service Obligations 

Updated on 4/06/2003

The Romanian draft legislation on Universal Service Obligations provides a right for all end users to benefit from the provision of universal services at a specified quality level, regardless of their geographical location and, considering the specific conditions, at affordable prices. 

The present penetration rate in Romania for fixed line services is around 19% of the population, or around 51% of the households. In addition around 23% of the population subscribe to a mobile network. A Number of the persons subscribing to mobile networks are also subscribing to a fixed line. A very rough estimation would indicate that around 30 % of the Romanian population has access to a telecom service, either through the fixed network or through one of the mobile networks. As a member of a household, the figure is higher but still far below the average in most other European States.

The average penetration rate in EU member states for fixed line services is 57 % of the population and around 75% for mobile, with some states having reached saturation with more than 85%. 

In most other accession countries between 60-80% of the households have a fixed line connection. Per inhabitant the penetration rate varies between maximum of 63 % and a minimum of 32%.

RomTelecom has a waiting list for new subscriptions of around half a million and the average waiting time is around two and a half years. Although such a list can only be regarded as a very rough indicator on the request for services it is obvious that a significant number of Romanians would like to have access to basic telecom services but are denied that possibility or can’t afford the services.

The networks of the mobile operators cover a significant part of Romania. There is no waiting list for getting a subscription. The demand at a specific time is met. The mobile operators are also constantly increasing their numbers of subscribers. The reason why the numbers of subscribers is not significantly higher is most likely the fact the many can’t afford the services although the operators offer a variety of subscription packages that meet the needs of different kinds of subscribers. Probably some further development is possible in that respect, for example by meeting specific needs of low income users that do not need to use the mobility in the network. Discussions should be held with the operators to encourage them to further develop differentiated tariff schemes on a voluntary basis. However that subject goes beyond the scope of this document.

The EU Directive on Universal Services opens a possibility to use, under specific conditions, a fund to finance the net cost of some specific measures. The fund can be financed through contributions by the sector. 

It is essential that obligatory contributions by operators to a fund do not undermine the telecom industry’s possibility to develop through commercially viable investments, which is necessary to achieve sustainable growth. 

It should thus be realised that the rather limited amount that could be raised for such a fund in Romania would not be able to make any significant impact on improving the accessibility of the services at affordable prices if the actions would be concentrated on individuals or households. 

Rather than focusing on individual subscribers, a greater impact can be achieved by a “community approach” such as through the establishment of so called TeleCentres.

The TeleCentre should provide access for everyone in the community to the key telecom services at affordable prices. The services offered should be, as a minimum, access at a fixed location to the basic circuit switched telecom services, including fax plus internet access.

In addition the TeleCentre will also be the platform through which the community citizens will have full, unrestricted access to all e-Government initiatives, including paying taxes on line where such a system is in place. Through using the Internet the TeleCentres will also make communication between the communities possible.

The TeleCentre should be present in all communities where the population is not adequately provided with affordable access to telecom services. In principal every commune could host a TeleCentre. For urban areas a slightly modified concept should be discussed. It should be noted that an active support by the hosting community would be essential to safeguard long term viability.

Based on comparisons from other countries, such as Hungary a need for around 1500 TeleCentres in Romania might be assumed. But clearly a more precise investigation about the need in Romania should be conducted. It is foreseen that the ANRC county offices should be instrumental in that respect.

A TeleCentre network should be established to which all TeleCentres should be connected. Through this network information could flow easily between the communities for any relevant purpose, not necessarily restricted to the operation of the TeleCentres as such. Such a network could be further developed into an online community, which may expand its activities and services to programs being essential for a national development of the rural community.

All the authorities in the community should be involved, including not only the political institutions such as the Mayor and the Local Council but also from the civil society such as the doctor, priest and teachers. They would all benefit significantly from the possibility to exchange information between colleagues in different communities. Distant healthcare, using the communications facilities provided by the TeleCentre could significantly improve the healthcare situation in many remote areas.

Furthermore small enterprises could benefit significantly from being provided by the TeleCentre with especially internet access.

The TeleCentre will significantly contribute to meeting the requirement in the Law on Universal services on the right of every citizen to have efficient access to basic telecom services at affordable prices.

Already existing TeleCenters
28 TeleCentres exist today in Romania in various forms: 

· 16 TeleCentres are operated with the help of CREST (in Satu Mare county and the neighbouring counties)
· 7 TeleCentres are operated with the help of CAR- Centre for Rural Assistance (in Timis county and one TeleCentre in Caras county) and
· 5 TeleCentres in Harghita region with the help of Telehaz Foundation

These TeleCentres are not primarily designed for providing telecom related services but are primarily used as a tool to promote community development and they have also been very successful in doing that. The basic infrastructure requested by the existing TeleCentre is normally a room with computer, printer and a photocopier. In some cases they have in addition telephone/fax, and, if possible, access to Internet, although a number of them actually lack Internet access or even a telephone.

