52001DC0742

REPORT FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS - Report on the implementation of Decision No 1336/97/EC on a series of guidelines for trans-European telecommunications networks

(presented by the Commission)

TABLE OF CONTENTS

1. Introduction

1.1. Reference Studies

2. Objectives of Ten-Telecom

3. Support Provided

4. Implementation of the Programme

5. Results Achieved with Community Support

5.1. Focus of support in calls for proposals

5.2. Evaluation of proposals

5.2.1. Opinion of Evaluators

5.3. Profile of Programme Participants

5.4. Project Portfolio

5.5. Project Results

5.5.1. Support Actions

6. Program Assessment

7. Assessment of Social and Societal Impact

8. Recommendations

8.1. Future programme development

8.2. Concluding remarks

ANNEX I

1. Introduction

TEN-Telecom is a Community programme supporting trans-European telecommunications networks and services. The Programme was established in 1993 on the basis of Articles 154-156 of the Treaty establishing the European Community. The Articles call for the development of trans-European networks in three areas: transport, telecommunications and energy. Programmes were established in these areas sharing common financial regulations that specify the conditions and procedures for granting Community aid [1]. The regulations were amended in 1999 [2]. The amendment introduced new forms of aid and allocated budgetary resources for the period 2000-2006 of 4600MEUR.

[1] Council regulation No 2236/95/EC of 18 September 1995 laying down general rules for granting of Community financial aid in the field of trans-European networks.

[2] Regulation No 1655/1999/EC of the European Parliament and of the Council of 19 July 1999 amending Regulation No 2236/95/EC laying down general rules for the granting of Community financial aid in the field of trans-European networks.

In addition to common financial regulations, each program is defined by individual guidelines. The guidelines for trans-European telecommunications networks were adopted in June 1997 [3], covering the objectives and priorities of the Programme. The areas which the Programme supports ('Projects of Common Interest') are identified in Annex I.

[3] Decision No 1336/97/EC of the European Parliament and of the Council of 17 June 1997 on a series of guidelines for trans-European telecommunications networks

The present report evaluates the Programme following the first three years of operation since the new guidelines were adopted [4] in 1997 until June 2000. Article 14 of the Guidelines requests a report every three years containing the following information:

[4] In the period before the new guidelines, 1993 to 1998, actions were supported in relation to the development of Euro-ISDN as a trans-European network ("TEN-ISDN"). During the period studies and projects were undertaken within the framework of the Euro-ISDN guidelines (Decision No 2717/95/EC) with Community aid granted under the TEN financial regulation. Early preparatory and scoping studies (1993-94) were followed by initial studies with limited elements of implementation (1995) and, subsequently, by feasibility studies and the initial roll-out of full-scale implementations (1996-97).

* an evaluation of the results achieved with Community support in the various project fields in relation to the overall objectives

* an assessment of the social and societal impact of the introduction of the applications after they are deployed

When the independent survey for this report was carried out, 58 projects had been funded from calls in 1998 and 1999, of which nine projects had been completed. Therefore, this report assesses anticipated outputs as well as actual results from projects.

Together with a report evaluating the Programme, Article 14 of the Guidelines requests 'an appropriate proposal for the revision of Annex I on the basis of technical developments and experience gained. A proposal for the revision of Annex I is presented together with this report as it follows in part from the assessment presented here.

1.1. Reference Studies

This report is based on two primary sources:

* an intermediate evaluation of the TEN-Telecom Programme [5] carried out from May to November 2000 by an independent, external contractor. This is referred to hereafter as the external evaluation.

[5] Intermediate Evaluation of the TEN-Telecom Programme, Final Report, PLS RAMBØLL Management A/S, http://europa.eu.int/information_society/programmes/evaluation/index_en.htm

tentelecom.

* the Court of Auditors special report No 9/2000 [6] concerning trans-European-networks (TEN) - telecommunications.

[6] Court of Auditors special report 9/2000 concerning trans-European networks (TEN) - telecommunications, accompanied by the Commission's replies, http://www.eca.eu.int/EN/reports_opinions.htm.

In addition, the report is set against the context of:

* The eEurope initiative defining objectives and priorities for EU support of the Information Society.

* Other Community programmes, for example, the Fifth framework programme, and the Commission's proposal for a sixth framework programme (2002-2006), eContent, IDA, and the other TENs.

