Ofcom reveals licence fees for 900 and 1800 MHz spectrum

Ofcom announced the annual licence fees that mobile operators will pay for 900 and 1800 MHZ spectrum, from 31 January 2019.
Ofcom mobilephone user complaints Q1 2018The operators use 900 MHz and 1800 MHz spectrum bands to provide mobile voice and data services, using a mix of 2G, 3G and 4G technologies.

In June, Ofcom published a consultation on the proposed licence fees that should apply for these spectrum bands.

The appropriate ALFs are £1.093 million per MHz of 900 MHz spectrum; and £0.805 million per MHz of 1800 MHz spectrum.

Ofcom also announced another consultation  on the annual licence fees for the 40 MHz of spectrum in the 3.4 GHz band, and 80 MHz in the 3.6 GHz band, that are licensed to UK Broadband, which is owned by Hutchison 3G UK. The fees for both 3.4 GHz and 3.6 GHz spectrum would be £0.358 million per MHz.

Ofcom will propose the fees for 3.4 GHz spectrum shortly. Ofcom plans to phase-in the increase in fees for 3.6 GHz spectrum over the period to mid-2020. The consultation runs until 11 February 2019.

Comments from telecoms

BT agreed in principle that the distance method remained a valid approach to estimating the UK 1800 MHz lump sum value. BT criticised interpretation of the benchmark data.

BT said Ofcom’s approach related to Tier 2 and 3 benchmarks will not have impact on the valuation of 1800 MHz spectrum. BT’s proposed alternative approach to deriving the lump sum value would lead to a lump sum value of 1800 MHz spectrum in the range of £8 million – £12 million per MHz.

Vodafone noted the high degree of variability in 900/800 MHz ratios in the Tier 1 countries and argued that there was no reason to assume the value for the UK was more likely to be in the middle of the range than other countries.

BT and Telefonica said Ofcom did not consider relevant auctions — 1800 MHz and 2.6 GHz auction in Czech Republic in June 2016; 1800 MHz auction in Sweden in October 2016; the 1800 MHz auction in Greece in November 2017; and multi-band auction in Turkey in August 2015 — in its analysis.