Carrier fees and levies fact sheet

Background

Carriers are required to contribute to the cost of providing the universal service obligation (USO), the digital data service obligation (DDSO) and the National Relay Service (NRS), and are also required to pay carrier licence fees.

Carrier contributions to these obligations, paid as levies, and annual carrier licence fees are based, in part, on each carrier's eligible revenue.

This fact sheet provides an overview of how these fees and levies are calculated to assist the telecommunications industry to make a rough estimate of potential future costs. It is not possible to be precise about future fees and levies because the amount of eligible revenue and the total amount that the industry must contribute changes from year to year.

Eligible revenue

Each year, the ACMA collects financial information from industry in the form of an Eligible Revenue Return (the Return) to calculate each carrier's eligible revenue.

Eligible revenue is based on the gross sales revenue of the carrier and the other entities consolidated in the financial statements of the carrier and other related parties, less a series of revenue and expense deductions.

The ACMA publishes its assessment of eligible revenue each year. For example, in 2006–07, the total eligible revenue of all carriers was $25,194,429,170.

Universal service obligation and Digital data service obligation levies

The cost of fulfilling the USO and the DDSO is shared among all carriers, based on their eligible revenue, with a small adjustment made for carriers in liquidation or no longer in operation.

For example, in the 2007–08 financial year, the cost of fulfilling the USO was $145,076,237 and $978.75 for the DDSO.

These levies are paid annually. Invoices are typically sent out around September or October of the following financial year. For example, each carrier paid approximately $6 in levies to support the universal service and digital data service obligations per $1,000 of eligible revenue for the 2007–08 financial year.

The levies for 2007–08 were calculated as follows:

levy contribution factor x
(total levy credits + previous levy deficit)
adjustment factor

The 'levy contribution factor' refers to the proportion of industry eligible revenue earned by the carrier using the eligible revenue figures from 2006–07.

The 'total levy credits' is the total of USO and DDSO cost amounts, which in this case was $145,077,215.75.

The 'previous levy deficit' for the calculation of 2007–08 levies was $0.

The 'adjustment factor' is an adjustment for carriers in liquidation or no longer operating at 31 August 2008, which in this case was 0.9967773234.

For a carrier with $1,000 eligible revenue, its USO and DDSO levy is $5.78, calculated as follows:

National Relay Service levy

Carriers are also required to contribute to the cost of providing the National Relay Service (NRS), which enables people with communication impairment to use the telephone.

On 28 November 2005, the then Minister for Communications, Information Technology and the Arts, Senator Helen Coonan made the National Relay Service (Participating Persons) Determination 2005 (No. 1). This Determination varies the criteria for determining eligible persons to pay the NRS levy. From the January 2006 quarter, only carriers with Eligible Revenue of more than $10,000,000 are required to pay the levy.

For the 2007–08 financial year, the total cost of providing the NRS was $14,636,363.60

This levy is paid quarterly. In 2007–08, each carrier contributed approximately $0.15 per quarter for each $1,000 of eligible revenue, or $0.60 per $1,000 of eligible revenue for the year.

The NRS levy for each carrier is calculated using the formula:

total levy x taxpayer eligible revenue
total eligible revenue of all taxpayers

$14,636,363.60 x $1,000 = $0.60
 $24,289,607,754

This is an approximate average for the 2007–08 financial year. Variations would have occurred from quarter to quarter depending on the taxpayers included.

Annual carrier licence charge

The ACMA charges licensed carriers to recover the cost of regulating the telecommunications industry. The annual licence charge paid by each carrier is based on a fixed minimum amount and a variable component based on the carrier’s share of ‘eligible revenue’.

The variable component for each carrier is calculated using the formula:

(total amount to be recovered through annual carrier licence charges—total amount to be recovered through fixed components) x (carrier's eligible revenue/total eligible revenue of all carriers).

The annual charge to carriers consists of a fixed component of less than $1,000 and a variable component based on eligible revenue. These charges are invoiced in the latter part of the financial year.

For example:

• if the total amount to be recovered through annual carrier licence charges was $26,000,000;
• if the fixed component was $100,000, which is say $1,000 for each of 100 entities that had a carrier licence on 1 July; and
• the total eligible revenue of those 100 carriers was $22,000,000,000.

For the financial year, each carrier will pay less than $1,000 + approx $1.18 per $1000 in eligible revenue as its carrier licence fee. The calculation is shown in the table.

Annual carrier licence charge calculation

More information

For more information about how to calculate eligible revenue or the USO and DDSO levies, contact the ACMA's Finance Section on (02) 6219 5555 or by email at uso.err@acma.gov.au.

You can also email the National Relay Service on NRSfeedback@acma.gov.au.

The ACMA has fact sheets on a range of topics.

Please note: this document is intended as a guide only and should not be relied on as legal advice or regarded as a substitute for legal advice in individual cases.