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UK Regulator Raises Spectrum Licensing Fees For Carriers

September 24, 2015 - Written By Muni Perez

UK communications regulator The Office of Communications (Ofcom) is bringing some bad news for mobile users in the country. In order to provide you with cellular connection, carriers use electromagnetic spectrum on several frequency bands. However, this is not free to use and government regulators charge these companies for it. After a long consultation period, Ofcom just announced that they will be increasing the license fees by a whopping 200%, in order to bring the price closer to what is paid in other European countries. However, fear not: even if bills suffer an increase, this doesn’t mean you are going to pay twice the price of your current bill.

For operating in the 900MHz and 1800MHz bands, which is used for 2G, 3G and our beloved fast 4G networks, British major carriers Vodafone, O2, EE and Three paid a combined £64.4 million a year. From October 31 and on, these companies will have to pay a total of £199.6 million per year. Nonetheless, by taking a closer look on these numbers, you realize that they represent just a fraction of each carrier’s yearly revenues. For a preliminary comparison, dividing the value by 4, each operator will have to pay around £50 million per year. EE had a revenue of £6 billion, and 50 million pounds is a relatively low value compared to the overall market. It is important to note that, according to the UK government agency, carriers have had a five-year notice about the rise, enough time for them to prepare their pockets.

Ofcom suggests that operators should absorb these extra costs in order to remain competitive, but if they don’t, customers should expect some sort of rise in their bills. Even those who are signed with smaller networks like Tesco Mobile are likely to be affected, as these are virtual operators that rent network from bigger companies – the ones that are being charged. One important aspect to take note is that competition is getting fierce in the mobile sector. While big players are merging to become stronger – giant BT agreed to acquire EE, and Three is also joining forces with O2, smaller and disruptive companies like FreedomPop are also fiddling in the British market.