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4G costs likely to rise as Ofcom looks to quadruple spectrum fees

Updated Claims 900MHz and 1800MHz spectrum is 'undervalued'
Thu Oct 10 2013, 10:51
Radio mast used for telecoms connections such as 3G and 4G

UK COMMUNICATIONS REGULATOR Ofcom proposed plans to increase the annual fees for licensing the 900MHz and 800MHz spectrum on Thursday, which could lead to mobile operators hiking 4G prices in the UK.

In December 2010, the UK Government advised Ofcom to revise 4G spectrum fees in line with market values, telling the body to consider the amounts paid in the recent 4G auction for 800MHz and 2.6GHz spectrum.

At present the big four mobile operators in the UK - EE, Vodafone, O2 and Three - pay £64.5 million in total a year in licensing fees for use of the 900MHz and 1800MHz spectrum, the bands used for voice calls and 3G and 4G services. However, Ofcom announced today that it is looking to up that price by £244.4m.

Citing concerns that the spectrum is "undervalued" because it is no longer used for 2G services, Ofcom is proposing that Vodafone and O2 each cough up £83.1m annually, while EE and Three's amounts are likely to be increased to £107.1m and £35.7m per year, respectively. The four mobile operators presently fork out £15.6m, £15.6m, £24.9m and £8.3m per year for use of the spectrum, respectively.

Ofcom's proposed 4G licensing price increases are over 432 percent for Vodafone and O2, and more than 330 percent for EE and Three.

Ofcom said in a statement, "The Government Direction required that, in setting these fees, Ofcom should have particular regard to the sums bid for licences in the 4G auction for 800 MHz and 2.6 GHz spectrum, which Ofcom completed earlier this year.

"Spectrum is a valuable and finite national resource, and charging for it can incentivise the optimal use of frequencies."

EE doesn't seem too bothered by the cost hike, telling The INQUIRER in a statement, "The industry has been aware of a Government-directed planned increase to spectrum licence fees, and Ofcom's proposal gives us further guidance.

"EE will engage in Ofcom's consultation process and reflect our view that there must be a balance between licence fees and the critical 4G network investment consumers and businesses are demanding to drive growth and jobs for the UK economy.

"The proposed increase in licence fees is excessive at a time when we are investing heavily in the roll out of 4G."

We are yet to hear from O2, Three and Vodafone. 

These proposals, if approved, are likely to take effect in 2014. µ

 

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