In order to meet the Universal Service Obligations the TeleCentres must however provide basic telecom services but would benefit from hosting also the services normally offered at the present TeleCentres. 

A very good collaboration with the local authorities is considered essential to safeguard long term sustainability. Through the TeleCentres the development of the local community has been greatly enhanced. 

An increased co-operation with the local business community should be given priority.

Minimum Services to be offered by a Telecottage
· Voice and data services
· Messaging services, incoming calls to be answered and messages to people collected and forwarded.
· Fax service
· Internet access

Necessary equipment
· Telephone
· Fax machine
· Computers
· Printer

Necessary Investments
For all the TeleCentres in areas presently without telecom services, the main investment will be the telecom connection as such. It is essential to have external financing for that investment. The possibility to find such financing is consequently being looked into.

Through experimenting by setting up five TeleCentres through a pilot project the most cost efficient technical solutions can be found. It is vitally important that a fully neutral approach is followed both in respect of technology and of telecom operators to be used.

The possibility to use the present mobile networks or satellite links should not be excluded.

The usage of fixed radio links will be fully explored. In that respect discussions need to be held also with the radio companies such as SNR.

Also entities that already have a backbone network, such as the railway company, post and the electricity company should be approached as potential suppliers of the connection to the public telecom network. 

Operating costs
The TeleCentre must be able to operate without generating a loss. The initial investments must be financed externally so as not to burden the operating results.

The cost of the telecom traffic should be covered through fees for the usage. Also the usage of equipment such as printers should be paid for in relation to the costs.

The computer could have an expected lifespan of five years. The community hosting the TeleCentre should commit itself to replace the computers and printers when necessary.

The community should also provide free of charge both the staff and the location necessary. Some existing TeleCentres are using volunteers, which have proved to be very efficient as well.

This would result in a situation where the tariff for using the services would normally match the normal tariff plus the subscription fee split among the total foreseen number of traffic minutes. For the core number of users that fee should be affordable since they are not really burdened by any one off the installation fee or the fixed subscription fee, the latter being shared among all users. It should also be taken into account that some communities most likely would be in position to cover the subscription fee, thus reducing the fee to be paid by the users.

The possibility to get a discount should be discussed with the relevant telecom operator.

For citizens in the community that can not afford to pay the normal tariff for the usage, such as some old age pensioners or persons with specifically low or no income, special schemes should be developed that could, as one possibility, provide those categories with special vouchers which give a right to a reduced tariff. It should be explored if the cost could be covered through a Universal Service fund, if such a fund is set up.

Legal structure
The present telecentres have among them found slightly different solutions concerning their legal status. But primarily they are organised as local NGOs. 

The telecottage, which should have the character of a telecom subscriber, must consequently be in position to sign such a contract. Some further examination of potential legal structures should be undertaken.

Potential locations and needs
The present penetration rate of telecom subscriptions in Romania indicates a vast country wide need of TeleCentres. It is also quite clear that no community, regardless size or location should be excluded from the possibility to have a TeleCentre if the requirements on community support can be met. However, the organisational model, based on the present experience from the TeleCentres is very much based on a community support that exists primarily in rural areas and some towns that are not too big. 

In those potential communities where such a community support is missing, various commercial establishments could possibly be used as a platform for the TeleCentre. The assignment of those hosting enterprises should be made through a fully open and transparent processes that mustn’t a priory exclude any commercial enterprise from participating. The attraction for an enterprise to host the TeleCentre is of course the possibility to attract customers into the premises that would in addition spend money on goods or services offered there.

It should be understood that the messaging service could be limited in urban areas due to the lack of personal contacts.

Sites to be used for the pilot project have to be chosen also taking into account other criteria, such as the possibility to explore different technical solutions and needs. 

A model for training of staff members at the telecottages must be designed. The training should include two different parts, one being the operation as such with a focus on financial management and accountability. The other one would be to provide capacity for the staff members to instruct the visitors on how to use all the facilities and to encourage all visitors and community citizens to take advantage of the possibilities offered.

The training should be based as much as possible on local competencies. 

Proposed way forward
A pilot project with five different centres should be started during the summer 2003. The communities to be used for the pilot project should all be very different, including the telecom facilities already present. 

Through the pilot project the most cost efficient solutions for the telecom connection will be investigated and tried. The negotiations with potential providers will clarify to what extent support can be foreseen from the operators.

During the autumn the usage by the community citizens of the new services offered will be evaluated and experience will be gained from the economical results of the TeleCentre.

RITI dot-Gov is part of the dot-Com alliance financed by USAID 

Dot-Com Alliance


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