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Millions of mobile customers face higher bills, warns Vodafone

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Mobile phone tower
Mobile phone tower

Vodafone has warned that the bills of millions of mobile customers will rise if regulators increase a £300m “regressive tax” on consumers.

The mobile operator has lashed out at plans by Ofcom to introduce extra charges on the airwaves that underpin Britain’s mobile communications industry.

Bosses at the watchdog aim to expand annual licence fees for 2100 MHz spectrum from January, generating extra money for the Treasury, but Vodafone claims that this will reduce investment at a time when operators are ploughing billions into banishing so-called connectivity “not spots” and upgrading the UK to faster 5G mobile signals.

In a consultation response, Vodafone said: “The fees represent a regressive tax on UK mobile users, with the potential to widen the digital divide.

“We do not believe that Ofcom’s impact analysis has sufficiently addressed the impact of annual licence fees on vulnerable customers or on investment.”

The company claimed that charging fees will increase the cost to mobile consumers to more than £300m per year in spectrum fees, or over £5 per person.

Ministers took the decision a decade ago to introduce fees for holders of 2100 Mhz licences that reflect the market value of spectrum.

Ofcom has proposed a charge of £0.567 per MHz for the so-called paired 2100 MHz spectrum, and £0.290 per MHz for the unpaired 2100 MHz spectrum.

Its fees are based on market value, and are intended to force operators to use spectrum as efficiently as possible to ensure society gets the maximum benefit.

Vodafone said that the money raised should be used to tackle the digital divide and help operators cope with the cost of using alternative equipment following the ban on China’s Huawei.

It said: “The potential wider social and economic benefits of 5G is reported to be huge by both the industry and Government.

“Adopting a backwards looking policy that reduces at source the funds available for the investment that enable these benefits requires review.”

The move comes after an auction of 5G airwaves in March attracted less investment than expected, raising £1.3bn for the Treasury compared to analyst predictions of £2.5bn.

An Ofcom spokesman said: “We’ll be carefully considering all responses to our consultation before making our final decision.”