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Mobile phone tariffs could treble

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Ofcom warnsCommunications regulator Ofcom has revealed the prices it will charge mobile phone networks to use spectrum in the UK – with some fees trebling.

The regulator will now bring in £199.6m a year from charging Vodafone, O2, EE and Three to use mobile bandwidth. This is up from £64.4m the operators currently pay. However it is slightly less than the £228.3m Ofcom had indicated in February that it would charge them. The new fees follow a prolonged consultation period. Ofcom was charged with introducing market rates for bandwidth use by the coalition Government in 2010. But it was forced to go back to the drawing board in 2014 after its original plan to hike fees five-fold met with bitter opposition from the mobile operators.

Operators have not ruled out raising prices to absorb the cost of the new fees. Dave Millett of independent telecoms brokerage Equinox has the following comments (which can be expanded on request):

1. Should the regulator be raising income for the Government by a form of indirect taxation? Is this really its remit?

2. The extra cost to the providers will be about £135m per annum

3. Whilst the industry could pay these additional fees from their profits it will no doubt be passed on to customers and businesses – so it is effectively another indirect tax on customers

4. Ofcom had previously proposed a five-fold rise so this appears to be a bit of a compromise

5. It will be interesting to see how this sits with Ofcom’s guidance that any customer whose mobile contract rises mid-term has the right to cancel – when it is they (Ofcom) that actually caused the rise to happen. 

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