Mobile bills expected to soar as Ofcom amps up charges

When Ofcom first proposed to hike the fees five-fold, mobile operators warned that they would be forced to pass on the costs to consumers.

However, fear not: even if bills suffer an increase, this doesn’t mean you are going to pay twice the price of your current bill.

Spectrum bands used by mobile operators are the 900MHz and 1800MHz, which are used to provide voice and data services using 2G, 3G and 4G.

While the total – GBP199.6 million – represents a significant increase from the GBP64.4 million the operators now pay, Ofcom noted that it is 13% lower than the proposals it put forward in February this year.

Ofcom earlier today said that from October 2016 it will more than treble the yearly fees that 3, EE, Telefónica UK Ltd. and Vodafone United Kingdom collectively pay to use spectrum in the 900MHz and 1800MHz bands.

Within its statement, EE acknowledges that the licence fee increase will undoubtedly have an impact on the prices it can offer Joe Public.

The regulator was ordered by ministers to review the fees to “reflect true market values”. 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.

A spokesperson for EE said Ofcom had taken a “flawed approach” in how it determined the new fees, putting investment in to its network at risk.

Guy Middleton, head of corporate and financial communications, said: ‘We think Ofcom has got this wrong.

“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”.

O2 gave a similar response, saying it is “examining the decision in detail before deciding how best to proceed”. Both EE and Vodafone have complained they are already facing a sharp increase in spending on network improvements so that customers in remoter parts of the country can make use of mobile services. The second half will come into effect on 31 October 2016, with full fees payable annually from that point.

Ofcom said it did not see a case for rising customer bills. It was tasked to bring the fees in line with those charged in other European nations – also taking into account the recent spectrum auction in Germany in June.

“It’s about time the United Kingdom government started thinking in a similarly joined up way”.

Unsurprisingly, the operators we’ve contacted aren’t massively impressed by the price rises.

Under the new regime, operators will now pay on a single date decided by Ofcom, as opposed to paying at different points of the year.

And smaller player 3UK will pay £25 million a year for its 1800 MHz holdings, up from £8.3 million.