Proposed mobile spectrum licence fees revised down by Ofcom

Out-Law News | 04 Aug 2014 | 3:58 pm | 1 min. read

Ofcom has reduced the fees it plans to charge network operators for the use of two frequencies that are used to deliver mobile broadband to customers.

Vodafone, Telefónica, EE and Hutchison 3G UK (Three) would pay between them £246.8 million (77-page / 784KB PDF) for access to the 900 MHz and 1800 MHz spectrum under the new proposals. Ofcom had originally proposed a total £309m annual licensing charge for use of the spectrum by the mobile operators.

Ofcom said its revised plans follow comments it received during a consultation on its original plans last year.

"After carefully reviewing stakeholders' responses, Ofcom has updated its analysis of: the bids made in the 4G auction for 800 MHz and 2.6 GHz spectrum; the interpretation of international benchmarks; and the calculation used to convert the total value of the spectrum into an annual fee, over 20 years," Ofcom said. "This has produced revised proposed total fees payable by mobile network operators of £109.3m per year for 900 MHz spectrum and £137.5m for 1800 MHz spectrum (at March 2013 prices)."

However, the proposed new annual licensing fees are far in excess of the fees the mobile operators pay annually for use of the spectrum.

Vodafone and Telefónica each pay £15.6m annually to use the 900 MHz and 1800 MHz frequency bands at the moment, whilst EE pays £24.9m and Three pays £8.3m. Under the revised plans, Vodafone and Telefónica would each pay an annual licensing fee of £65.8m. EE would pay £86.4m and Three £28.8m under the latest plans.

Ofcom was ordered by the UK government to revise the current licensing fees for the two frequency bands to "reflect full market value" in light of the fact the bands are now being used to deliver some 4G services by the operators as well as 2G, 3G and voice calls.

Philip Marnick, group director of Ofcom's spectrum group, said: "We expected substantial responses to our initial proposals, which are based on complex analysis. We've listened carefully to the arguments and evidence put forward during the consultation, which has helped refine our proposals. We're conducting a further consultation to ensure we reach an appropriate view about the best approach to setting the annual licence fees. We expect to publish our final decision on mobile licence fees around the turn of the year."

Ofcom's consultation closes on 26 September.