2. Objectives of Ten-Telecom

The principal objectives of TEN-Telecom are defined in Article 2 of the Programme's guidelines.

The Community shall support the interconnection of networks in the sphere of telecommunications infrastructure, the establishment and development of interoperable services and applications as well as access to them with the following objectives:

* To facilitate the transition towards the information society for all (e.g., considering the needs of disabled and elderly and promoting social inclusion).

* To strengthen economic and social cohesion, including the need to link island, land-locked and peripheral regions to the central regions of the Community

* To stimulate new activities leading to job creation.

* To improve the competitiveness of European enterprises, in particular SMEs, and strengthen the internal market.

They emphasise that the purpose of the programme is to promote an inclusive information society and are followed by providing financial support in a number of strategic areas organised on three broad levels: Applications, Generic Services, and Basic Networks. The areas are identified in Annex I of the Programme guidelines and specified further in the TEN-Telecom work programmes.

3. Support Provided

TEN-Telecom provides support for the technical and commercial feasibility, validation and deployment of a project. In this respect, the Programme is designed to support the launch of innovative services based on proven technology. The Programme supports services of public interest that are not competing with commercial services.

Technical and commercial feasibility and validation activities can be financed up to 50% of the cost of these activities. Deployment can be financed up to 10% of the total investment cost. Finance can be provided through cost sharing, subsidies on the interest of loans, contributions towards fees for loan guarantees, and direct grants to investment.

The Commission contribution to any one project is limited to 10% of the total investment cost of a project including feasibility studies.

In addition, TEN-Telecom is able to fund co-ordination and support actions aimed at developing the appropriate environment for the development of an inclusive information society (Annex II of the Programme guidelines). These actions can include consensus development on a national and regional level and the co-ordination of activities with related Community and national programmes.

4. Implementation of the Programme

The TEN-Telecom budget for the period 1998-2000 was 92.8MEUR. The expenditure for that period is shown below.

Overall financial data for the TEN-Telecom programme (MEUR).

>TABLE POSITION>

*Including 1.6MEUR budgetary transfer from the TEN-Energy line

At the time of the external evaluation, 9 projects had been completed, 46 were open (under implementation), and 3 had been terminated. A further 35 projects from the first call for proposals in 2000 (2000/1) were still under negotiation.

In order to improve the execution of payments, the programme has adopted a pro-active approach of sending early warnings of reports and claims due, and reminding participants of contractual obligations for supporting documents before claims are submitted. This approach reduces both late claims and delays in payment, and will lead to a correction in the payments' implementation.

5. Results Achieved with Community Support

5.1. Focus of support in calls for proposals

TEN-Telecom selects projects for support on a competitive basis in response to calls for proposals. In each call selected areas are put forward for prospective proposals. The following sections contain an overview of the calls for proposals issued from 1998-2000.

Calls for Proposals

1998/1: Telecommunication networks

3.2.1: Development and Interoperation of Satellite Networks

3.2.2: Development and Interoperation of Mobile Networks

3.2.3: Global Network Development and Interoperation

1998/2: Generic Services and Applications

1: Trans-European Generic Telecommunications Services

1.1: Internet based Generic Services

1.2: Electronic Commerce Support Services

1.3: Extranet/Intranet platforms for SMEs

2: TransEuropean telecommunications Applications

2.1: Education and Training

2.2: Access to Europe's cultural heritage

2.3: Applications and services for SMEs

2.4: Transport and mobility

2.5: Environment and emergency management

2.6: Health

2.7: City and regional information network

Rolling Call 1998/3: Support and Co-ordination Actions

Market analysis and technology watch

Preparatory sectoral meetings in the application areas covered by the TEN-Telecom programme

Co-ordination and support

Awareness and dissemination

1999/1: Generic Services and Applications

1: Trans-European generic telecommunications services

1.1: Internet based Generic Services

1.2: Electronic Commerce Support Services

1.3: Multi-media Support Services

1.4: Support of Mobility

2: TransEuropean telecommunications Applications

(Same as in 1998/2) // 2000/1: Generic Services and Applications

1: Trans-European Generic Telecommunications Services

1.1 Generic Information Services

1.2 Services for Industry and Commerce

1.3 New Access Methods, Mobility and Convergence

2: Trans-European Telecommunications Applications

2.1 Education and training 2.2 Access to Europe's cultural heritage 2.3 Applications and services for SMEs 2.4 Transport and mobility 2.5 Environment and emergency management 2.6 Health 2.7 City and regional information networks

