Ofcom Revises 900MHz and 1800MHz Licence Fee Increase

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Ofcom reduces the amount it planned to charge mobile operators for existing frequencies, following feedback from operators

Ofcom has lowered proposed licence fee increases for mobile operators using 900MHz and 1800MHz spectrum, following further consultations with stakeholders.

The communications regulator was told by the government to increase the amount it charged operators to reflect true market value after the auction of 800MHz and 2.6GHz bandwidth last year.

Currently, EE, O2, Three and Vodafone pay a combined £24.8 million a year for the 900MHz band and £39.7 million for the 1800MHz frequencies. Last October, Ofcom proposed increasing this to £138.6 million and £170.4 million respectively.

4G © Shkanov Alexey Shutterstock 2012Ofcom spectrum licences

Operators opposed the increases, while the GSMA warned that higher fees could harm investment in 4G networks in the UK. Ofcom claimed that the hikes would force networks to be more efficient with their use of spectrum, which it said is a finite resource.

The new proposed fees will see the four UK operators pay a total of £109.3 million for their 900MHz licences and £137.5 million for the 1800MHz licences.

Vodafone and O2, which currently pay £15.6 million a year for licences, would pay £65.8 million under the proposals, while EE would see its annual bill jump from £24.9 million to £86.4 million. Three’s fees would rise from £8.3 million to £28.8 million as the figures are based on spectrum holdings after the sale of EE’s sale of 1800MHz to Three in October 2015.

“We expected substantial responses to our initial proposals, which are based on complex analysis,” says Philip Marnick, Group Director of Ofcom’s Spectrum Group. “We’ve listened carefully to the arguments and evidence put forward during the consultation, which has helped refine our proposals.”

Both bands are used for 2G and 3G services, while the 1800MHz band forms the basis for EE’s 4G network, which was launched in November 2012.

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