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30|03|07

Reduction in the underlying cost of regulation for 2007/8

Ofcom today published its Tariff Tables for 2007/8, which sets out an overview of the fees due from industry for the coming financial year.

Ofcom is funded by payments from broadcasting licensees and communications providers, as well as payments for the management of the UK radio spectrum.

For the fourth successive year Ofcom will operate under a budget which is lower in real terms than the budget for the previous year.

Operating budget

On a like-for-like basis, Ofcom’s budget for 2007/8 will be £126.7m, which is 5 per cent lower in real terms than its budget for 2006/7 and 9.8 per cent lower than its budget for 2005/6.

As a result of recent discussions with HM Treasury, there has been a minor change to Ofcom’s funding arrangements. In the past, technology research was funded directly by HM Treasury under the Spectrum Efficiency Scheme. In the future, this research, which is expected to cost £3.5m in 2007/8, will be included in Ofcom’s budget. However, because the research will relate predominantly to the management of the radio spectrum, it will be funded by the Department of Trade and Industry (DTI). This gives a total budget on the new basis of £130.2m.

DTI loan

To cover the cost of establishing the organisation Ofcom received a £52.3m loan from the DTI. The set-up costs were incurred during the period March 2003 to January 2004. By the end of 2007/8 Ofcom will have repaid the loan, together with the accumulated interest. Therefore, from 2008/9 onwards the loan will no longer be recouped through regulatory fees, reducing further the financial burden on stakeholders.

Ofcom’s operating costs are allocated to each sector according to the extent of work proposed for that sector in 2007/8. The stakeholder charges are set in accordance with the Statement of Charging Principles. Details of individual company fees are not disclosed.

Ofcom’s work programme for 2007/8 is set out in its Annual Plan. The draft for consultation was published on 12 December 2006 and the final version of the Annual Plan will be published on 3 April.

See Related Items for the Tariff Tables for 2007/8 and the Statement of Charging Principles.

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