2000/2: Generic Services and Applications

1 : Trans-European Generic Telecommunications Services

1.1 Generic Information Services

1.2 Services for Industry and Commerce

1.3 New Access Methods, Mobility and Convergence

2 : Trans-European Telecommunications Applications

2.1 Education and training 2.2 Access to Europe's cultural heritage 2.3 Applications and services for SMEs 2.4 Transport and mobility 2.5 Environment and emergency management 2.6 Health 2.7 City and regional information networks 2.8 New work methods and services for the job market

(source: external evaluation)

The above table shows that projects for the basic networks layer were only requested in the first call after the introduction of the new Guidelines, based on opinions within the management committee. All subsequent calls have addressed Generic services and Applications with the exception of a supplementary rolling call for support and co-ordination actions published in 1998.

The following table shows the number of proposals submitted.

Proposals submitted per call 1998-2000

Call //

proposals

1998/1 // 18

1998/2 // 132

1998/3 // 11

1999/1 // 53

2000/1 // 92

2000/2 // 123

5.2. Evaluation of proposals

The evaluation of proposals for funding is carried out by TEN-Telecom staff with the support of external evaluators. The evaluation criteria, followed by evaluators, are based on Annex II of the Programme guidelines. These refer principally to the economic and financial viability of projects, socio-economic effects and trans-European dimension.

Proposals are assigned to groups of three evaluators in accordance with their expertise. Evaluators form an individual opinion and grade for each proposal and then convene in order to establish a consensus score. Two plenary sessions are then held: firstly, to discard the lowest category 'C' proposals and, subsequently, to examine the scores awarded to the remaining proposals. At the completion of the second plenary session, proposals are ranked in order of priority for funding.

5.2.1. Opinion of Evaluators

Nineteen evaluators participating in the evaluation of the Call for Proposals 2000/1 and Rolling Call for Proposals 1998/3 were invited to express opinions on the evaluation procedures. Assigning panels to specific areas was considered a major strength. Panels were felt to allow for good personal interaction between experts promoting strong consensus-based decisions and fair scoring of proposals. Some reservations were expressed regarding the short time available to become familiarised with individual proposals, the generality of certain evaluation criteria and the possibility that projects falling between areas could be adversely affected.

The evaluation process is currently being reviewed in order to improve the process in general and to tighten the evaluation criteria. In particular, TEN-Telecom will clarify the definition of total investment costs allowable for a project.

5.3. Profile of Programme Participants

The external evaluation conducted a survey showing that more than 50% of participants were from private enterprises, 5% from public enterprises, 10% from public administrations and 18% from research institutions. The participating private enterprises include many of the large technology companies in the field of telecommunications and IT as well as smaller companies. Most participants (66%) represent organisations present in one member state whilst 9% of organisations were present in all 15 Member States. 57% of participants belong to organisations categorised as SMEs. 23% of participant organisations have a turnover of more than 150 MEUR.

Almost half of the 58 projects surveyed had received funding from other sources for previous project stages. The most common sources of funding were ESPRIT (8), Telematics Applications (6) and the ACTS programme (5). The majority of the participants surveyed by the external evaluation stated that their project would not have started had it not received funding from TEN-Telecom.

5.4. Project Portfolio

Out of the 58 projects supported from the 1998 and 1999 calls, one project was funded for deployment, 55 for feasibility and validation and two as support actions [7]. These figures are proportionate to the numbers of proposals received for funding in each phase and show that most proposals are for technical and commercial feasibility and validation.

[7] From call 2001-1, 36 projects were selected of which 4 were deployment projects. The selection of proposals from the call 2000-2 is currently being finalised.

This may in part be due to the relative funding levels for each category: 50% for feasibility and validation compared with 10% for deployment (support actions are funded at 100%).

5.5. Project Results

Of the 58 projects selected for support during 1998 and 1999 only nine projects were completed at the time of the external evaluation. In this respect, the main project outputs accounted for were business plans, supported by market analysis, technical studies and pilot applications.

Evidence gathered from annual project reviews suggests that on the whole, the technical quality of projects is satisfactory whilst business plans were found to be relatively weak in a number of areas.

