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UPD UK Mobile Operators Face Huge Licence Fee Hike for 900MHz and 1800MHz

Thursday, October 10th, 2013 (7:51 am) - Score 870

The Government has found a new way to squeeze extra money out of Mobile Network Operators (MNO) after it directed Ofcom to impose a huge annual licence fee hike upon the 900MHz and 1800MHz radio spectrum bands, which are used for voice, 3G and 4G based mobile services across the United Kingdom.

It’s no secret that some people had been expecting the recent 4G (800MHz and 2.6GHz) auctions to raise more than it did (here). The Government’s Chancellor of the Exchequer, George Osborne, had specifically hoped to rake in around £3.5bn from the auction and indeed the operators themselves made total “theoretical” bids of roughly £5.2bn. But in the end the final total came to just £2.368bn.

So it’s perhaps not surprising that Ofcom, under government direction, was instructed to revise its annual licence fees for the 900MHz and 1800MHz spectrum bands to compensate. This called upon the regulator to “have particular regard to the sums bid for licences in the 4G auction“. Ofcom also compared the amounts bid to similar overseas spectrum auctions and assessed the “technical and commercial characteristics” of the related bands.

As a result mobile operators, which currently pay a combined total of £24.8m per year for 900MHz spectrum and £39.7m for 1800MHz, will now find themselves having to fork out £138.5m per year for 900MHz and £170.4m for 1800MHz. Ofcom states that “spectrum is a valuable and finite national resource, and charging for it can incentivise the optimal use of frequencies.”

Revised Licence Fees Per Operator
Vodafone
Current: £15.6m
Proposed: £83.1m

O2
Current: £15.6m
Proposed: £83.1m

EE
Current: £24.9m
Proposed: £107.1m

Three UK
Current: £8.3m
Proposed: £35.7m

The changes are still subject to consultation, which closes on 19th December 2013, and the new annual licence fees are then likely to be introduced sometime in 2014. Naturally the usual fear is that some of this increase could end up resulting in higher prices for customers, although any hike would probably be quite small.

UPDATE 3:09pm

A spokesperson for Vodafone has responded, “We are disappointed that Ofcom is proposing a 430% increase in the fees we pay for our existing spectrum at a time when we are investing more than ever in vital national digital infrastructure. The regulator should be encouraging such private sector investment in infrastructure and new services like 4G, which will benefit consumers, businesses and the wider British economy for many years to come.”

It will be interesting to see whether operators can encourage Ofcom to lower the surprisingly high increase.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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21 Responses
  1. Avatar Captain Cretin

    Well they have to pay the Commons wine and spirits bill SOMEHOW.

  2. Avatar GNewton

    And they have to give BT so much money, too!

    • Avatar FibreFred

      This has nothing to do with BT, some would look at your comments as trolling

    • Avatar JNeuhoff

      @GNewton: It seems FibreFred always has to jump into any forum thread to defend his beloved BT copper VDSL. And GNewton, you are right, it is a fact that BT has received hundreds of millions of taxpayer’s money, and many forum members can now see how questionable this arrangement really was. Money doesn’t grow on trees, hence the taxation of wireless frequencies.

    • Avatar Roberto

      Er actually its possible BT would enter the equation especially if some of those “fees” (ill call it a tax) from the increase get re-circulated back into funding for FTTC and BTs pocket.

    • Avatar FibreFred

      Oh Deduction, that is a very desperate leap even for a troll

    • Avatar Roberto

      Not a leap and i am not deduction, its just people that disagree with you using logic you have no worthy response for.

  3. Avatar Tax Payer

    Please do NOT cry a river for these multi-national corporations, after all they pay virtually no corporation TAX in the UK on billions of pounds they generate annual, how else we supposed to get them to pay some tax. About time we squeezed them hard on a resource they cannot live without (finite radio spectrum), we should all be paying for the recession bailout – not just PAYE earners.

