Ref: 28/03
Date: 21 May 2003

New arrangements on how Oftel will raise money from the communications industry to fund its work after 25 July 2003 have been published today in a statement by the regulator.

Existing arrangements mean that licence holders under the Telecommunications Act contribute a fee to the funding of Oftel. This funding will continue up until July 24 2003.

After this date, telecommunications licences will be abolished under the new EU Directives and with them the payment of fees. They will be replaced by administration costs charges and companies in the electronic communications sector with an annual turnover of £5 million or more will now pay these charges.

A number of service providers, for example large Internet service providers (ISPs), will contribute to the regulator's running costs for the first time. However, the turnover limit means that approximately 100 companies who currently currently pay fees will no longer have to do so after the 24 July 2003.

The statement also sets out Oftel’s decision not to require advance notification from those companies providing electronic communications services. This allows companies to offer communications services without having to inform Oftel first as long as they meet the requirements of the a set of general conditions of entitlement.

The arrangements take into account the introduction of the new regulatory regime, which comes into force on 25 July ast part of the new EU communication directives.

David Edmonds, Director General of Telecommunications, said today:

"The new funding regime set out today by Oftel reflects a fair approach to the industry for the future funding of the regulator.

"Oftel's approach to funding had been based on the principle that those companies who were subject to regulation should pay the costs of that regulation. This will continue under the new arrangements.

"Larger communication providers with a turnover greater than £5 million, for example large ISPs, will contribute to Oftel's funding for the first time. But smaller service providers will no longer have to contribute a fixed fee, removing an unnecessary burden from them.

"We expect that Oftel's funding arrangements will be passed on to Ofcom when it comes into existence towards the end of this year. However, it will be up to Ofcom to decide how they develop future funding arrangements."

Notes to editors:

1. The statement is available on Oftel's website at www.oftel.gov.uk/publications/eu_directives/2003/notfees0503.htm . Hard copies are available to the media from Oftel's Press Office, telephone 020 7634 8991, and to the public from Oftel's Research and Information Unit, telephone 020 7634 8761.

2. After 25 July 2003, Oftel will have to begin the process of collecting the administrative charge for the period 25 July 2003- 31 March 2004. To help companies prepare for this the Director intendtions to publish a general demand for information as soon as possible after 25 July 2003. This notice will also appear in the Belfast, Edinburgh and London Gazettes. The general demand will request those persons liable to charging to send details of their turnover from relevant activities to Oftel within six weeks. The text of the demand is available atannexed to the statement.

3. The general conditions are a set of rules which will apply from 25 July 2003 to the provision of an electronic communications network or an electronic communications service. from 25 July 2003, which This is the implementation date for the new EC Communications Directives. These new Directives require the abolition in the UK of the current telecommunications licensing regime. Licences are to be replaced by a regime of general authorisation to provide electronic communications networks and services coupled with general and specific conditions. The general conditions will apply to all network and service providers (or all network and service providers of a particular type), whereas the specific conditions will be imposed on individuals, for example those with significant market power or designated universal service obligations.