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