Implementation of the Authorisation Directive in the UK
and the draft Communications Bill
Peter Davies.
Licensing Adviser
OFTEL
Introduction
• EU Authorisation Directive
• Draft Communications Bill
• Statutory Instruments under the European Communities Act
• Could be two periods
• Oftel in the first. OFCOM in the second
Ending of the Licensing Regime
• 25th July 2003
• Crossing the Rubicon
• All telecommunications licences revoked
• A new licenceless regime
• Licences still needed for numbers, spectrum and rights of way
Funding Oftel/OFCOM
• Regulator funded by industry
• Previously funded from licence fees
• No more individual licences
• Authorisation Directive provides for administrative charges
• Extends to all Communications
Consultation by Oftel
• Before and after 25th July
• Licence fees for the first period
• Administrative charges for the second
• OFCOM will probably replace Oftel during the second period
The first period
• Licence fees based on the existing system
• Only apply to individual licensees
• pro rata amount to reflect the part period
• Based on last year’s licensable turnover figures
The second period
• Administrative charges after 25th July 2003
• Will extend to all electronic communications
• Systems no longer a concept
• Networks, services and associated facilities
Who could be liable for these charges
• Those operating electronic communications networks (ECN)
• Those providing electronic communications services (ECS)
• Those providing associated facilities (AF)
• Content providers not included
What is an associated facility
• Associated facilities include:
• Co-location to facilitate LLU and similar services
• Conditional access
• Access control
Who will pay administrative charges
• Those operating ECNs and those providing ECS and AF whose
• relevant turnover is £5 million or more
• Minimum fee for those below 5 million threshold abolished
Notification to Oftel/OFCOM
• Notification is permitted
• Regulatory requirements imposed only when necessary
• UK has decided notification is not necessary at present
• Communications Bill will provide power to require notification
How administrative charges will be assessed
• Relevant turnover will replace licensable turnover
• In practice very little difference between the two
• Charges when relevant turnover is more than £5million
Relevant turnover will include
• call conveyance• Resale of calls • Line rental and
connection• Access provision • Provision of leased
lines• Value added
services
• Providing internet access to end-users
• LLU activities including co-location facilities
• Conditional access and access control
Gross or net turnover
• Net turnover was considered
• Regulator needs system which is straightforward and transparent
• Had to consider complexity
• Increased administrative burden
• most providers would pay about the same.
Arguments for net turnover
• Existing regime involves double counting
• Resellers say that margins are small
• Net turnover might favour service providers who have not paid charges hitherto
Why retain gross accounting
• Leave providers paying about the same amount
• In net accounting no profit operators would pay nothing
• Still need to be regulated• Much more difficult to police.• Annual audited accounts would not
provide simple check
Existing turnover bands retained
• £1 bn or more • £750m – below
£1bn • £600m – below
£750m • £500m – below
£600m • £400m – below
£500m • £300m – below
£400m • £200m below
£300m
• £150m – below £200m
• £100m – below £150m
• £75m – below £100m
• £50m – below £75m • £25m – below £50m • £10m – below £25m • £5m – below £10m
Communications Bill
• OFCOM has power to publish general demand
• Requirement to provide self-certificate of turnover
• Extract from audited accounts
Separate charges
• OFCOM can levy charges for:
• Radio spectrum (RA at present)
• Numbers (Currently no separate charge)
• Rights of way (No separate charge at present, but charge included in initial licence fee by DTI)
Other matters
• Costs of Competition Commission references may continue as now to be recovered from the industry
• No supplementary fee.
• Surpluses/deficits will be carried forward to following charging year
Percentage cap on recovered costs
• Existing cap will continue
• 0.08%
• =80p per £1,000 of relevant turnover
• Actual figure for 2001/2 Financial year was 56p per £1,000
Penalties
• Penalties for non-payment of administrative charges
• Equivalent to a maximum of twice the amount of the unpaid charge
• Right to operate could be suspended for non-payment of the charge
Proposed procedure
• General demand published in April 2003 to cover second period
• Oftel website. Also in the London, Belfast and Edinburgh Gazettes
• Operators service providers assess turnover advise Oftel/OFCOM
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