Ofcom on Thursday announced that it will take the results of the recently concluded German spectrum auction into account when setting the annual licence fees U.K. operators must pay for frequencies in the 900 MHz and 1800 MHz bands.
"Ofcom considers that this auction provides relevant evidence for the purposes of estimating the market value of the 900 MHz and 1800 MHz licences in the U.K.," the regulator said, as it published an updated version of its ongoing consultation into mobile licence fees.
The German auction drew to a close in mid-June after 181 rounds of bidding. The country raised €5.08 billion from the sale of spectrum in the 700 MHz, 900 MHz, 1500 MHz and 1800 MHz bands to Deutsche Telekom, Vodafone and Telefonica.
Ofcom has analysed the results of the German auction and its possible implications for the value of 900-MHz and 1800-MHz spectrum in the U.K., factoring in variables such as spectrum caps and the likelihood of strategic bidding.
Amongst other things, it noted that the €1.3 billion raised from the sale of 900 MHz spectrum in Germany could be an understatement of its market value, although it noted that it could not be sure of the likelihood or scale of such a risk.
When it came to the 1800 MHz band, the regulator said it could see no evidence to suggest whether its value was over or under-stated in Germany. The sale of 1800-MHz airwaves in Germany raised €2.4 billion.
As directed by the government following the U.K.’s 4G auction, Ofcom is in the process of revising the annual licence fees, or ALFs, that holders of 900-MHz and 1800-MHz spectrum are required to pay. It has published a series on consultations on the subject, the first one being in October 2013 and the most recent, before this new one, in February 2015.
As part of the process it is carrying out an international benchmark analysis, looking at the results of spectrum auctions in Europe since the start of 2010 that included at least one of the ALF bands.
Stakeholders will be able to comment on Ofcom’s initial analysis of the German auction until 7 August.
