Ofcom hits operators with spectrum fee price hike

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Totals fees that will be paid by operators for using 900 MHz and 1800 MHz spectrum bands more than trebled to £200 million as part of regulator review

Ofcom has revealed the new license fees to be paid by mobile operators to use the 900 MHz and 1800 MHz mobile spectrums.

The combined fee paid by the four major mobile operators has been almost trebled by the regulator – from £64.4 million to £199.6 million.

In 2010, the government tasked Ofcom with revising the fees, which the operators pay every year for their spectrum use.

EE is paying the most for its spectrum (£75 million, up from £24.9 million), followed by Vodafone and O2 (both will pay £49.9 million, up from £15.6 million) and Three (£25 million, up from £8.3 million).

Ofcom’s group director of spectrum Phillip Marnick said: “We have listened carefully to the arguments and evidence put forward by industry, and conducted a complex and comprehensive analysis to determine the new fees.

“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.”

Ofcom had been forced to go back to the drawing board after making initial proposals in February that would have seen the prices increase five-fold. The regulator said these costs are 13 per cent lower than the initial proposals, which would have seen the operators paying a combined £228 million per year.

The new costing will come in to effect in two stages, according to the regulator. One half of the fees increase, from the current to the new rates, will come into effect on October 31, while the full fees will come into force a year later.

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EE has slammed the price hikes and warned that it could damage infrastructure investment, having a negative impact on consumers and businesses.

CCS Insight Principal Analyst, Operators, Kester Mann said that while the operators will not welcome the price hikes, it is a bitter pill they will have to swallow.

“Although the fees are 13 per cent lower than those proposed in February, they still represent a significant increase from current levels,” Mann explained.

“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.”

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