Contents

Summary

Background and introduction

Licence fee for the first period

Responses to the Consultation

The Director’s conclusions

1. Summary

1.1 For the period from 1 April 2003 to 24 July 2003 (the ‘First Period’) Oftel will collect licence fees from individual licensees in the same way as it has done for previous years. These fees will be related to turnover and payable on a pro-rata basis. The only departure from Oftel’s previous practice will be that Oftel will use the same turnover figures as were used for the calculation of the licence fee for the year 2002-2003.

  2. Background and introduction

2.1 This statement sets out the Director’s conclusions with regard to the proposals contained in his February consultation document entitled Implementation of the Authorisation Directive’s provisions on notification and fees available at http://www.oftel.gov.uk/publications/licensing/2003/fees0203.htm

2.2 The consultation document considered three issues:

• Whether there was a need for a formal notification process to be implemented after licences are abolished in July 2003;
• The system for collection of licence fees for the period from 1 April 2003 to 24^th July 2003 (‘the First Period’); and
• The system for the collection of administrative charges from 25 July 2003 until 31 March 2004 (‘the Second Period’).

3. Licence fee for the first period

3.1 The current licence fee regime will end on 24 July 2003. In the consultation document it was proposed that Oftel should collect licence fees for the First Period in the usual manner i.e. based on relevant turnover attributable to licensable activities. The one departure from this is that Oftel would use the same turnover figures as were used for the calculation of the licence fee for the year 2002-2003. 3.2 Under the current regime Oftel collects turnover figures each year from individual licensees. Once all the figures have been collected, Oftel calculates each company’s annual licence fee. This process takes a number of months and it did not seem to be a practicable option for a licence fee period that would last for just over three months. The period necessary to collect the information and calculate the fee would almost certainly be longer than the First Period. Oftel therefore proposed to use the figures collected for the current year (i.e. the relevant turnover figures that have been provided by licensed network providers for the assessment of fees for the year 2002-2003). Experience shows that turnover shares tend to remain stable from year to year.

4. Responses to the Consultation

4.1 Oftel received sixteen responses. Where specific comment was made on the system for the collection of licence fees for the First Period, the responses supported Oftel’s proposals.

5. The Director’s conclusions

5.1 The estimated gross administration costs of Oftel for the First Period are approximately £6.02 million (see note one below). The Director has decided to collect the costs under the licence fee condition in the same way as he has done for previous years on the basis of turnover from licensable activities. Oftel will use the same turnover figures as were used for the calculation of the licence fee for the year 2002-2003 to calculate the licence fee due from individual licensees with a turnover of £5 million or more. Individual licensees with a turnover of under £5 million will pay part of the annual fixed fee of £3000 for the 115 days of the First Period i.e. approximately £945.

Note:

1.  The estimated gross administration costs for the year 2003- 2004 are £19.1 million. The estimated administration costs for the First Period have been calculated on a pro-rata basis- i.e. according to the number of days in the First Period.