Mobile phone customers could face higher bills after Ofcom today announced it is to treble annual fees for some operators.
The regulator says operators will now have to pay a combined annual total of £199.6 million for access to the 900MHz and 1800 MHz spectrum bands, which are used for 2G, 3G and 4G voice and data services.
The overall figure is 13% lower than Ofcom's earlier proposals in February but more than three times the current £64.4 million fee. Ofcom says the mobile industry has not previously had to pay market value for access to the spectrums.
The fees vary for each operator depending on the bandwidth they use. Vodafone and O2 will see their fees more than triple from £15.6 million a year to £49.8 million, while EE's charges will rise from £24.9 million to £75 million and Three's will change from £8.3 million to £25 million.
Half the increase will be payable from 31 October and the second half a year later, with full fees payable annually from that point onwards. See MoneySavingExpert.com's Cheap Mobiles guide for 30+ tips on cutting your costs.
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Could the fee increase push prices up?
There is a concern providers could increase mobile phone bills as a result of the increase in operating costs. An EE spokesman says: "The trebling of fees is bad news for British consumers and business 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."
He adds: "We think Ofcom has got this wrong. The proposed licence fees for 1800MHz spectrum are based on a flawed approach. 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 says it's too early to say say if there will be an impact on customers, but adds that it's a "significant increase" at a time when it's already investing in its network.
O2 says: "We're examining the decision in detail before deciding how best to proceed." Three refused to comment.
Price comparison site cable.co.uk says it's fair for providers to pay for a finite resource but warns the money "has to come from somewhere".
Dan Howdle, the site's telecoms spokesman, adds: "While, on paper, O2, Vodafone, Three and EE appear in arguably rude health from the perspective of their announced operating profits earlier this year, behind closed doors they are unlikely be happy to see their war chest diminished."
'Operators have had five years' notice'
Ofcom however, doesn't agree that bills will have to rise as a result of the fees increase. A spokesman says: "Mobile operators have a strong incentive 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."
Additional reporting by Helen Knapman.