A decision handed down yesterday by British telecom regulator Ofcom that triples annual bandwidth fees for usage of the 900 MHz and 1800 MHz bands has raised the ire of national wireless carriers Vodafone, Everything Everywhere (EE), Three and O2. These carriers contend that the ruling will force them to raise subscriber rates and cut back investment.
The directive, which goes into effect on October 31, caps a process which began five years ago when the UK government charged Ofcom with introducing market rates for bandwidth use. Representing a scaled-back version of Ofcom’s original proposal to hike fees five-fold, the new, three-fold rate increase will boost total annual fees paid by the four national carriers from £64 million (US$97.4 million) to £200 million (US$304.6 million). EE, the top-ranked wireless operator in the UK, will pay the highest fees, with annual charges surging from £29.4 million to £75 million. Vodafone and O2 will see their fees rise from £15.6 million to £49.8 million each, while Three will pay £25 million this year after having paid £8.3 million in previous years. Although the four carriers pledged last year to cover 90% of the U.K. with mobile voice service in hopes of convincing Ofcom to back off of its proposed rate hike, Ofcom proceeded with the rate hike on grounds that the coverage commitment has no impact on the market value of the spectrum in question. Ofcom further noted that the new fees “are in line with analysts’ expectations and with the amounts that operators pay for accessing spectrum in other countries.”