Ofcom revises proposed spectrum price hike; operators welcome changes

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Ofcom has put forward its final proposal for the hike in annual fees for the spectrum licenses allotted to EE, Vodafone, O2 and Three for providing 2G, 3G and 4G services totaling to £246.8 million – still £182 million higher than what they are paying currently.

The reason of the latest revision is rooted in the unhappiness voiced by all the operators last time around when Ofcom proposed an increase totaling to £309 million. Operators said at the time that increase was far from fair especially after they have been through a 4G auction that emptied their cash reserves.

Industry analysts were of the opinion that if the proposed increase were to go into effect without any revision, customers may end up suffering as the burden of the enormous increase may be transferred to them.

Government had asked Ofcom in 2010 to revise the fees being paid by operators for the 900MHz and 1800MHz bands to reflect the current market value. Ofcom came up with a revision that added a whole lot to what the operators are paying currently.

The latest revision, which is expected to go into effect in 2015, will not be implemented directly and will go through a consultation period until September 26, 2014.

Operators have welcomed the latest revision, but some are expecting that the prices should go down further.

O2 is of the opinion that the current revision is much fairer compared to the initial valuation and that the previous valuation would have hampered industry investment. Three voiced similar opinions, but is expecting the prices to fall further.

According to latest pricing revision, EE will have to pay £86.4 million, O2 and Vodafone to pay £65.8 million and Three would end up paying £28.8 million.