Government goes after mobile operators in 4G licence fee grab

Mobile operators may face increased annual licence fees for spectrum used to provide 4G services, according to proposals put forward by Ofcom.

The communications regulator has started a consultation on the licence hike, which covers mobile services in the 900MHz and 1800MHz radio spectrum bands. These bands are used for voice, 3G and 4G data services.

News of the plans comes shortly after the 4G spectrum auction, which brought in less revenues that what had been previously anticipated. However, Ofcom has said that the fee increase was decided before the auction and the two are unrelated.

The Government had been relying on £3.5 billion being raised in the auction, but the process ended up generating just under £2.4 billion.

Higher annual licence fees may help plug this shortfall. In its consultation, Ofcom admits it has to “have particular regard to the sums bid for licenses in the 4G auction". Ofcom has also taken account of higher sums raised for 4G licenses overseas.

The bottom line to the consultation is that the mobile operators could end up paying a total of £308.9 million a year for annual spectrum licenses in the 900MHz and 1800MHz bands, as opposed to the current total of £64.5 million.

If approved, the new license fees would come into force next year.

An Ofcom spokesman told "The licence increases in the consultation have nothing to do with what was raised in this year's 4G spectrum auction.

"A decision was taken in 2010 to increase license fees and the formula used to raise them was decided before the 4G auction even took place [this spring]."

Copyright © 2013 IDG Communications, Inc.

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