Ofcom proposes spectrum licence fee changes
December 13, 2024
By Colin Mann
UK regulator Ofcom is consulting on proposed changes to the annual licence fees (ALFs) paid by mobile network operators to use certain spectrum bands.
It charges mobile network operators annual licence fees for the use of three spectrum bands (900 MHz, 1800 MHz and 2100 MHz). 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 currently total around £320 million (€386m) per year and are paid to His Majesty’s Treasury.
Ofcom aims to set ALFs based on an estimate of the forward-looking market value of the spectrum so that it continues to be used efficiently. In July 2024, Ofcom launched a review of these fees, in response to evidence submitted by BT/EE.
In its review, Ofcom considered submissions from the mobile network operators, used evidence from recent spectrum auctions in the UK and internationally, and applied its method for calculating the fees. Ofcom is therefore now proposing the following changes:
- Reduce the ALFs for 900 MHz spectrum to £1.097 million per MHz (a 21 per cent reduction);
- Reduce ALFs for 1800 MHz spectrum to £0.81 million per MHz (also a 21 per cent reduction); and
- Increase ALFs for 2100 MHz spectrum to £0.766 million per MHz (a 12 per cent increase).
As a result of these changes, the total amount paid by the mobile network operators to use these spectrum bands would reduce by around £40 million per year, with each of the operators seeing a reduction in the total amount they pay. The amount of the reduction varies by operator because they hold different amounts of spectrum in each of the bands.
Ofcom invites comments on these proposals by March 7th 2025. Following a separate consultation on Regulations which would implement its proposals and, subject to responses, Ofcom aims to publish a final statement in summer 2025 (Q2 FY 2025/6).