(In response, the Business Plan Support project has been funded by TEN-Telecom as a support action, starting from January 2000, in order to provide assistance in this area. Consortiums are also referred to the LIFT programme [8] for additional advice.)

[8] LIFT (Linking Innovation Finance and Technology) is a free service sponsored by the European Commission's Innovation/SMEs Programme. It provides help to small businesses in preparing a business plan and attracting investment.

Of the nine completed projects, six consortiums, listed in the following table, responded to the external evaluation. As shown in the following table, three projects have either recently been deployed or are expected to be deployed in the near future

Deployment status of completed projects

Project // Status (October 2000)

ENINFO

Completed:

April 2000 // A pilot service (Internet-based environmental information for the chemical sector) was developed during the project, but the potential market deemed too small to be profitable.

HERMES

Completed:

August 2000 // The feasibility study showed an immature market for postal Hybrid Mail Services at present but large long-term potential. The project will not be deployed within the foreseeable future.

HORTONET

Completed:

February 2000 // Project showed positive results. Pilot application established. Commercially viable operation (multimedia garden walk-through network, 150 gardens in 15 countries) expected within 2-3 years. IST support granted for further development of business concept/content to enhance educational and cultural aspects.

TESSYN

Completed:

March 2000 // Feasibility and market study has been carried out and deployment potential assessed. Actual deployment cannot take place until the year 2008 or 2010 as this depends on the completion of GALILEO and further development of the TESSYN system. The results of the study are, however, deployed in further more concrete studies to plan for project deployment.

THEN

Completed:

March 2000 // The feasibility study showed that the Trans-European Telemedicine market was not mature, but the consortium initiated deployment of services in the national market (Italy). Contact network in the Mediterranean region (Tunis) is being developed, and other services (distance learning for medical professionals) are expected to be included in the business venture.

TTT-NET

Completed:

1st quarter 2000 // The project concerns preparation for deployment of the new generation IP-telephony system. It was decided to launch the project in two phases, starting with TTT-NET to provide the basic interoperability. The project was successful, and phase 2, TTT-SERVICES, was implemented immediately after completion of TTT-NET. TTT-SERVICES is of strategic importance to European industry and deployment is expected within the very near future.

(source: external evaluation)

Following a joint initiative launched in 1997 by DG Information Society and DG Regional Policy, fifteen projects were co-funded from the TEN-Telecom budget with the aim of improving the quality of local information on tourism and SMEs through a critical mass of interoperable and reliable information. In April 2000 a technical assessment of the projects was carried out with the assistance of external experts. The assessment concluded that the projects contributed significantly to a pioneering action toward eEurope, integrating local actions at European level whilst respecting the principle of subsidiarity.

Thirteen projects co-funded by TEN-Telecom with the Educational Multimedia Task Force were reviewed in October 1999. The review assessed the technical progress achieved and their contribution to TEN-Telecom objectives. The majority of the projects reviewed displayed positive results according to both criteria.

5.5.1. Support Actions

In 1998, a rolling call for proposals for support and co-ordination actions (1998/3) was published, addressing the following tasks: market analysis and technology watch; preparatory sectoral meetings in the application areas covered by TEN-Telecom; co-ordination and support; awareness and dissemination. Following the call, two projects were funded: -

* TELECOM 2000 organises preliminary sectoral events in the areas covered by the Programme, promotes co-operation between the projects of the Programme and stimulates awareness of the Programme through seminars and programme information days.

* The TUSAM project monitors the telecommunications market for technological developments as a source of strategic guidance for the Programme. The project produces biannual intelligence reports. The structure of the reports is as follows:

Part A - Overview of market developments in trans-European networks.

Part B - Overview of developments in trans-European telecommunications applications in the areas of focus for the Programme.

Regular updates are provided to the sixth monthly reports containing short summary articles of general trans-European developments and developments in specific TEN-Telecom application areas.

6. Program Assessment

The external evaluation found that many of the projects supported have the potential to make significant contributions to TEN-Telecom and Community objectives, with respect to accelerating the development of new growth-area activities leading to job creation and to improving the competitiveness of Community firms, in particular SMEs. Contributions are also likely to be immediate, as the main focus of support has been at the Applications layer.

