Ofcom publishes proposals for changes to 900MHz, 1800MHz annual fees

11 Oct 2013

UK telecoms regulator Ofcom has published a consultation regarding a proposed revision to the annual licence fees for the 900MHz and 1800MHz spectrum bands, after the government in December 2010 directed it to revise the charges so that they reflect full market value. In outlining its proposals, Ofcom noted that the Government Direction called for it to make the price changes with a particular regard to the money generated by the 4G spectrum auction that was concluded in February 2013.

In order to calculate the new pricing structure for licence payments, and to ensure it will realise the full market value of the spectrum, Ofcom said it had: analysed the sums paid in the 4G auction; compared the amounts bid in overseas spectrum auctions; and assessed the technical and commercial characteristics of the UK spectrum bands. Following such action, as per the watchdog’s revised fee schedule the total payable by the UK’s mobile network operators for their 900MHz spectrum allocations will rise to GBP138.5 million (USD222 million), while for the combined 1800MHz holdings it will increase to GBP170.4 million. On an operator-by-operator basis, market leader EE will see its current annual fee of GBP24.9 million more than quadruple to GBP107.1 million, while both Vodafone UK and O2 UK will each be required to pay GBP83.1 million a year, up from GBP15.6 million. Rounding out the market, the smallest cellco by subscribers Hutchison 3G UK will see its annual fees also increase more than four-fold, from GBP8.3 million to GBP35.7 million.

Subject to the consultation on Ofcom’s proposals, it has said the new annual licence fees are likely to come into effect next year. Interested parties now have until 19 December 2013 to make submissions regarding the matter.

Unsurprisingly perhaps, the initial reaction from the nation’s cellcos has been less than favourable, with the Financial Times citing a Vodafone UK spokesman as saying of the development: ‘We are disappointed that Ofcom is proposing a 430% increase in the fees we pay for our existing spectrum at a time when we are investing more than ever in vital national digital infrastructure … The regulator should be encouraging such private sector investment in infrastructure and new services like 4G, which will benefit consumers, businesses and the wider British economy for many years to come.’

United Kingdom, EE, Hutchison 3G UK (Three UK), O2 UK, Ofcom, Vodafone UK