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British regulator proposes fee hike for mobile network operators

LONDON (Reuters) - Mobile network operators may face a four-fold hike in licence fees to rent the radio spectrum in Britain, under plans unveiled by telecoms industry regulator Ofcom on Thursday.

Ofcom said the proposed new fees for certain spectrum bands used by mobile network operators for voice calls as well as third and fourth-generation mobile data signals reflected market value based on other countries.

The proposals come after Britain earlier this year 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.

Currently Vodafone, Telefonica's O2, EE - a joint venture of Deutsche Telekom AG and Orange, and Hutchison's H3G pay about 64.5 million pounds in total for using the 900 megahertz and 1800 megahertz spectrum bands.

This would increase to about 309 million pounds under the proposed changes.

"Spectrum is a valuable and finite national resource, and charging for it can incentivise the optimal use of frequencies," Ofcom said in a statement.

The British government had asked Ofcom to recalculate the fees to reflect "full market value" and Ofcom said the new rules were expected to take effect next year after a consultation period that ends in December.

Operators had expected a price rise but Vodafone said it was disappointed by the scale of the increase. The other operators have yet to respond to Ofcom's report.

Ofcom's proposed hikes depend on the amount and the quality of the airwaves held by operators. O2 and Vodafone would each pay 83.1 million pounds a year, up from 15.6 million pounds.

EE would see its licence fees rise to 107.1 million, up from 24.9 million pounds, while H3G would see fees rise to 35.7 million pounds from 8.3 million pounds.

Vodafone said it was reviewing the details of Ofcom's proposals before responding to the regulator.

"We are however disappointed that Ofcom is proposing a 430 percent increase in the fees we pay for our existing spectrum at a time when we are investing more than ever in vital national digital infrastructure," a spokesman said in a statement.

"The regulator should be encouraging such 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."

(Reporting by Belinda Goldsmith; Editing by Pravin Char)

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