UK operators win licence fee reduction

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UK operators have won a reprieve in the amount of money they will pay for 800MHz and 1800MHz spectrum, after regulator Ofcom reduced their proposed charges.

Currently EE, O2, Vodafone and Three pay £64.4 million (€80.9 million) for their holdings across the two bands of frequency. Ofcom was told in 2010 by the British Government that it needed to revise these in order to reflect how the market value had changed.

In October 2013, Ofcom proposed EE would pay £107.1 million (up from £24.9 million), O2 and Vodafone pay £83.1 million each (both up from £15.6 million), and Three pay £28.8 million (up from £8.3 million).

Operators objected to these proposals, which amounted to an almost fivefold increase in licence fees. They said the hike in fees could lead to an increase in consumer prices, damage investment in infrastructure, as well as harm innovation and competition in the UK mobile market.

This morning, Ofcom released fresh figures, which it said were based on bids made in last years 4G auction for 800MHz and 2.6GHz spectrum, measuring it against the amount paid in other countries and track spectrum fees over a 20 year period.

The revised total is £246.8 million, which amounts to a 20.1 percent reduction on the 2013 proposals but a 283.2 percent increase on the existing figures.

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.”

A spokesperson for EE was critical of the new proposals. She said: "Ofcom's new annual licence fees proposals for 1800 MHz spectrum remain unjustifiably high at three and a half times current levels. They fail to adequately address the impact of significantly higher licence fees on investment in mobile networks and on consumer pricing. The proposals are out of touch with the consumer appetite for mobile coverage in even more places across the UK.”

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