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Vodafone "disappointed" by Ofcom spectrum price hike plans

Vodafone, EE, O2 and Three could be forced to pay £245m extra to deliver mobile services.

Mobile mast

Vodafone has expressed disappointment at Ofcom's plans to increase the annual fees mobile operators must pay to run services using the 900MHz and 1800MHz spectrum bands.

These frequencies are used by the operators to deliver voice calls, 3G and some 4G services.

The mobile regulator wants to increase the amount Vodafone, O2, EE and Three pay a year to use these spectrum bands from 64.5 million to 308.9 million, an increase of 379 per cent.

The sum each mobile operator will have to pay depends on how much they coughed up during the 4G Ofcom spectrum auction, as well as the technical and commercial characteristics of each band.

Further to this, the amount each paid out in similar, overseas spectrum auctions will also be taken into account, Ofcom confirmed.

Vodafone and O2 pay 15.6 million a year in spectrum licence fees now, and this could increase by more than 430 per cent to 83.1 million if Ofcom's proposals are approved.

EE's annual spectrum licence fees total 24.9 million, and could potentially rise to 107.1 million. Meanwhile, Three, who currently shells out 8.3 million a year in fees, could have to stump up 35.7 million in the future.  

In a statement, Ofcom said the increase reflects the fact spectrum is a finite resource, and charging more for mobile operators to use it should ensure it is being used efficiently.

The mobile operators have until 19 December 2013 to respond to the proposals, with the new updated licence fees expected to come into effect next year.

While there is a risk the price hikes could result in end users' mobile bills going up, industry watchers predict the operators are unlikely to pass the costs down for fear of losing their competitive edge.

Unsurprisingly, the news has not gone down well with members of the mobile operator community, with Vodafone being among the first to hit out at Ofcom's proposals.

In a statement to IT Pro, a Vodafone spokesperson expressed the firm's dismay at Ofcom's proposed price hike.

"We are disappointed that Ofcom is proposing a 430 per cent increase in the fees we pay for our existing spectrum at a time when we are investing more than ever in vital national digital infrastructure," the statement reads.

"Vodafone UK is spending more than 900m this year alone on its network and has pledged to bring indoor 4G coverage to 98% of the UK population by 2015.

"The regulator should be encouraging such private sector investment in infrastructure and new services like 4G, which will benefit consumers, businesses and the wider British economy for many years to come," the statement concludes.

An O2 spokesperson told IT Pro the proposals were "in line with Ofcom's earlier guidance".

"We'll now be looking through [the guidance] in detail and will respond to Ofcom in due course," the spokesperson added.

IT Pro contacted Three and EE for comment on this story, but was still awaiting a response at the time of writing.

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