With the exception of the first call, there has been no support for projects at the basic networks layer. This is a consequence of the limited size of budget allocated to the Programme and the opinions of the management committee. In this area, support has been provided by the Structural Funds to qualifying regions and the EIB. The EIB will continue to support development of telecommunications networks in the context of the Innovation 2000 Initiative [9] by providing investment loans.

[9] Innovation 2000 Initiative: Actively promoting a European economy based on knowledge and innovation, http://www.eib.org/pub/divers/i2i_en.pdf.

In general, demand for TEN-Telecom funding has exceeded the amount available each year. In the most recent call, the number of proposals increased by approximately 25%.

The following table shows the proportion of received to retained proposals.

Proportion of received to retained proposals

>TABLE POSITION>

* projects selected at the evaluation

7. Assessment of Social and Societal Impact

In view of the low number of completed projects, the assessment of social and societal impact is largely based on anticipated results shown in the annual project reviews.

Reports from the annual reviews of November 1999 and October 2000 have shown anticipated impacts in a number of areas [10]. The following list highlights some of the expected benefits from the projects reviewed in relation to the Programme objectives.

[10] 0 Assessment of objectives attainment was performed for a total of 39 out of the 56 on-going TEN-Telecom projects, excluding support measures.

To facilitate the transition towards the information society for all is the principal objective of the Programme. In this respect, increased access to the Information Society is expected from generic services, especially voice over IP from projects such as TTT-Services and VIP-TEN, providing low cost services over existing infrastructure. At the applications layer, the city and regional network project, E-GAP, is focused on providing new modes of interaction between local and regional administrations and citizens.

In line with the objective of improving the competitiveness of SMEs, satellite services such as the DEMON project can potentially lower the entry barrier to broadband services. Projects at the applications layer are likely to provide benefits to specific areas, e.g. CLISME (management tool for networked transportation companies) and Digital Market (trading networks for SMEs and local public administration in city centres).

Contributions to social inclusion are anticipated from projects providing interactive and communicative services to citizens, e.g. easing communication with local administrations (E-GAP) and developing demand responsive public transport (SIPTS).

8. Recommendations

In view of the performance of the Programme after three years of operation, the following recommendations cover future strategies for Programme development. The areas supported by the Programme are defined in Annex I of the Programme guidelines. A proposal for the revision of Annex I, identifying the areas supported by TEN-Telecom, is submitted together with this report including a memorandum explaining the revision.

8.1. Future programme development

The Court of Auditors special report and the external evaluation contained a number of recommendations with implications for the future development of TEN-Telecom.

The Court of Auditors special report examined the development and implementation of EU policy concerning the TEN-Telecom programme and related measures from the Structural Funds and the EIB/EIF over the period 1993 to 1998. The report mainly addressed preparatory actions undertaken before the adoption of the new TEN-Telecom guidelines (Decision No 1336/97). The report contained the following recommendations:

* the need to avoid undue overlap with the Research Framework programme and other sources of Community funding,

* the establishment of tighter project monitoring procedures.

The external evaluation covered the implementation of the TEN-Telecom guidelines (Decision No 1336/97) encompassing the launch of calls from 1998 to 2000 and financial appropriations from 1998 to 1999. The evaluation contained the following observations:

* the marketing of the Programme should be intensified,

* the evaluation highlighted the small number of deployment projects supported by TEN-Telecom.

Based on the orientations from these two sources and experience gained from running the Programme since the new guidelines, the following actions are proposed:

1) Increase number of deployment projects

In future, TEN-Telecom will strive to encourage more deployment projects. In order to increase the impact of the Programme and develop a distinct profile vis-à-vis the IST programme, it is intended to raise the amount of deployment projects through a number of initiatives.

* A two-stage evaluation procedure will be introduced for deployment projects to make it easier, cheaper, and quicker for a consortium to have a project considered for Commission support by lowering the cost of entry into the project evaluation stage. A new preliminary stage will be added whereby a consortium will only be required to submit a brief but well-defined proposal. If the proposal is positively assessed by independent evaluators, the consortium will be invited to submit a full proposal.

This change is based on positive experience of a similar mechanism used in the Integrated Applications for Digital Sites Activity (IADS) of the Fourth RTD Framework Programme. Experience has shown that a two-stage evaluation process need not take longer than the current one-stage evaluation.