  4. Avatar dragoneast

    We’re the ultimate taxpayers, not the “corporations”! But why are the Government keeping a dog and barking themselves? (I know: “It’s the economy, stupid”.) Still, I’m sick and tired of the administration of this Country where everyone is responsible for bits of everything and as a result no-one is responsible for anything. Chaos.

  5. Avatar FibreFred

    There’s no maintenance on thin air, its a license to print money so…. too right.

    • Avatar Roberto

      Except its not thin air, there are these things called towers for your mind to understand think of them like a BT exchange and then there are these things called wires in their network also juggling data around. It must come as a shock to you that in reality actual equipment is still needed to send and receive a digital signal.

    • Avatar JNeuhoff

      @Roberto: FibreFred uses copper VDSL, he doesn’t use wireless broadband.

    • Avatar Roberto

      His logic as a BT fan seems to be flawed at every angle. If sending something by air is a license to print money BT have done very well at that scam with their BT-FON/Wifi product that leeches bandwidth from paying customers.

    • Avatar FibreFred

      I was talking about the feed to the customer a cable v thin air shame it was lost on you both but doesn’t come as any real surprise

    • Avatar Roberto

      Im talking about BT-FON service which is also thin air. Except worse than the mobile operators as BT charge for the same bandwidth twice. Once to the Landline subscriber and once to the FON subscriber who leeches the bandwidth wirelessly via homehubs. That is clearly lost on you and your initial clueless remark though.

  6. Avatar zemadeiran

    I am not sure if the ofcom puppets are a bunch of a holes or the mobile firms are moaning bitches, this said however I believe that we “Joe Public” are going to be fucked over again…

    As long as you have people like the ex head honcho of hmrc giving advice to corporates on how to best use tax loopholes then we are truly up shit creek without a paddle.

    • Avatar DTMark

      This is the State thrashing around trying to extort money from somewhere, anywhere, to keep the Big State going in a country which is basically bankrupt and only appears otherwise through direct manipulation of the monetary system (for example Quantatative Easing) and corporatism schemes like “Help to Sell” for the house-builders.

  7. Avatar DTMark

    “Ofcom states that spectrum is a valuable and finite national resource, and charging for it can incentivise the optimal use of frequencies.”

    How does selling an entire frequency spectrum to one operator on a national basis accomplish that?

    Selling discrete frequency ranges to individual operators in individual areas would incentivise more rapid rollout and prevent hoarding. It might even achieve the stated benefits and demonstrate an iota of “joined-up thinking”.

    But then that would require OFCOM to get off their backsides and maintain a database.

    And it doesn’t bring in a windfall for the government through the taxation of “fresh air”.

  8. Avatar Sledgehammer

    All I can see these increases doing is 1. increase the charges for 4G usage 2. put a damper on the uptake of 4G. End result under usage of finite resources. Well done to the Gov: and Ofcom we are well and truely screwed.

    • Avatar Roberto

      Indeed nothing more than another attempt to support the BT cable cartel the government have spent millions on. Competition is bad if you are a greedy corporate henchman. They also did a similar thing when 3G came along to make it worthwhile for BT to continue its ADSL2+ upgrades.

  9. Avatar dragoneast

    Com’on folks, you’ve all just had the Royal Mail giveaway, all you need to do is wait for the next one, hey? And the Government is trying to boost your house price, so you can go to the Bank for a hand-out. But seriously what is the problem if, as seems to be the case, Ofcom are making sure that the UK spectrum charges are in line with those internationally? Do you believe that the British have the God-given right as His Chosen People to get everything on the cheap? Well, trying telling that to the competitors we have to buy things from, on our small offshore island poor in natural resources: threaten them perhaps with eternal damnation by that God-you-keep-in-your pocket. And before we complain about Government expenditure, think about how much of the economy it keeps afloat – you don’t have to be employed by them or work for them, but I bet many, even most, of your clients receive money from the Government somewhere along the line. It’s the same in all modern economies, even the good ole capitalist USA. Shock, horror, money doesn’t grow on trees as we all grew up believing; you take the benefits, you pay the price. When we grow up, or rather if, we’ll start to realise that life isn’t a fairytale where you just wish and dreams come true.

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