5. Posts and Telecommunication Kosovo (PTK) has been given the authority to provide post and telecommunication services in Kosovo on an interim basis, using existing public postal and telecommunication assets. PTK has restored a minimal microwave network linking major towns and local, long distance and international telephone services have recommenced in major centres. However, many regional towns have still not been reconnected to the national network. The Swiss Government provided DM 0.4 million worth of essential tools to enable PTK to resume operations.

6. France has provided postage stamps worth DM 0.5 million to enable postal services to be re-started. The new UNMIK stamps for Kosovo became available in March 2000, allowing a basic postal service to recommence. An international service is expected to start in the near future. The stamps have also been marketed for philatelic purposes. Ninety Post Offices are now operational.

7. A new GSM network commenced operation in Pristina in February and will be extended to seven major cities and the airport by the end of March. The network will be entirely self funding and will provide essential communications pending full reinstatement of the fixed network.

8. A number of privately operated internet service providers have commenced business in Pristina providing internet access to UNMIK departments and NGOs as well as local businesses.

9. The postal service and the telecommunication infrastructure in Kosovo will need significant investment in order to contribute to the overall economic, democratic and social development of the territory.

10. Funding has been committed by the EU for essential repairs to the telecommunications network (DM 12 million) and for Post Office equipment and vehicles (DM 4 million). Additional donor commitments of around DM 55.7 million are required.

Description	2000	2001	Total
Telecommunications	61.6		61.6
Post	10.1		10.1
Total	71.7		71.7

11. Good telecommunications services are essential for reconstruction and development in Kosovo. The international presence in Kosovo has also generated new business opportunities for the telecommunications sector, however the telecommunications infrastructure suffered considerable damage during the conflict which urgently needs to be repaired before further development of services can be considered.

12. In addition, the regulatory and policy framework for communications services in the territory needs development. A regulatory authority needs to be established within UNMIK with adequate staffing and resources.

Description	Total
Development of regulatory institutions
Training of telecommunications regulatory authority staff	0.3
Frequency management system	2.0
Network restoration and modernisation:
Reinstatement of transit exchange, local switch and local loop in Pristina	12.0
Restore national backbone capacity	12.0
Regional backbone	8.0
International access facilities	0.3
Spare parts	4.0
Technical training for PTK staff	0.3
Management training for PTK managers	0.5
Rural services program – Teleshops	7.0
Local loop reinstatement	10.0
Refurbishment of telecommunications offices	2.0
Billing system for PTK	3.0
Audit of PTK	0.2
TOTAL	61.6

13. The development of a sound regulatory framework for the telecommunication industry is a high priority. It is anticipated that an agreed set of regulatory principles will be in place by mid-2000, with the aim of creating a legal framework conducive to private sector investment and setting up a regulatory authority within UNMIK.

14. A program of training for local staff in telecommunications regulation issues will be required. It will be necessary to identify and train suitable local people to fill positions in the telecommunications administration authority. The skills necessary for market regulation in particular need to be developed. It is estimated that DM 300,000 will be required in 2000 for training for regulatory staff in the Department of Posts and Telecommunications. In the longer term the regulatory functions will be transferred to an independent authority.

15. Responsibility for radiocommunications frequency management and non-broadcast licensing will be transferred from KFOR to UNMIK and spectrum use and licensing fees will be introduced. Frequency management equipment will be required to enable the Department of Posts and Telecommunications to monitor use of radiocommunications frequencies to prevent misuse and interference. The system should consist of frequency management software, direction finder and communication decoding tools. The estimated cost of a frequency management system is DM 2 million.

16. Significant investment will be required over a period of time to expand and modernise telecommunications services in Kosovo to meet the economic development needs of the territory. There are however a number of high priority short term needs for which funding commitment is required in 2000. The following projects have been ranked in order of priority.

17. Transit exchange and local switch in Pristina. The first priority in reconstructing the telecommunications network is the reinstatement of the transit exchange, local switch and sections of the local loop in Pristina which were destroyed by NATO bombing. EU funding has been committed for this work which is expected to commence shortly.

18. National backbone. Basic repairs have been made to the national transmission backbone, using PTK’s own resources, to connect the seven major towns. However, the capacity of the system is still limited and is insufficient to handle the volume of traffic being generated. The second priority for network reinstatement is therefore an investment of DM 12 million to restore the backbone to full capacity.

