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Mobile lobby group says UK fees hike threatens 4G roll-out

Two women look at a mobile phone on Oxford Street in London October 29, 2012. REUTERS/Suzanne Plunkett
Two women look at a mobile phone on Oxford Street in London October 29, 2012. REUTERS/Suzanne Plunkett

LONDON (Reuters) - Telecom operators in Britain may rein in spending on high-speed 4G networks if the country presses ahead with a plan to quadruple the cost of renting airwaves, mobile phone industry group GSMA said on Thursday.

Regulator Ofcom outlined the plan in October after the UK government said the fees should reflect "full market value".

The proposal also came after Britain raised a less-than-expected 2.34 billion pounds ($3.7 billion) in a 4G spectrum auction for airwaves to carry high-speed mobile Internet traffic earlier last year.

"The GSMA is concerned that Ofcom's proposal to more than quadruple annual license fees ... will jeopardize mobile operators' ability to upgrade their networks for 4G services in the UK," GSMA's chief regulatory officer Tom Phillips said.

Ofcom wants to hike charges for the 900MHz band to 138.5 million pounds ($229.7 million) from 24.8 million pounds, and to 170.4 million pounds from 39.7 million pounds for 1800MHz.

Europe has lagged the United States and parts of Asia in rolling out superfast mobile broadband, in part because spectrum has only recently become available for the services.

Britain's Vodafone, for one, is planning big increases in capital expenditure on upgrading its networks in Britain and elsewhere.

Vodafone said on Thursday its own analysis indicated the proposed fees were more than double where they should be.

"Vodafone UK is spending more than 900 million pounds this year alone on its network and has pledged to bring indoor 4G coverage to 98 percent of the UK population by 2015," a spokesman said.

"The regulator should be encouraging private sector investment in infrastructure and new services like 4G, which will benefit consumers, businesses and the wider British economy for many years to come."

Ofcom said it had not yet made a final decision on the level of the fees.

"We are currently consulting on this, and we will consider all responses with an open mind before making our decision later this year," it said.

Espirito Santo analyst Robert Grindle said that while the proposed fees were "somewhat based on the market price," mobile operators did have a point.

"The returns are relatively low in UK mobile and the operators to some extent will be squeezed by this," he said.

($1 = 0.6030 British pounds)

(Reporting by Paul Sandle; Editing by Mark Potter)

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