Authorization Fees and the EU Authorisation Directive

The EU Authorisation Directive (the “Directive”) includes provisions related to levying fees on undertakings that provide electronic communications services or that operate electronic communications networks.  The provisions of the Directive that relate to licensing fees are paragraphs 30 to 32 of the introductory section of the Directive and Article 12 of the Directive.

Pursuant to the provisions of the Directive, national regulatory authorities (“NRAs”) are permitted to impose administrative charges on undertakings for the sole purpose of recouping the cost of managing, controlling and enforcing the general authorisation regime and the costs associated with granting rights of use.  Administrative charges that are imposed on undertakings must be limited to the actual administrative costs involved with these regulatory functions.

NRAs that opt to impose administrative charges are required to publish an annual report that sets out the total sum of charges collected and the total administrative expenditures incurred.  NRAs are further required to make appropriate adjustments if there is a difference between the total sum of charges collected and the total amount of expenditures incurred.

The Authorisation Directive does not specify how the administrative costs of NRAs should be allocated among market participants.  The Directive does, however, stipulate that systems for administrative costs should not distort competition or act as a barrier to market entry.  The Directive also states that the levying of charges should be in line with the principles of the general authorization system, namely fairness, simplicity, and transparency. 

While not prescribing the system of administrative charges, the Directive gives two examples of acceptable systems:  a turnover based distribution key (e.g., a revenue-percentage charge) and, where administrative charges are very low, a flat rate charge or a combination of a flat rate charge and a turnover-based fee component.

The Authorisation Directive distinguishes between administrative charges and usage fees for radio frequencies and numbering resources.  The Directive permits the levying of usage fees for scarce resources such as radio frequency and numbers as a means of promoting the optimal use of such resources.   Usage fees must not, however, hinder the development of innovative services or act as a barrier to competition.  The Directive also states that it is “without prejudice to the purpose for which fees for rights of use are employed.”  Thus, NRAs are free to determine the use to which these fees will be put.

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