The Commission for Communications Regulation (ComReg) is suing cable firm Chorus to force it to pay 3.5 per cent of its annual revenue to the regulator.
ComReg issued the legal proceedings yesterday following a protracted dispute with the two biggest Irish-based cable firms, Chorus and NTL.
Chorus, which provides more than 200,000 people with television services, is refusing to pay the cable levy, saying it is "unfair" and "excessive".
Likewise, NTL has expressed serious concerns to ComReg about the licence fee, although it is understood to be continuing to pay the 3.5 per cent levy. Between them, the firms have paid up to €20 million since 1999.
Documents released under the Freedom of Information Act show NTL and Chorus are threatening to sue the State to recover any surplus cash raised by the levy that is not spent regulating the cable TV sector.
Under regulations, in place since 1999, ComReg levies a licence fee of 3.5 per cent from cable firms to cover the cost of regulating the sector. But both cable firms believe ComReg does not require the full payment to regulate the sector. The firms also claim they are being unfairly treated as telecom firms pay 0.5 per cent of turnover and their main rival, BSkyB, pays no levy to ComReg.
A letter from NTL managing director Mr Graham Sutherland to the Minister for Communications, Mr Ahern, in March, says NTL thinks the fees levied to date are invalid. It sets a 10-day deadline for the Minister to make a decision on whether to refund a surplus to NTL.
"In the absence of such an indication, NTL will have no option but to resort to other means of vindicating its legal entitlement," says the letter.
NTL and Chorus have paid levies worth up to €20 million since the regulations came into force. They have asked ComReg to provide a detailed breakdown of its budget for regulating the sector to determine where the money has been spent. Correspondence between NTL and ComReg shows both firms were not satisfied by the office's response.
Mr John Doherty, a ComReg commissioner, wrote to Chorus that the change in the regulations in 1999 was to introduce a "revenue neutral" regime. He said ComReg was reviewing the fees and levies it collected to meet its expenses. Chorus's views would be taken into account, he added.
ComReg is due to publish a new standard levy for all communication operators shortly. It has already said this should be set at 0.2 per cent of annual turnover for all firms, whether telecoms or cable TV firms.
But it remains unclear whether NTL and Chorus would accept a new levy regime that enabled their BSkyB to avoid any levy.
Up to now, BSkyB has avoided paying any levy to ComReg because it is based in Britain.
Mr Willie Fagan, director of regulatory affairs at Chorus - 50 per cent owned by Independent News & Media - said last night that the firm objected vehemently to its competitor not paying the 3.5 per cent levy.
Mr Fagan would not comment on whether Chorus would pay its outstanding levies to ComReg or how much it owes the regulator.
Correspondence between Chorus and ComReg shows that the firm made its first-quarter levy payment in January, suggesting the firm may not have made its second-quarter payment.