19. Regional backbone. Although major cities are now connected, 50% of regional switches are not connected to the national backbone and so only have access to local calls services. DM 8 million will be required to restore the regional backbone to connect all towns and villages. This work cannot be done until the national backbone has been restored to handle the additional calls.

20. International connection. DM 300,000 is also required for equipment to connect international traffic from Kosovo in order to ensure the availability of secure international communications for the people of Kosovo and for international organisations involved in reconstruction activities.

21. Spare parts. Many local and regional switches are currently not working simply because of a lack of spare parts. An amount of DM 4 million would be required for spare parts to bring this equipment back into operation.

22. Technical training. The current staff of PTK have, in general, not worked in the telecommunications industry for the past 10 years and their technical skills need to be upgraded. Management staff need training in the use of new technologies such as digital switches, transmission technologies, and new local loop technologies, in customer service issues and in network strategic planning. Operational staff need training to enable them to maintain modern equipment. Technical training is expected to cost DM 300,000.

23. Management training. The commercial environment in which PTK operates has also changed significantly in the past 10 years and senior managers in the organisation need training to develop their management and financial administration skills. Training for executives may include both management seminars and courses in Kosovo and international visits to other telecommunications enterprises.

24. Rural services. The extension of basic telecommunications to rural areas is essential for the economic and political development of Kosovo. It is proposed that the concept of Teleshops which has been successfully used elsewhere, could be applied in Kosovo. These would provide telephone, fax and eventually internet connections for public use in each town and village. An amount of DM 7 million is sought for this project.

25. Local loop reinstatement. In some towns up to 70% of local loop infrastructure was damaged during the conflict, for example when buildings and houses were destroyed. An amount of up to DM 10 million will be required to reconnect these areas using the most appropriate and cost effective available technologies.

26. Telecommunications buildings. The main transit centre building in Pristina was destroyed by NATO bombing. The building is too badly damaged to be restored and other buildings will be used for future telecommunications operations. However, these buildings require refurbishment and repairs expected to cost DM 2 million.

27. Billing system. The collection of telecommunication revenues is a significant problem. Only about 30% of accounts are currently collected, largely because of problems with customer identification and billing. PTK urgently requires an improved billing system to increase the proportion of revenues collects. An amount of DM 3 million is required for this purpose.

28. Further expansion of the network would be implemented over a period of several years. Funds for expansion and modernisation of the fixed network could be provided by donors or through commercial investment. A policy framework to facilitate private sector investment is currently being developed within UNMIK. Specific medium and long term funding proposals will be included in the Reconstruction Program for 2001.

29. The majority of telecommunication services in Kosovo are currently provided by PTK under the authority of UNMIK. PTK operates public telecommunications infrastructure in the territory and is included in the Kosovo Consolidated Budget as public enterprise. In order to clearly establish the financial standing of the enterprise, and the value of the assets it controls, it is proposed that an independent financial audit be undertaken.

30. It is anticipated that an amount of around DM 200,000 would be required for an initial audit of PTK. Funding is expected to be available for this activity from the EU.

12.3 Post Services

31. Getting the postal service restarted has been the highest priority in the post sector. This has been facilitated by EU funding for new vehicles and post office computers, and printing of new stamps funded by France. However, funds are also required for repairs and refurbishment of post office buildings, improved security equipment and training for post office staff.

Description	2000
Post office buildings	3.0
Post Office vehicles, computers and software	4.0
Postal security and computer software	3.0
Training for Post Office staff	0.1
TOTAL	10.1

32. Although not much damaged during the conflict a number of postal buildings require repair and refurbishment. Now that the postal service has restarted it is proposed to assess the amount of mail being processed by each office before determining priorities for post office refurbishment. It is anticipated that a total amount of DM 3 million will be required for Post Office building repair and improvement.

33. A recent Universal Postal Union (UPU) expert mission has assessed the security requirements of post offices and recommended the type of equipment needed, including alarms and safes required to protect stamps and cash and Xray equipment to examine parcels. The estimated cost of this equipment is DM 2 million.

34. Computers will be provided to Post Offices, with the financial help of the EU, however some specific software is needed, such as point-of-sale programs. The cost of this is expected to be DM 1 million.

35. Postal staff will require some retraining in administration and computer skills and security requirements. An amount of DM 100,000 is required for training.

36. The recurrent costs of post and telecommunications staff are to be met from revenue from post and telecommunication services.