Feeds

Brace yourselves, telcos: Ofcom triples cost of 2G spectrum holdings

They knew it was coming...

Choosing a cloud hosting partner with confidence

Ofcom has set out charges for mobile operators who want to keep the 2G spectrum they were allocated in the '80s, and it's about triple what they're paying now.

Numbers are in millions of pounds, and will go up every year

Following the 4G auction, the problem remains of allocated spectrum; frequencies which were handed over to network operators for nothing to kickstart the mobile revolution and are now extremely valuable. So operators who want to hang onto their allocations will have to stump up an annual fee indefinitely, and Ofcom is consulting on what exactly that fee should be.

The news shouldn't come as a shock to the operators. Though they'll no doubt dispute the numbers, the premise of an annual fee calculated from the estimated market value was proposed – and agreed – back in December 2010, but the details will provide plenty of scope of argument. And with millions of pounds at stake, there's every reason to argue.

The problem goes back to 1985, when "Racal Vodafone" (as it was known in those days) and Cellnet were allocated bands at 900MHz in which to run competing mobile networks based on GSM technology. They were joined by Orange and Mercury (remember them?), which were given bands at 1800MHz in 1990, with Vodafone and Cellnet getting small slices of 1800MHz too.

Then came the 3G auctions of 2000, and suddenly radio spectrum was an extremely valuable commodity.

With refarming (which allows any technology to be deployed in any band) those chunks of spectrum became a political hot potato as Three – the only operator not to get allocated spectrum – called for restitution and EE (which ended up with most of it) got a 12-month monopoly on 4G.

The incumbents do pay an annual fee for their allocated spectrum – it's just not very much and certainly not market rates. Three pays nothing, but once it finishes buying spectrum off EE, it too will face the annual charge.

The new fees are calculated purely on the value of the spectrum, which Ofcom pegs at £25m per Mhz for the 900MHz band and £15m for a MHz at 1800 where propagation isn't quite so good.

What the regulator has not counted is the size of the holding or how useful it is, which is bad news for Vodafone and Telefonica, whose holdings at 900MHz are stripped between them – preventing either having access to contiguous blocks suitable for 4G, at least until they exchange some bands.

The rates are also pegged to the Retail Price Index, so will rise every year and continue to do so for at least the next 29 years. The only way an operator can avoid paying is to sell the band, or hand it back to Ofcom, which can then auction it off and stop collecting annual rates.

The numbers aren't very surprising, and the operators are certainly braced to pay them, but with the consultation (PDF, long) open until 19 December, expect to see the network operators fighting to reduce them every step of the way. ®

Beginner's guide to SSL certificates

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
DOUBLE BONK: Testy fanbois catch Apple Pay picking pockets
Users wail as tapcash transactions are duplicated
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
In the next four weeks, 100 people will decide the future of the web
While America tucks into Thanksgiving turkey, the world will be taking over the net
prev story

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.