Ofcom license fee hike may see 4G prices soar in UK

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Mobile operators in the UK may have to pay up to £244.4m extra (cumulative) if Ofcom goes ahead with its proposed plans of hiking annual fees for licensing the 900MHz and 1800MHz spectrum. The increase in annual fees may directly affect the current consumer rates of 4G with subscribers having to shell out more starting January 2014.

Back in December 2010 Ofcom was asked by the UK government to revise 4G spectrum fees to bring them in line with the market value and to consider the amounts that were paid in the recent 4G auction.

Ofcom has proposed over 430 percent hike in annual fees paid by Vodafone and O2, it has proposed 330 percent hike for EE and Three. Currently Vodafone shells out £15.6m, EE £24.9m, O2 £15.6m and Three £8.3m. With the proposed increase, the four operators will end up paying £83.1m, £107.1m, £83.1m and £35.7m respectively. on top of the government order, the £1.5bn shortfall from the 4G auction may also be one of the factors behind the hike.

Ofcom is concerned that the spectrum is “undervalued” as well as a finite and valuable national resource which needs to be charged according to current market value. Ofcom is of the opinion that “charging for it [spectrum] can incentivise the optimal use of frequencies.”

The new values have been calculated by analysing the sums paid for 4G services during the auction earlier this year and by comparing those amounts with bids in other spectrum auctions, Ofcom said. The proposed hike is now under consideration and if the proposal goes through it will take effect from 2014.

With an overall increase of £244m annually, operators will have no other choice but to hike 4G rates throughout the country.