Ofcom confirms new annual licence fees for 900MHz/1800MHz frequencies

24 Sep 2015

British mobile network operators will be required to pay significantly higher fees to use spectrum in the 900MHz and 2100MHz bands following a final ruling from sector regulator Ofcom.

The telecoms watchdog has published revised annual fees, concluding that the UK’s cellcos should pay a combined annual total of GBP80.3 million (USD123 million) for the 900MHz band and GBP119.3 million for the 1800MHz band. While the total – GBP199.6 million – represents a significant increase from the GBP64.4 million the operators currently pay, Ofcom noted that it is 13% lower than the proposals it put forward in February this year. Explaining its decision to revise its original plans, Ofcom said that the final levy for the 1800MHz band was 3% lower, reflecting a reduction in the ‘discount rate’ used to convert a ‘lump-sum value’ (of the type paid by licensees when they acquire a licence in an auction) into an equivalent annual payment. Meanwhile, the final charges for the 900MHz band, which are 24% lower than the February 2015 proposals, reflect the discount rate reduction and the prices paid in Germany’s spectrum auction, which concluded in June 2015.

These new fees come into effect in two phases: one half of the increase, from the current to the new rates, is applicable from 31 October 2015, while the full fees will subsequently be payable annually from 31 October 2016. Additionally, despite the nation’s operators having previously paid their respective charges at different points in the year, in the future there will be a single common payment date set by the regulator.

Commenting on the development, Philip Marnick, Ofcom’s Group Director of Spectrum, was cited as saying: ‘We have listened carefully to the arguments and evidence put forward by industry, and conducted a complex and comprehensive analysis to determine the new fees … The mobile industry has not previously had to pay market value for access to this spectrum, which is a valuable and finite resource, and the new fees reflect that value.’

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