British cellcos win appeal over annual licence fee increase

24 Nov 2017

An appeal by British mobile network operators (MNOs) over local telecom regulator Ofcom’s decision to sharply increase annual licence fees in September 2015 has been upheld by the Court of Appeal (CA).

As noted in TeleGeography’s GlobalComms Database, in October 2013 Ofcom set out a revised fee schedule under which the total payable by the UK’s MNOs for their 900MHz spectrum allocations would rise to GBP138.5 million (USD184 million), while for the combined 1800MHz holdings it would increase to GBP170.4 million. Despite a less than favourable reaction from the nation’s cellcos, a final ruling on the matter was issued by the watchdog in September 2015, confirming the significantly higher fees. As per this decision, the quartet would be required to pay a combined annual total of GBP80.3 million for the 900MHz band, and GBP119.3 million for the 1800MHz band; the total – GBP199.6 million – represented a marked increase from the GBP64.4 million the operators were paying prior to the ruling. The new fees came into effect in two phases; one half of the fee increase became due from 31 October 2015, with the full fees payable annually from 31 October 2016.

Now, however, the Treasury may have to issue a refund, after the CA upheld a challenge by the MNOs in which they claimed that the government was not technically allowed to order Ofcom to force annual licence fees higher. According to the Financial Times, the matter was challenged on the basis of EC laws regarding infrastructure investment, and with it possible that the government will now have to return the increase in fees paid over the last two years, it has been estimated that this this figure would be between GBP200 million and GBP300 million. While Ofcom will now have to consult further on plans for annual licence fees, it is understood that the CA ruling could itself yet be appealed in the Supreme Court.

In response to the ruling, an EE spokesman was cited as saying: ‘This case raised an important point of law concerning the Government’s spectrum direction to Ofcom. We are considering the judgment carefully … We’re happy with the outcome as we’ve always supported the view that the trebling of spectrum fees was excessive and would harm network investment.’