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Proposed licence fees for mobile spectrum

October 10, 2013

Ofcom has today published a consultation on revising annual licence fees for the 900 MHz and 1800 MHz spectrum bands, currently used by mobile network operators.

These bands are used for voice calls, 3G and some 4G services. In December 2010, the Government directed Ofcom1 to revise these fees so that they reflect full market value.

The Government Direction required that, in setting these fees, Ofcom should have particular regard to the sums bid for licences in the 4G auction for 800 MHz and 2.6 GHz spectrum, which Ofcom completed earlier this year.2

Spectrum is a valuable and finite national resource, and charging for it can incentivise the optimal use of frequencies.

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

Calculating the new licence payments

To calculate the full market value of the spectrum, Ofcom has:

  • analysed the sums paid in the 4G auction;
  • compared the amounts bid in overseas spectrum auctions; and
  • assessed the technical and commercial characteristics of the UK spectrum bands.

This has produced revised proposed total fees payable by mobile network operators of £138.5m per year for 900 MHz spectrum and £170.4m for 1800 MHz spectrum.

The table below shows how much each mobile network operator pays annually for this spectrum and the revised amount as set out in the proposals on which Ofcom is consulting today.

Current and proposed total annual licence fees for 900 MHz and 1800 MHz spectrum

Vodafone O2 EE* H3G*
Current Proposed Current Proposed Current Proposed Current Proposed
£15.6m £83.1m £15.6m £83.1m £24.9m £107.1m £8.3m £35.7m

* EE and H3G figures relate to holdings after EE’s divestment of 1800 MHz spectrum to H3G, to be completed in October 2015.

Subject to this consultation, new annual licence fees are likely to come into effect next year. The consultation closes on 19 December 2013.

ENDS

NOTES FOR EDITORS

  1. The Government’s Direction was made on 20 December 2010.
  2. Ofcom’s 4G auction was completed in February 2013. Everything Everywhere Ltd, Hutchison 3G UK Ltd, Niche Spectrum Ventures Ltd (a subsidiary of BT Group plc), Telefónica UK Ltd and Vodafone Ltd all won spectrum.

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