Ofcom has lowered its pricing proposals for the spectrum licences that EE, Vodafone, O2 and Three pay in order to provide 2G, 3G and 4G services, although it is still up £182m on the current fees being paid.
Currently EE pays £24.9m, Vodafone and O2 pay £15.6m and Three pays £8.3m a year for the right to use their spectrum holdings in either the 900MHz or 1800MHz bands. This makes a total of £64.4m.
Last October, though, Ofcom said that, at the behest of the government, it would revise the fees order to reflect the true value of spectrum. It proposed totals that would have added another £245m to the government's coffers by raising the overall total paid to £309m.
This would be done by raising the prices to £107.1m for EE, £83.1m for Vodafone and O2 and £35.7m for Three.
However, the operators voiced their unhappiness with these proposals, claiming they were far in excess of what was fair for the spectrum, especially as they had just been through an expensive bidding process of new 4G holdings at 800Mhz and 2.6GHz.
In response, Ofcom has now submitted its final proposals for pricing, with each total falling. It now proposes EE pays £86.4m, O2 and Vodafone pay £65.8m and Three pays £28.8m.
Philip Marnick, group director of Ofcom's Spectrum Group, said the telecoms watchdog has “listened carefully” to the responses its received to its initial proposals, and would now do so again before reaching its final decision.
"We're conducting a further consultation to ensure we reach an appropriate view about the best approach to setting the annual licence fees. We expect to publish our final decision on mobile licence fees around the turn of the year."
A second consultation on these fees is now in place until 26 September 2014, with the new fees likely to come into effect in 2015, Ofcom said.
O2 welcomed the new pricing, seeing it as a fairer value than Ofcom’s first attempt.
“Previous fee proposals would have hampered industry investment and put pressure on retail prices, to the detriment of mobile phone customers.”
Vodafone said it was reviewing the consultation document.
Three also welcomed the new pricing, although hoped it would fall further: “We are still reviewing Ofcom’s proposals but the new consultation goes some way to bringing proposed fees for 1800MHz spectrum closer to its real value."
EE was far more critical of the figures, though, claiming they were "out of touch" as they would hamper EE's current network upgrade and rollout work, especially in remoter regions.
"Ofcom's new annual licence fees proposals for 1800MHz spectrum remain unjustifiably high at three and a half times current levels," it said. "They fail to adequately address the impact of significantly higher licence fees on investment in mobile networks and on consumer pricing."
Ovum telecoms analyst Matthew Howett told V3 that the new, lower figure showed there was a tug-of-war going on between the operators, Ofcom and government.
“Ofcom is in a difficult place because it has to make sure the spectrum fees reflect the market value of the spectrum, but there is no real agreed methodology on how to do this,” he said. "I think the huge increase they first proposed struck everyone by surprise, so I think they always expected to move."
Howett went on to criticise the government for a lack of clarity around why it was looking to raise the price for the spectrum fees, noting that the money the operators would have to pay could be better spent on rural mobile 4G installations, as one example.
“They [the government] need to realise that mobile has an important role to play, but they don’t seem to have a good grasp of that,” he said.
Overall, Howett said he expected the operators to possibly get their way and see the final fees lowered, although probably not by too much more.
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