* TEN-Telecom will introduce more frequent calls for proposals, the timing of which will be fixed well in advance, in order to attract more projects that are ready to deploy. A minimum of two calls a year is estimated. The time between the publication of a call and contract signature will be reduced to less than nine months.

It takes a substantial amount of time to prepare a deployment project and therefore it is impractical for a consortium to wait for a further long period for the next call for proposals. Moreover, if a consortium has acquired support from other financial sources, it is likely that such support will be dependent on timely deployment.

* As indicated by the low number of deployment projects, the current maximum level of support does not provide sufficient incentive for the establishment of trans-European services. This is due to the fact that there are intrinsic barriers caused by differing administrative systems, languages and cultures that must be overcome in order to adapt a service to local conditions in several member states. TEN-Telecom proposes to amend Article 5(3) of the TEN financial regulation (No 2236/95-1655/99) to raise the maximum level of support from 10% to 20% in such cases where serious barriers exist.

* The TEN-Telecom guidelines specify two types of activity for Community support: (i) technical and commercial feasibility/validation, and (ii) deployment. At present, these types of activities are treated separately: a consortium applies for support, in response to a call for proposals, for either technical and commercial feasibility/validation, or deployment. Separating activities in this way breaks up the business cycle and hinders the deployment of services.

TEN-Telecom proposes to test a contract combining both activities. Under this contract, a consortium will carry out the validation of a service and, based on a positive review, will continue to deploy the service without needing to re-apply for further funding in response to another call for proposals. (In the event of a negative review, Community support will be stopped.)

Combining activities in this way will reflect the natural business cycle and encourage the deployment of high quality services without delay and/or hindrance.

2) Increase in the number of projects involving public administrations

The Programme will emphasise the objective of a socially inclusive information society by accelerating the uptake of public services for the citizen focusing on areas where Europe has a competitive advantage. In line with the Programme guidelines, TEN-Telecom will encourage more projects concerning public administration at local, regional, national, and European level to provide services of high social value. Support will be provided for innovative systems and services leading to more efficient public administration on at European, national, regional and local level including the re-engineering of administrative processes to ultimately facilitate inter-operability at a European level.

In order to mobilise actors in the public sector, namely users, service providers, and public administrations, an informal advisory group, Stakeholders Advisory Group (StAG), will be established, comprised of users, service providers, civil servants, and manufacturers of hardware and software. If necessary, specialist advisory groups will also be arranged for the particular areas supported by the Programme as listed in Annex I of the Programme guidelines (Decision No 1336/97).

3) Interconnection and interoperability of networks

Support will be provided for interconnection and interoperability of networks necessary for the operation of a public interest service. This will replace the more generic support for basic networks in the current Annex I.

4) Co-ordination with other actors

Ensuring good use of public funds, TEN-Telecom shall seek co-ordination with the IST programme, in particular, with regard to their support for take-up measures and pilot actions in order to place the respective programmes in complementary position. It will be important to make explicit the distinction between the two programmes regarding the types of supported activities and areas addressed. In future, TEN-Telecom staff will participate in IST evaluations in order to maximise synergy.

TEN-Telecom will seek co-ordination through inter-programme groups with other relevant actors within the Commission, e.g. the other TEN programmes, the Structural Funds, the Competitive and Sustainable Growth programme, the IDA programme and the Socrates programme in order to increase synergy and avoid undue overlap. Encouraging more deployment projects will help minimise the degree of overlap.

TEN-Telecom will develop a more active relationship with the EIB involving co-financing of projects. At present, the EIB is represented at TEN-Telecom committee meetings as an observer. A working group will be proposed to examine potential scenarios and modalities for complementary financing in the context of the Innovation 2000 Initiative. In the first instance, the working group will refer where possible to examples put forward in the memorandum for co-operation between the research framework programme and the EIB, leading to a separate memorandum for co-operation between TEN-Telecom and the EIB.

Based on the priorities of the Innovation 2000 Initiative, there is potential for common ground between TEN-Telecom and the EIB in the areas of 'New information and communications technology networks' and 'Diffusion of Innovation'.

5) Programme administration and project monitoring

Project monitoring procedures will be tightened in future and clearer guidelines on allowable costs will be provided, particularly:

* There will be more on-site technical and financial audits in order to avoid cases of irregularities of the kind noted in the Court of Auditors special report. Eventually, the Programme will introduce audit certificates in line with the IST programme.

