Proposals on how Oftel will raise money from the communications industry to fund its work for the year 2003-2004 were published in January.

These take into account the new regulatory regime that will come into force on 25 July 2003 under the EU communications directives. This means that there will need to be separate regimes for before and after 25 July.

Up until 25 July, Oftel proposes to continue with existing funding arrangements, whereby it charges a fee to operators that hold a licence under the Telecommunications Act 1984.

But under the EU Directives all individual licences will be revoked and replaced with general authorisations and conditions imposed where necessary. These will apply not only to operators, as at present, but also to service providers.

After 25 July, Oftel proposes that all companies in the electronic communications sector with an annual turnover of £5 million or more should contribute to the regulator’s running costs through an administrative charge. These proposals would mean that a number of service providers – most obviously the larger Internet service providers (ISPs) – will be required to pay a fee for the first time. Oftel also proposes to abolish the fixed fee for individual licence holders with an annual turnover of under £5 million which will mean that, after 25 July, approximately 100 companies who currently pay fees will no longer have to do so.

David Edmonds said at the time of publication:

"Oftel’s existing funding arrangements have worked well. They are based on the principle that those companies who are subject to regulation should pay the costs of that regulation.

"That principle will continue under the new Directives. But the new Directives apply not just to operators but also to service providers. It is, therefore, appropriates that major service providers – for example the ISPs – should be asked to pay towards the costs of regulation, alongside operators."

It is anticipated that Ofcom will apply Oftel’s proposals at least initially. However, it will be a matter for Ofcom, subject to the provisions of the Communications Bill, to determine its charging structure.

For further information, contact Christina Spyrelli (tel: 020 7634 8839 / e-mail: christina.spyrelli@oftel.gov.uk).