Ofcom Considering Increasing 4G Spectrum License Fees For Carriers

10 October 2013

Ofcom:

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 Ofcom 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.

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.

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.

Basically, the government were hoping to sell the initial 4G spectrum licences to carriers for £1.5 billion pounds more than they got. Now, to claw back some of that revenue, they are raising the rental prices for the 4G bands.

Would they have considered raising annual fees if the 4G auction had met its revenue targets? I doubt it.