Operator licence fees could quintuple early next year, but Ofcom says they reflect true market value
Ofcom has announced plans to charge UK mobile operators up to five times more in annual license fees for 900MHz and 1800MHz spectrum currently used for 3G and 4G services.
The communications regulator was directed by the government in 2010 to revise the fees to reflect full market value, and take into consideration the amounts each network paid for licenses in the auction of 800MHz and 2.6GHz bandwidth designated for 4G services earlier this year.
Vodafone, O2, Three, EE and BT paid a combined £2.31 billion in license fees during the auction.
Ofcom spectrum licences
To calculate the market value, Ofcom has not only analysed the amounts paid by each operator, but also the bids in overseas spectrum auctions and the technical and commercial characteristics of each band.
Operators currently pay a combined £24.8 million for the 900MHz band and £39.7 million for the 1800MHz, but Ofcom is proposing the fees rise to £138.6 million and £170.4 million respectively.
Vodafone and O2 currently pay £15.6 million for both bands but under the plans they would have to fork out £83.1 million, while Three’s licenses would rise from £8.3 million to £35.7 million. EE, which uses the 1800 MHz band for its 4G network, will see its fees more than quadruple from £24.9 million to £107.1 million.
Ofcom notes that the figures are based on spectrum holdings after Three gains access to the 1800MHz airwaves it bought from EE as part of the conditions imposed on the merger of Orange and T-Mobile, although this transfer will not be completed until October 2015.
Customers to pay the cost?
The consultation closes on 19 December 2013, but the new licence fees are expected to come into effect early next year. The operators that TechWeekEurope spoke to were unable to say whether or not the increased costs would be passed onto customers at this stage.
“The consultation document was expected and the approach appears to be in line with Ofcom’s earlier guidance. We’ll now be looking through it in detail and will respond to Ofcom in due course,” said an O2 spokesperson.
Ofcom hopes the revised charges will encourage operators to make more efficient use of their spectrum holdings as more and more demands are placed on the UK’s airwaves.
“Spectrum is a valuable and finite national resource, and charging for it can incentivise the optimal use of frequencies,” said the regulator.
Ofcom is already investigating reassigning the 700MHz band currently used for Digital Terrestrial Television for so-called ‘5G’ services, while last week it launched Europe’s first major trial of white space technology.
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