diff --git a/Lib/SimpleXMLRPCServer.py b/Lib/SimpleXMLRPCServer.py
index e9bda9a..967ac7e 100644
--- a/Lib/SimpleXMLRPCServer.py
+++ b/Lib/SimpleXMLRPCServer.py
@@ -164,7 +164,7 @@
     reason to instantiate this class directly.
     """
 
-    def __init__(self, allow_none, encoding):
+    def __init__(self, allow_none=False, encoding=None):
         self.funcs = {}
         self.instance = None
         self.allow_none = allow_none
diff --git a/Misc/NEWS b/Misc/NEWS
index 0cff98c..b8d3883 100644
--- a/Misc/NEWS
+++ b/Misc/NEWS
@@ -689,6 +689,9 @@
 - Issue #999042: The Python compiler now handles explict global statements
   correctly (should be assigned using STORE_GLOBAL opcode).
 
+- Issue #2703: SimpleXMLRPCDispatcher.__init__: Provide default values for
+  new arguments introduced in 2.5.
+
 Tools/Demos
 -----------