Ofcom revises down spectrum price increases

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Proposed increase to annual licensing fees revised downwards by regulator but still represent a significant hike

Ofcom has revised down its proposed increase to spectrum licence fees that it charges to operators on an annual basis.

The regulator had announced a price hike in October 2013 that would have seen operators annual licence fees increase almost five-fold across the board.

It followed the government tasking Ofcom with reviewing the licence fees for following the 2010 auction of 4G spectrum to realise their ‘full market value’. The operators were understandably unhappy.

Last week, the regulator announced it would be delaying the implementation of the price hikes until early next year and it has now published a new set of proposals for the amount it will charge 900MHz and 1800Mhz spectrum, which are predominantly used to deliver 2G and 2G services.

EE currently pays £24.9 million for its spectrum and the new proposal suggests a payment of £86.4 million, down from £107.1 million in the October 2013 proposals.

O2 and Vodafone pay £15.6 million and it is proposed this will now increase to £65.8 million, down from £83.1 million.

Three, which pays £8.3 million annually, is now being proposed to pay £28.8 million by Ofcom, down from £35.7 million.

O2 and Three welcomed the decision to further consult on the licence fees and said they would study them in due course.

“Previous fee proposals would have hampered industry investment and put pressure on retail prices, to the detriment of mobile phone customers. We’ll read through the revised proposals over the coming weeks,” said an O2 spokesperson.

Three added: “We are still reviewing Ofcom’s proposals but the new consultation goes some way to bringing proposed fees for 1800MHz spectrum closer to its real value. We will continue to work with Ofcom to develop a license fee process which reflects the true value of different frequencies of spectrum.”

Vodafone said it was reviewing the proposal and would continue to speak to Ofcom.

EE said it was preparing a statement.

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