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back to article Operators get the FEAR as Ofcom proposes 275% hike in mobile spectrum fees

Ofcom has “rethought” the fees that UK mobile networks pay for their 900MHz and 1800MHz spectrum, based on the industry's reaction to its latest proposal. Previously Ofcom decided to hike the annual fee that the networks pay for access to spectrum from £65m to £309m – a relative rise of 375 per cent. That’s now been modified to …

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Won't affect customers?

"Yet given the competitive nature of the market it's unlikely to affect consumers' mobile tariffs"

I suspect the vermin at O2 will use it as justification for further increases in prices for the majority of its customers, given that their contracts predate OFCOM's new rules on mid contract increases.

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Re: Won't affect customers?

O2's contracts say that they will increase by inflation every year, which is allowed. They can't increase by more than inflation.

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Tax cuts next election then?

A 600% hike in mobile spectrum fees will help Cameron there.

Taxing the masses indirectly is a very good way to reduce the top rate of tax.

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On what planet is the Ofcom spokes person based?

"Ofcom says that how operators choose to finance this – which is around £3 per subscriber per year – is, of course, down to the individual operators. Yet given the competitive nature of the market it's unlikely to affect consumers' mobile tariffs."

So Ofcom believe the operators will simply absorb a cost that is currently around 52p per customer pa and is anticipated to increase to around £3 per customer pa, when they (the operators) have recently passed on RPI based increases of 2.7% pcm (approximately 68p on a £25 pcm contract)...

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Anonymous Coward

Re: On what planet is the Ofcom spokes person based?

Planet Quango where the lifeforms ("spokespeople") breathe tax and eat free lunches.

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Re: On what planet is the Ofcom spokes person based?

I doubt it matters what Ofcom believe. This will be decided in court, and if the mobile operators lose then they'll find creative ways of ending contracts early and thereby pushing customers back into the marketplace. A marketplace, of course, that now will only include far more expensive offerings.

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Holmes

I am so confused here, I just don't know who to hate the most: OFCOM or the operators.

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The impossible tax

> the fees that UK mobile networks pay

in other words, a government tax.

One that won't hit the operators, as they will all have been taxed equally, so when they pass it on to the subscribers (shocker!) they will all raise their tariffs equally and therefore the "competitiveness" won't change. Sure, there may be some jostling, so one supplier will raise the cost per minute, while another will raise the cost per megabyte (and no doubt, surreptitiously slip in a little extra for themselves) but if their costs go up, there's only one outcome - and that's another dip into our wallets.

So, all this does is take money from the public (and businesses) and transfer it, via the mobile operators who will simply be acting as tax-collectors, to the government. They will then congratulate themselves on keeping income tax low - even though it's generally considered a "progressive" tax: that takes more from those who can afford it - and raising indirect taxes which affect the rich and the poor alike - unless the poor stop using their phones and thereby avoid (oooh, there's a nasty term) paying the freshly raised tax on talking.

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The paid for 900 and 1800, but not in cash

At least for the 900MHz block, and I think also for the 1800 block, operators had population coverage requirements to meet. So they paid for the allocation in terms of rolling out masts.

If only the government had adopted that stance with 3G and 4G and these small islands would have close to 100% geographic coverage with high speed mobile connections. That would have a potential to drive real economic growth. Instead the government just went for a quick pay day that has only hindered deployment. Now they seek to repeat the mistake.

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Re: The paid for 900 and 1800, but not in cash

>population coverage requirements

There was a population coverage requirement for 3G, but it was just 80%, later increased to 90%.

O2 is required to have 98% 4G coverage indoors (99% outdoors) by 2017. There isn't, AFAIK, a similar obligation on the other networks, but they "intend to match this coverage", according to OFCOM.

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We collectively own the spectrum so the licences given out should be free and the savings passed on to the customers. Any other model basically means the operators pass the cost onto us and so we are just paying the government even more money!

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The "we" who could be taken to "own" the spectrum (all of us) aren't the same as the "we" who use their mobiles incessantly and would therefore be expected to bear the brunt of any price increases (a much smaller number), nor the "we" who only have a mobile for occasional social or possible emergency use and would therefore probably think that those who use the spectrum most should pay most for it (a surprisingly large number). Mobile use still isn't a universally used utility like water.

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Boffin

What's that in Olympic Pools per fortnight?

The new pricing is designed to reflect that and works out at £1.57m per MHz at 900MHz and £0.9m per MHz at 1800MHz.

That has got to be the singularly most useless unit conversion I've ever seen.

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Anonymous Coward

Re: What's that in Olympic Pools per fortnight?

Not totally useless. If you're looking at spectrum prices, £ per MHz is a perfectly reasonable way to measure it, just like if you were comparing potato prices you might look at the price for a kg of potatoes.

To give you an idea of what you can fit in a MHz, with the UK standards it takes 8MHz for a TV multiplex from one mast. You need some several times that if you want nationwide coverage and different TV in different regions, since adjacent masts can't use the same frequency. But you can squeeze multiple channels into one multiplex - the exact number depends on the quality you want, but 2-8 channels would be typical. Normal UK FreeView has 7 multiplexes.

I don't know what the bandwidth for a mobile phone cell tower is, but I suspect it depends on how busy the cell is.

Different frequencies have different characteristics, so get priced differently. Frequencies that go through the walls of a house easily are better (and more expensive), since you can get indoor coverage. Frequencies that travel further are usually better, since you can have less cell towers so the network is cheaper to build. Frequencies that are supported by standard cellphone radio chips are better (and more expensive).

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Boffin

@ AC -- Re: What's that in Olympic Pools per fortnight?

I don't know what the bandwidth for a mobile phone cell tower is [...]

And you see, theerin lies the problem. The bandwidth of any user of the spectrum in these bands is not using a single frequency, now are they? They're using a band of frequencies. So someone telling me that the gov't is charging so much per 3 MHz band in the 1800 MHz frequency range or 8 MHz band in the 900 MHz frequency range would make sense; the tripe as stated in the article doesn't

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Honestly

Can anyone tell me what the mobile industry in the UK is making in after-tax profits? Not that many of them will be making any tax payments at all mind but let's get real here...

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Honestly

Can anyone tell me what the mobile industry in the UK is making in after-tax profits? Not that many of the players will be making any tax payments at all but let's get real here...

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Coat

Re: Honestly

I understood you the first time...

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Re: Honestly

I didn't but that's OK because someone else did.

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WTF?

Huh?

" Mobile network operators currently pay an annual combined total of £24.8m per year for 900 MHz spectrum and £39.7m for 1800 MHz spectrum. Unlike the 3G and 4G spectrum, they didn't pay for the 900MHz and 1800MHz bands,"

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Re: Huh?

Total tax, not just band rental. If, say, one were dealing with an industry that avoids much UK tax, then rather than playing whackamole with their accountants, it might be easier to just sock em with a simple fee they can't avoid.

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Thumb Up

Re: Huh?

Ahhh ok.

thanks!

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