LONDON--The U.K. Office of Communications, or Ofcom, once again
lowered its estimate of annual license fees to be paid by mobile
network operators on Thursday.
The regulator expects the fees to be around 223 million pounds
($340.24 million) a year, which is 10% lower than the GBP246.7
million forecast last August.
Ofcom had already lowered its forecast in August from its
October 2013 estimate of around GBP309 million, citing further
analysis and responses from stakeholders.
Ofcom, the independent regulator and competition authority for
the U.K communications industries, said the new figures are based
on a smaller discount rate the operators pay when they buy a
license at auction for both 900 MHz and 1800 MHz bands, and a lower
assessment of the market value of the 1800 MHz band.
Mobile network operators currently pay an annual fee of GBP64.4
million, which is being reviewed.
The U.K. government had directed Ofcom in 2010 to revise fees
paid for the 900 MHz and 1800 MHz spectrum bands to reflect full
market value, after completion of the 4G auction in February 2013.
The two bands are used to provide voice and data services using a
mix of 2G, 3G and 4G technologies.
EE, H3G, Telefonica and Vodafone agreed with the U.K. government
last December to provide geographic voice coverage across 90% of
the U.K. landmass by the end of 2017, and this was implemented
through a variation of the mobile network operators' licences in
January.
Under the new guidance, which is still subject to further
review, Vodafone and Telefonica will each pay GBP61.2 million, down
from GBP65.8 million estimated last August, while EE and H3G will
pay GBP75.6 million and GBP25.2 million respectively, down from
GBP86.4 million and GBP28.8 million.
Ofcom said its initial view is that while there could be
incremental costs incurred by the mobile operators in meeting the
coverage obligation, it is unlikely to have a material effect on
the market value of the spectrum.
However, the regulator said it is open to considering
alternative views before reaching a final decision. It has
therefore published a consultation on the matter, which closes on
April 17.
Ofcom will then make a final decision on the revised annual
licence fees, which will likely to come into effect later this
year, it said.
Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749
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