GSMA Says Ofcom Spectrum Licence Increases Will Affect 4G Rollout

Mobile industry lobbying group the GSMA says Ofcom’s proposals to increase the annual licence fees for 900MHz and 1800MHz spectrum could hold up British operators’ rollout of 4G networks.

Ofcom announced in October it plans to increase the total amount that operators currently pay for the licences by a factor of four. They currently pay £24.8 million for the 900MHz band and £39.7 million for the 1800MHz; figures that will rise to £138.6 million and £170.4 million respectively.

“The GSMA is concerned that Ofcom’s proposal to more than quadruple annual licence fees will jeopardise mobile operators’ ability to upgrade their networks for 4G services in the UK,” says Tom Phillips, chief regulatory officer of GSMA.

Ofcom price hikes

Ofcom had been directed by the government to revise the fees to reflect full market value and to take into consideration the amount each network paid for 800MHz and 2.6GHz spectrum designated for 4G services. Vodafone, O2, Three, EE and BT paid a combined £2.31 billion in license fees during the auction last year.

All except BT have launched 4G networks, but the GSMA fears the UK, and the rest of Europe, could fall further behind the US and Asia in LTE rollout.

“Europe is lagging significantly behind the US in terms of deployment of next-generation wireless infrastructure,” said Phillips. “4G represented 19 per cent of US connections compared to less than two per cent in the EU at the end of 2013. However, improvement in 4G deployment can only be realised with long-term investment from the industry.

“Any lag in 4G roll-out could potentially put UK businesses at an international disadvantage and deny consumers access to the latest mobile services.”

Operator opposition

Ofcom says nothing has been decided and that its proposed increases will take into account any reaction from the industry.

“The Government has directed Ofcom to revise the fees so that they reflect full market value,” says a spokesperson. “No decisions have been made on the level of the fees. We are currently consulting on this, and we will consider all responses with an open mind before making our decision later this year.”

Both Vodafone and EE have criticised the proposals in the past. EE CEO Olaf Swantee has said the government should do more to support the rollout of 4G, including reducing licence fees, however EE’s LTE service is now available in 160 towns and cities, while it has two million 4G customers.

”There’s no doubt that governments will try to get a little bit more money out of operators,” Vodafone CEO Vittorio Colao told reporters in November, as he announced more details of a £19 billion investment programme across its business around the world that will see 77,000 new 4G sites constructed.

GSMA director general Anne Bouverot has previously praised Ofcom for its innovative spectrum initiatives, especially with regards to spectrum trading, but warned the rest of Europe should do more if it is to keep up with the rest of the world.

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