Consultation: Review of Annual Licence Fees

Annual licence fees (“ALFs”) are fees we charge mobile network operators (“MNOs”) to use certain spectrum bands. They typically come into effect after a mobile operator’s licence won at auction has come to the end of its initial period. The initial period is typically 20 years.

We aim to set ALFs at an estimate of the forward-looking market value of the spectrum. This is because ALFs are intended to ensure that the spectrum is used efficiently: an operator who is not willing to pay the market price for spectrum should have an incentive to return some or all of it to Ofcom, or to trade the rights to use the spectrum to a more efficient user.

We are proposing to revise the ALFs we charge for mobile spectrum as follows:

• For 900 MHz spectrum, we propose to reduce the ALFs to £1.097m per MHz (a 21% reduction).
• For 1800 MHz spectrum, we propose to reduce ALFs to £0.81m per MHz (also a 21% reduction).
• For 2100 MHz spectrum, we propose to increase ALFs to £0.766m per MHz (a 12% increase).

The net effect of our proposed changes is that the total amount the MNOs pay to use these mobile spectrum bands would reduce by around £40m per year, with each of the MNOs seeing a reduction in the total payment amount they pay.

Responding to this consultation

Please submit responses using the response form no later than 5pm 7 March 2025.