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Oftel having a ‘laugh’ over new funding proposals

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Plans to force ISPs to pay for the running of telecoms watchdog, Oftel, have been branded a joke by some in the industry.

Yesterday, Oftel published proposals based on new European Union legislation that forces any company in the "electronic communications sector" with annual turnover of more than £5m to contribute to the cost of running the telecoms regulator.

The proposals would mean that a number of ISPs - including AOL UK, Freeserve and Pipex, for example - would be forced to pay a fee for the first time.

While ISPs would have to pay-out, around 100 telcos would be freed from the financial burden, said Oftel.

The new fee structure is due to be introduced from July 25 and would remain even after Oftel - which has an annual budget of around £20m - is replaced by the new giant communications regulator, OFCOM.

Speaking out against the move Pipex boss, David Rickards, told The Register that he "laughed" when he heard of the proposals.

He said it proved Oftel and Government were out of touch since they were effectively taxing broadband. On the one had Government wants the UK to be a top broadband nation, on the other, it is adding an additional financial burden to those trying to roll-out broadband.

And he also questioned whether the industry would be getting value for money from the regulator. "After all, Oftel doesn't have a brilliant track record," he said.

At the moment it is unclear exactly how much ISPs would be forced to pay based on their turnover, although insiders claim that AOL UK and Freeserve could be stung for a six-figure sum. Even ISPs such as Pipex could be slapped with an annual bill running into tens of thousands of pounds.

One industry insider described the move as "affordable but unwelcome".

In a statement Freeserve said: "We're happy to pay Oftel so they can carry on doing a great job." [that's a joke, right? Ed] ®

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