Hong Kong’s telecoms regulator OFTA has updated the rules governing universal service fund payments for the provision of basic telephone service, to mirror recent changes in technology and service usage. The existing arrangements were put in place in 1998 to ensure affordable basic telephone service to all people in the Special Administrative Region on a non-discriminatory basis. PCCW, the only universal service provider, has been compensated under the universal service contribution scheme for the net cost of providing universal service to unprofitable customers. Under the new rules, the compensation is now shared by telecoms service providers who provide International Direct Dialling (IDD) telephony services, on the basis of traffic volumes. OFTA said the arrangements should be maintained, but PCCW should no longer receive a subsidy in the form of the universal service contribution in buildings connected by at least one alternative access network constructed by its competitors. The authority also updated the methodology for calculating the universal service cost. For example, the net cost of providing universal service should not be calculated on an individual customer basis. The net cost of serving all customers connected by the same distribution point should be considered instead. The changes are in response to the results of a public review on the regulatory framework, and will take effect from 1 July.