U.K. Mobile License Fee Increase to Slow 4G Progress, Group Says

Jan 23, 2014 5:35 am ET

Jan. 23 (Bloomberg) -- The U.K. regulator’s proposal to more than quadruple mobile carriers’ spectrum license fees will cause further delays to the introduction of high-speed, fourth- generation networks, the GSMA industry association said.

“Any lag in 4G roll-out could potentially put U.K. businesses at an international disadvantage and deny consumers access to the latest mobile services,” the group said today in a statement.

Europe is already falling behind the U.S. in turning on its 4G networks, which give mobile customers access to wireless Internet speeds more like the broadband performance they get at home, the GSMA said. Carriers need the cash to invest in their networks, according to the group, which represents almost 800 mobile operators and about 250 other companies including handset makers.

The 4G service, which is about five times faster than older technology, makes downloading videos, uploading photos and playing games on mobile devices quicker, giving networks the ability to carry more data. Carriers are counting on the technology to encourage customers to pay more for data plans.

Vodafone Group Plc and Telefonica SA’s O2 unit began offering the service in the U.K. last year following larger competitor EE, a venture of Deutsche Telekom AG and Orange SA that in 2012 was the first to sell the service in Britain. U.K. carriers spent 2.34 billion pounds ($3.88 billion) last year acquiring rights to use the spectrum, the airwaves that carry calls and data, in an auction.

U.S. Ahead

Connections through 4G networks represented 19 percent of U.S. usage at the end of last year, compared with less than 2 percent in the European Union, according to the GSMA.

Under the proposed rules, annual fees for the 900 megahertz spectrum band will increase to 138.5 million pounds from 24.8 million pounds a year. The cost to use the 1800 MHz band will increase to 170.4 million pounds from 39.7 million pounds.

The proposed fees mean that Vodafone and O2 will each owe 83.1 million pounds a year for rights to use the spectrum, up from 15.6 million pounds, regulator Ofcom said in October. The bands are used to make calls and send data on 3G and 4G networks.

Ofcom repeated today that it has been directed by the government to increase prices to “reflect full market value” for the “valuable and finite natural resource.” The regulator’s consultation on the proposal ended last week, and it will make a decision sometime this year, an Ofcom spokesman said.

--Editors: David Risser, Robert Valpuesta