Mobile operators hit back at Ofcom plans to increase fees, claiming they threaten to increase consumer prices and hinder investment

James Nickerson
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Mobile phone operators say the charge is bad for business and bad for consumers (Source: Getty)

Mobile phone users could witness their bills increasing after Ofcom tripled fees for operators to use certain airwaves, providers have warned.

The charge relates to the fees mobile operators Vodafone, O2, EE and Three pay for licences to provide 2G, 3G and 4G services and will come to a total of £199.6m each year, up from £64.4m.

The implemented charges, which will come into effect 31 October, are 13 per cent lower overall than was suggested by Ofcom in February, having been reduced amid fierce opposition from the mobile operators.

In July Ofcom withdrew proposals amid claims by providers that investment could be under threat and raise fees for customers.

All figures £VodafoneTelefonicaEEH3GTotal
Proposed Feb 2015£62.5m£62.6m£77.3m£25.8m£228.3m
Final decision£49.8m£49.8m£75.0m£25.0m£199.6m

Philip Marnick, Ofcom’s group director of spectrum, said: “We have listened carefully to the arguments and evidence put forward by industry, and conducted a complex and comprehensive analysis to determine the new fees.The mobile industry has not previously had to pay market value for access to this spectrum, which is a valuable and finite resource, and the new fees reflect that value.

But mobile operators have hit back, saying the charge is bad for consumers and business.

An EE spokesperson said: "We think Ofcom has got this wrong.

"The proposed licence fees for 1800MHz spectrum are based on a flawed approach. The trebling of fees is bad news for British consumers and businesses as it raises the risk that we won’t be able to offer the best prices, and invest and innovate at the pace we and our customers would like.

"We’re also very disappointed that Ofcom has not reflected the higher costs we’ve taken on to meet enhanced coverage obligations that Ofcom and government encouraged us to accept.

Vodafone added: “We will be reviewing Ofcom's proposed spectrum fees over the coming days as they represent a significant increase when we are already investing around £1bn on our network and services this year.”

Read more: Mobile devices to drive growth in British media consumption

A spokesperson from O2 said: "We're examining the decision in detail before deciding how best to proceed."

However, an Ofcom spokesperson said: “Mobile operators have a strong incentive to invest in networks and to keep prices competitive. The operators have had five years’ notice that the fees would be increased to reflect full market value and we expect them to have budgeted for this."

“The fees announced today are in line with analysts’ expectations and with the amounts that operators pay for accessing spectrum in other countries.”

A spokesperson for Three declined to comment.

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