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EE slams Ofcom over licence fee price hike

James Pearce
September 24, 2015

O2 and Vodafone said it will review decision after regulator trebled combined annual spectrum costs to almost £200 million

EE launched a scathing attack on Ofcom after today’s news that the regulator has trebled annual charges operators pay for mobile spectrum licences.

The operator will pay £75 million per year for its 800 MHz and 1800 MHz spectrum  from October next year – three times the £24.9 million it currently pays – after the regulator introduced new pricing for the spectrum bands.

A spokesperson for EE said Ofcom had taken a “flawed approach” in how it determined the new fees, putting investment in to its network at risk.

“We think Ofcom has got this wrong,” the EE spokesperson added. “The proposed licence fees for 1800MHz spectrum are based on a flawed approach.

“The trebling of fees is bad news for British consumers and business as it raises the risk that we won’t be able to offer the best prices, and invest and innovate at the pace we and our customers would like.

“We’re also very disappointed that Ofcom has not reflected the higher costs we’ve taken on to meet enhanced coverage obligations that Ofcom and Government encouraged us to accept.”

A spokesperson for the regulator dismissed EE’s criticism and said operators had been given five years to prepare for the potential increase in fees.

The Ofcom spokesperson said: “Mobile operators have a strong incentive to invest in networks and to keep prices competitive. The operators have had five years’ notice that the fees would be increased to reflect full market value and we expect them to have budgeted for this.

“We’ve listened carefully to the arguments and evidence put forward by industry. The fees announced today are in line with analysts’ expectations and with the amounts that operators pay for accessing spectrum in other countries.”

Other operators react

Ofcom announced the new costs today after the Government ordered a review into spectrum pricing in 2010. Overall, the industry will pay almost £200 million per year for the spectrum bands – up from £64.4 million.

Unlike in previous years,the new system will require mobile operators to pay on a single common payment date that will be set by the regulator. The first half of the new increases will come in to force from the end of October, with the complete price hike being enforced on October 31 next year.

O2 also saw its costs more than trebled from £15.6 million to £49.8 million, the same as Vodafone. Three’s annual charge was increased from £8.3 million to £25 million.

An O2 spokesperson said: “We’re examining the decision in detail before deciding how best to proceed.”

This position was echoed by Vodafone. A spokesperson for the operator 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 £1 billion on our network and services this year.”

Three declined to comment on the price increases.

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