The U.K.’s four main mobile operators will have to pay significantly more in annual spectrum licence fees, starting next month.
Ofcom on Thursday announced a price hike for use of the 900 MHz and 1800 MHz bands. In total the telcos will pay £199.6 million a year, which is lower than the sum the regulator proposed earlier this year, but three times as much as they pay currently.
"The mobile industry has not previously had to pay market value for access to this spectrum, which is a valuable and finite resource, and the new fees reflect that value," said Ofcom’s director of spectrum Philip Marnick.
The U.K. government called for the fees to be revised in 2010 to reflect the full market value of the spectrum, and since then Ofcom has undertaken a series of consultations and market analysis before arriving at a new figure.
In February it proposed a total bill of £223.3 million. At the time it said the figure had been lowered slightly to take into account a pledge from operators to provide voice and SMS coverage to 90% of the U.K.’s landmass by the end of 2017. On Thursday though it noted that it did not see the coverage commitment as having an impact on the true market value of the airwaves.
However, Germany’s recent spectrum auction did make a difference to its thinking. The prices paid in the German multi-band auction in June led Ofcom to reduce the fee for 900 MHz spectrum by 24% compared with its February proposal.
As such, Vodafone and O2 are now facing a lower price hike than they might have otherwise.
Both telcos will now pay £49.8 million a year for use of their 900 MHz and 1800 Hz spectrum, up from £15.6 million.
With the largest spectrum holding of the four, EE faces the biggest bill at £75 million per year, as opposed to the £24.9 million it pays now.
And smaller player 3UK will pay £25 million a year for its 1800 MHz holdings, up from £8.3 million.
The figures for EE and 3UK take into account their spectrum holdings once EE has divested some 1800 MHz spectrum to its rival; that deal is due to be completed next month.
Operators will not have to find all of the extra money immediately though. Ofcom said half of the fee increase will come into effect on 31 October, with the other half kicking in a year later.