* Clearer definitions of financial terms will be sought including the total investment cost of a project. The definitions will clarify the boundary between validation and deployment costs, what is eligible as an investment cost, and whether revenue should be deducted from initial operation costs.

In future calls, projects will apply fixed overhead rates of 60%, in contrast to actual cost overhead rates applied at present, which are on average 62%. The overhead is then a percentage of readily available costs, and does not have to be derived from the overall accounts of an organisation. It will be much simpler for a participant to calculate and for the Commission to verify. This measure has received the agreement of the programme management committee.

* There will be a strong role for users in deployment projects such as a user group to assess the effectiveness of a project. The role of users will also be reinforced in business plans.

* Early reviews of deployment projects will be carried out before substantial resources are deployed. The impact of completed projects will be assessed at an early stage.

* In order to monitor more closely the effects of Community funding, there will be an obligation on projects to provide feedback on their results after the period of Community support has ended.

With regard to the selection of projects, it is proposed that the procedures will be simplified in a similar way to the case for the IAP (Internet Action Plan), eContent and IST programmes: the Commission has empowered the Commissioner responsible for the Information Society to adopt decisions selecting projects on behalf of and under the responsibility of the Commission.

6) Participation of accession countries

TEN-Telecom will investigate the possibility of increasing the participation of accession states by the provision of financial support in order to act as an effective vehicle for the integration of accession states. The Programme guidelines (Article 13, Council Decision No 1336/97/EC) stipulate that the participation of third party countries is allowed on the basis that it does not entail an increase in Community support. TEN-Telecom will propose an amendment to this Article allowing financial support to accession states as is the case in the IST programme.

7) Establishment of a clear profile

Feedback from member states' delegates and industry has indicated that the external perception of TEN-Telecom is somewhat unclear. Stakeholders and potential participants do not easily grasp the aim of the Programme or the technological area it addresses. This lack of clarity is likely to affect the promotion of the Programme amongst relevant actors. In order to improve the clarity and understanding of the Programme, the Commission will define a clearer identity for TEN-Telecom. This will include a more targeted programme acronym, 'e-TEN', in order to indicate an emphasis on applications and services and a closer alignment with eEurope.

8) Programme communication

The communication of the Programme will be stepped up in order to raise awareness and increase the number and quality of large implementation projects of high social-economic impact. In this respect, TEN-Telecom will adopt a more pro-active strategy, consulting with public authorities, NGO's, and associated commercial parties engaged in the provision of public interest services. This task will be covered by a support action. The target of the action will be public administrations and industry. In order to clarify the Programme to potential participants, the Guide for Proposers will be simplified.

8.2. Concluding remarks

The intention of these recommendations is to build on TEN-Telecom's strengths at the same time as addressing aspects of the Programme that can be improved, as indicated by independent sources and through experience of running the Programme.

Greater emphasis will be given to public services to encourage applications and services meeting the challenges of the information society and tailored to the requirements of citizens and SMEs. Encouraging more deployment projects will complement this orientation by stimulating the launch of operational services with immediate social benefits.

The Court of Auditors report highlighted the need for co-ordination between Community actions in the field of trans-European telecommunications networks to avoid undue overlap. TEN-Telecom will raise the degree of co-ordination with other actions through consultation and mutual agreements in order to develop appropriate synergies and place the Programme in complementary position.

A clearer profile for the Programme will be developed through a reduction in the areas addressed, from 18 to 7 (see proposal for revision of Annex I), and a targeted communication strategy. This will involve re-branding the Programme as 'e-TEN' in order to capture the notion of applications and services and lessen the connotation of telecommunications infrastructure.

To realise the orientation of the Programme toward public services, TEN-Telecom will establish effective co-operation, through StAG, with relevant actors including public authorities, NGOs, and industrial parties involved in the provision of services in the general interest. This task will be prioritised so that the Programme can identify and assist in bringing forward those services of most value to society.

ANNEX I

Projects supported by TEN-Telecom 1998 and 1999 [11]

[11] Data on maximum aid recommended missing for 3 projects in areas 1.1, 2.3 and 3.2.1, respectively. Sums and averages calculated for projects for which data is available.

>TABLE POSITION>

(source: external evaluation)