Running a mobile network is an expensive business, but Ofcom has proposed changes that could save the likes of EE, Three, O2, and Vodafone roughly £40 million each year in licence fees.
This would come from changing the Annual Licence Fee (ALF) costs for networks to use the 900MHz, 1800MHz, and 2100MHz radio spectrum bands, with Ofcom at the start of 2024 setting out to investigate whether there was “sufficient evidence of a possible material misalignment between our fees and the underlying market value of the relevant spectrum.”
Now, the regulator has seemingly found that there was a misalignment, as it’s proposing a reduction in the ALFs for 900MHz spectrum to £1.097m per MHz (a 21% reduction), a reduction in the ALFs for 1800MHz spectrum to £0.81m per MHz (also a 21% reduction), and an increase in the ALFs for 2100MHz spectrum to £0.766m per MHz (a 12% increase).
The exact impact of this will vary depending on how much of each band each network holds, but according to Ofcom it will result in roughly a £40 million saving per year.
Lower prices or greater investment
This could in theory mean lower prices for customers, since the networks won’t have to spend as much to run their networks, but if it has any customer-facing impact it’s probably more likely to come in greater investment in infrastructure, so networks can perhaps speed up their rollout of 5G.
That’s all speculation for now though, and these ALF changes haven’t been confirmed just yet anyway, with Ofcom seeking feedback on its proposals until March 7th, and not publishing its final statement on the matter until summer of 2025 – so there could still be changes to the proposal.
