LONDON: Ofcom is consulting on proposed changes to the annual licence fees (ALFs) paid by mobile network operators to use certain spectrum bands.

“We charge 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 £320m per year and are paid to His Majesty’s Treasury.

“We aim 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, we launched a review of these fees, in response to evidence submitted by BT/EE.

“In our review, we considered submissions from the mobile network operators, used evidence from recent spectrum auctions in the UK and internationally, and applied our method for calculating the fees. We are therefore now proposing the following changes:

·    reduce the ALFs for 900 MHz spectrum to £1.097m per MHz (a 21% reduction); 

·    reduce ALFs for 1800 MHz spectrum to £0.81m per MHz (also a 21% reduction); and

·    increase ALFs for 2100 MHz spectrum to £0.766m per MHz (a 12% 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 £40m 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.”

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