Regulations Governing Universal Service of Telecommunications Enterprises Article 27

Participating Universal Service Carriers shall, in addition to sharing the universal service costs in accordance with preceding two Articles of these Regulations, contribute towards the reserve fund for bad debts:1. Bad debts incurred in the first implementation year in accordance with these Regulations shall be considered part of the universal service charges for the second implementation year, and shall be shared amongst Participating Universal Service Carriers in accordance with the methods set forth in Article 25.2. From the second implementation year onwards, a certain proportion in relation to the contributing universal service charges shall be paid annually.The "certain proportion” in the preceding paragraph shall be set in accordance with the following criteria as well as the adjustment by the competent authority (NCC) according to the experience of collecting bad debts:1. If the proportion of bad debts of the first implementation year exceeds 1%, the "certain proportion" shall be the proportion of bad debts.2. If the proportion of bad debts of the first implementation year is less than 1%, the "certain proportion" shall be 1%.The "proportion of bad debts” in the preceding paragraph shall be the proportion of bad debts incurred in an implementation year in relation to the total universal service costs in that year.