European Union leaders are finalising plans for a Union-wide reduction in local telephone costs to enhance e-commerce and Internet access across the region.

Mr Antonio Guterres, the Portuguese prime minister, said yesterday that cheaper telecommunications charges would be one of the `'clear objectives" to be agreed at next month's special EU summit in Lisbon.

The pressure on European telecommunications operators to move towards the kind of lowcost local calls available in the United States would address political concerns that higher telephone charges are holding back the development of Europe's new economy.

The migration towards lowcost or free telephone line use would also have a significant impact on Europe's free Internet service providers, which have developed business models supported by a share of revenues from use of telephone lines.

The summit, from March 23rd to 24th, has been called to spur Europe's development as a knowledge-based society with the aim of making the EU the world's most competitive economy by 2010.

Mr Guterres said the summit would consider plans for a transEuropean broadband network and ways of harnessing information technology to improve the quality of public services so they could better serve citizens and businesses.

A strong political lead, with concrete objectives and target dates where possible, would encourage companies to take advantage of new markets.

Portugal, which holds the EU's six-month rotating presidency, has been co-operating with the British government in preparations for the summit in its capital city.

Britain has proposed a deadline of 2002 for the removal of all remaining barriers to e-commerce in the EU and 2003 for making access to the Internet faster and cheaper in the EU than anywhere else.