P.CH. - Fotolia

Ofcom hikes licence fees for mobile spectrum

Ofcom more than trebles the annual licence fees it charges UK operators for mobile spectrum

Ofcom has published revised annual spectrum licence fees for mobile operators after being told by the government to revise them to reflect market value.

As a result the fees – which cover the 900MHz and 1,800MHz spectrum bands used for 2G, 3G and 4G networks – have now more than trebled from £64.4m per annum to £199.6m per annum.

Ofcom group director of spectrum Phil Marnick said the telecoms regulator had listened carefully to the arguments and evidence put forward by industry, and consequently the final fees were actually 13% lower than it had originally wanted.

“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,” he said.

EE will now have to pay £75m per annum, up from £24.9m; O2 £49.8m, up from £15.6m; Three £25m, up from £8.3m; and Vodafone £49.8m, up from £15.6m.

The fee rates will henceforth be updated to account for inflation. Ofcom also said it would set a single common payment date for all four operators, which previously paid at different points in the year.

The new charging regime will come into effect in two phases: one half of the fees increase from 31 October 2015, and the second half a year later, with full fees payable annually from that point.

The mobile network operators kept largely quiet about how they would absorb the increased costs.

A spokesperson for Vodafone said: “We will be reviewing Ofcom's proposed spectrum fees over the coming days as they represent a significant increase when we are already investing around £1bn on our network and services this year.”

O2 said that it too was examining the proposal in detail before deciding how best to proceed.

None would disclose whether or not the increased fees that Ofcom plans to charge them would be passed on to business or consumer customers.

Kester Mann, principal operators analyst at comms analysis house CCS Insight, said: "Operators will inevitably protest at the large hike in fees and are likely to warn that investment in networks and services will be impacted as a result.

"However, the reality is that this is a pill the providers are going to have to swallow. In one of Europe’s most competitive markets, they have no choice but to continue to make improvements to coverage and capacity and have little margin to adjust pricing to compensate."

Read more on Mobile networks