Own-initiative investigation into Primus Telecommunications Limited: failure to pay Ofcom’s administrative charges

13 December 2007

Complainant: Ofcom own-initiative
Complaint against: Primus Telecommunications Limited (“Primus”)
Case opened: 30 April 2007
Case closed: 16 July 2007
Issue: Failure to pay Ofcom’s administrative charges
Relevant instruments: Ofcom’s enabling powers relating to the collection of administrative charges for electronic networks and services and associated facilities are found in sections 38 to 44 of the Communications Act 2003 (the “Act”)

Update note – 13 December 2007

Ofcom received no representations from Primus in response to the notification issued under section 40 of the Act on 16 July 2007 and Primus paid the outstanding charge on 17 August 2007.

A non-confidential version of the notification has now been prepared and is available at the link below.

End of update note

On 16 July 2007 Ofcom issued a notification to Primus under section 40 of the Act in relation to a contravention of its duty to pay an administrative charge to Ofcom under section 38 of that Act. The notification sets out details of the amount of charge outstanding. Primus has until 5pm on 17 August 2007 to make representations and to pay the amount outstanding.

A non-confidential version of the notification is currently being prepared, and will be published shortly.

Text published when case was opened

Ofcom is partly funded by administrative charges levied on (among others) certain designated providers of electronic communications networks. Ofcom is required to raise income from each of the sectors it regulates to cover the costs to be incurred by Ofcom in regulating that sector, together with a proper apportionment of Ofcom’s ‘common costs’ to each of those sectors.

Ofcom’s administrative charges for designated providers of electronic communications networks and services are levied according to self-certified relevant turnover for each provider.

On 31 March 2005, Ofcom designated descriptions of those persons liable to pay administrative charges under section 38 of the Act. That designation is set out in the statement entitled “Designation and relevant activity guidelines for the purposes of administrative charging” (http://www.ofcom.org.uk/consult/condocs/designation/statement/statement.pdf).

In particular, the designation prescribes as follows: “[d]uring each Charging Year, the Electronic Communications Network, Electronic Communications Service or Associated Facility which is designated for the purposes of section 38 of the Act is any Electronic Communications Network, Electronic Communications Service or Associated Facility where the person providing that Network or Service, or making available that Associated Facility had a Relevant Turnover from Relevant Activities of £5 million or more in the last but one calendar year prior to the charging year in question. (For example, if the relevant Charging Year commences on 1 April 2007, the relevant turnover will be for the calendar year of 2005).”

On 31 March 2006, Ofcom published tariff tables for its administrative charges for 2006/07 (http://www.ofcom.org.uk/about/accoun/tarifftable0607/tarifftable0607.pdf).

The invoice issued to Primus in April 2006 for the administrative charge based on its self-certificated ‘Relevant Turnover’ for the year ending 31 December 2004 has not been paid. Primus has paid part of the invoice, but disputes that the unpaid part of Ofcom’s invoice relates to turnover falling within the meaning of ‘Relevant Turnover’.

Ofcom has therefore opened an investigation to consider whether to take action under section 40 of the Act, the first step of which is for Ofcom to determine whether there are reasonable grounds for believing that Primus is in contravention of a requirement to pay such an administrative charge.

Case Leader: Ruth Gibson ( email:ruth.gibson@ofcom.org.uk)
Case Reference: CW/00956/04/07