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Ofcom consults on licence fees for mobile spectrum

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The UK telecoms regulator, Ofcom has published plans to revise the annual licence fees for the 900 MHz and 1800 MHz spectrum bands used by mobile network operators.

The Government directed Ofcom in 2010 to revise fees to reflect full market value, after the completion of the 4G auction. The two bands are used for 2G and 3G, including voice calls, and some 4G services.

Today's proposals build on earlier analysis, following consideration of responses from stakeholders. Taken together, the changes to the analysis decrease the overall proposed levels of fees, although some of the individual numbers that make up the fees have risen.

Mobile network operators currently pay an annual combined total of £24.8 million per year for 900 MHz spectrum and £39.7 million for 1800 MHz spectrum.

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."

Updated calculations for new licence payments

After 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.

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).

Current and proposed total annual licence fees

  Vodafone Telefónica EE H3G
Current £15.6m £15.6m £24.9m £8.3m
Proposed in October 2013 £83.1m £83.1m £107.1m £35.7m
Revised proposals £65.8m £65.8m £86.4m £28.8m

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Tags: ofcom  radio spectrum  UK