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