The regulator is seeking industry comments on its current evaluation of the spectrum, which operators would be required to pay for from the start of 2022
Ofcom has today outlined its proposals for the annual licence fees for 2,100MHz spectrum and is seeking comment from the industry.
The 2,100MHz band was first auctioned back in 2000 for 3G services with 20-year licence terms. However, by 2011 the government had directed Ofcom to alter the licencing terms, making them indefinite, and instead introduce an annual licence fee, payable from the start of 2022.
Later, in 2013, Ofcom extended the use of 2,100MHz band spectrum beyond 3G, allowing it to be used to provide 4G services.
All four of the UK’s major operators currently own spectrum in this band, with EE having the largest share (50MHz), followed by Three (24.6MHz), Vodafone (29.6MHz), and finally O2 (25MHz).
Today, Ofcom have released its suggested pricing scheme for both paired and unpaired spectrum, having been told by the government to ensure that these figures accurately represent the spectrum’s current market value.
The proposal sees paired spectrum priced at £0.567 million per MHz and £0.290 million per MHz for unpaired spectrum. Operators will be given the chance to pay the annual fee in a single payment, or in ten equal monthly instalments.
Exactly what the operators will make of these proposed prices is unclear, but they are unlikely to be too upset. When the spectrum was first auctioned in 2000 the spectrum raised an incredible £22.5 billion. In that auction, which notable exceeded expectations, the operators paid £380.6 million on average for one MHz of paired spectrum.
Adjusted for inflation, this figure would be around £570.9 million today, meaning Ofcom’s evaluation of the spectrum’s worth has not changed significantly from what the operators agreed to pay over two decades ago.
In related news, Ofcom recently proposed changes to the current licences for 800MHz spectrum, aiming to bring them more in line with those of the 700MHz band allocated in the most recent auction. A number of technical changes would be required to align the licences more closely, the result of which should make it easier for manufactures to produce equipment compatible with both bands.
Is spectrum becoming available fast enough in the UK? Find out what the operators think at this year’s live Connected Britain event