The regulator lost its appeal to the UK High Court, and will now have to repay operators after overcharging them for annual spectrum licence fees.
Background: Ofcom and UK mobile operators have been disputing annual spectrum licence fees (ALFs) since 2015. Back then, Ofcom ruled an increase in licence fees for the 900MHz and 1800MHz bands, as directed by the Government of the time, to ensure that fees reflected “full market value” of those frequencies after their liberalisation. A legal battle began, and in November 2017 the Court of Appeal quashed Ofcom’s decision as it was inconsistent with EU Directives on infrastructure investment. In 2018, Ofcom passed new ALFs, slightly reduced compared to the 2015 decision, but a legal battle went on about the amount MNOs could recover for the fees taken under the annulled 2015 ruling.
The High Court decides: Ofcom’s argument was that the amount MNOs could take back is the difference between what was ruled in 2015, and what Ofcom would have charged by way of executive action. Instead, MNOs argued that the refund to which they were entitled was the difference between the 2015 decision and the amounts payable under 2011 regulations. On 19 February, the High Court decided in favour of the MNOs, which means Ofcom now has to pay back a total £218m to EE (£82.4m), O2 (£54.4m), Three (£26.9m) and Vodafone (£54.4m).
The 2018 decision stands: It is worth noting that the ruling has no impact on the ALFs ruled on in 2018 – £1.093m per MHz per year in the 900MHz band, and £0.805m per MHz per year in the 1800MHz band, which came into force as of 31 January 2019. Ofcom could appeal the High Court’s ruling to the Supreme Court, although it has not yet announced whether it will do so. Vodafone has announced it will reinvest the returned fee into network upgrades.
