Ofcom opens consultation on revised spectrum licence fee hike

Ofcom set out a new proposal for revised 2G and 3G licence fees in the UK, in a further twist to an ongoing saga that has now seen the regulator revise its initial proposed increase for a second time.

The UK regulator said it has now opened a consultation on the new provisional decision on the revised fees for 900 MHz and 1800 MHz spectrum licences, and will seek views on the impact on mobile operators of a new obligation to provide 90 per cent geographic voice coverage by the end of 2017.

Earlier in February, Ofcom varied the licences of the UK's four mobile operators following an agreement reached between the government and the operators in December to improve mobile coverage across the country.

The latest proposal on licence fees represents good and bad news for the market's four mobile network operators: while Ofcom is now proposing a 10 per cent reduction from the total £246.7 million (€335 million/$379 million) put forward in August 2014, operators would still have to pay £223.3 million, which is considerably more than the current total amount of £64.4 million.

Broken down among the four operators, Vodafone UK, Telefónica UK, EE and Three UK currently pay £15.6 million, £15.6 million, £24.9 million and £8.3 million respectively for the 900 MHz and 1800 MHz bands. Under the latest proposal they would pay £61.2 million, £61.2 million, £75.6 million and £25.2 million respectively.

Ofcom commented that while there could be incremental costs incurred by the mobile operators in meeting the new coverage obligation, "it is unlikely to have a material effect on the market value of the spectrum."

However, the regulator said it is open to considering alternative views before reaching a final decision. The consultation closes on Apr. 17.

The UK government directed Ofcom in 2010 to revise fees paid for the 900 MHz and 1800 MHz spectrum bands to reflect full market value, after the completion of the 4G auction. The two bands are used to provide voice and data services using a mix of 2G, 3G and 4G technologies. The 4G spectrum auction was completed in February 2013.

For more:
- see this Ofcom document

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