Ofcom Review UK Mobile Licence Fees for 900MHz, 1800MHz and 2100MHz

The UK telecoms regulator has announced that, following a request from BT, it has launched a review of the annual licence fees they charge mobile network operators (EE, Vodafone, Three UK and O2) for use of three popular mobile spectrum bands – 900MHz, 1800MHz and 2100MHz – supporting 2G, 3G and 4G (mobile broadband) services.

As regular readers will already know, the cost of Annual Licence Fees (ALF) can be a highly divisive subject. Mobile operators often complain that hikes in this area can mean price rises for consumers and less investment going toward their networks. The horrifically overpriced 3G auction that netted a staggering £22bn in 2000, but which also hobbled the roll-out and network investment in related services, is just one such example.

In recent years, Ofcom and the Government have worked somewhat more effectively to address the issue of spectrum pricing, although some grumbles will always exist. But the cost of such licence fees can also be influenced by other factors, such as the ongoing removal of 3G services, as well as the desire to make modern 5G services available via the same bands.

Suffice to say that the market regulator has now decided to launch a review of the annual licence fees they charge for use of the 900MHz, 1800MHz and 2100MHz bands.

Ofcom’s Statement

Annual licence fees (ALFs) are fees we charge mobile network operators to use certain spectrum bands. They typically come into effect after a mobile operator’s licence won at auction has come to the end of the initial licence period. The fees are designed to ensure that the spectrum is used efficiently. We currently charge ALFs for three mobile spectrum bands (900 MHz, 1800 MHz and 2100 MHz).

On 28 March 2024, BT wrote to Ofcom to request a review of the ALFs we charge for 1800 MHz spectrum. We have now considered BT’s request, and we consider that the evidence suggests that a fee review is justified. As a result of the commonalities in the formula we use to set ALFs, we have decided to begin a review of all of the ALFs we currently charge (that is, ALFs for 900 MHz, 1800 MHz and 2100 MHz spectrum).

At this stage there’s not a lot of official detail on the context for Ofcom’s decision and BT’s request, although at the start of this year the Government did ask Ofcom to review their “market-based approach to mobile spectrum management“, which could impact their approaches to both allocating and charging for spectrum.

In January 2024, Ofcom said: “If there is sufficient evidence of a possible material misalignment between our fees and the underlying market value of the relevant spectrum, we will review the precise levels of ALFs.” Perhaps BT has now provided some of that evidence. The regulator currently aims to report their “initial findings” by the end of 2024.