The UK mobile phone providers could soon hike bills. The cause of the increase will be the decision by Ofcom, which is the UK telecoms regulator, to raise network license fees by as much as three times. The three-fold rise in license fees is part of the new changes that Ofcom is making within the sector. Ofcom has already won itself a number of fans by the decision to make it easier for users to shift from one provider to the next within a day. Will this raise a backlash?
Some of the top UK mobile phone providers who might decide to transfer the increased costs to users include the following:
How much is the increase?
All the UK operators have had to pay a total charge of around £64.4 million. However, the new changes from Ofcom will see the fee rise three times to a high of roughly £199.6 million. The decision to increase the network license fees did not happen overnight. Ofcom has been consulting with other players in the industry for the last two years regarding the increase. Initially, Ofcom had proposed an increase that was 13 percent higher than what it has announced.
The increase in network license fees will affect spectrum bands, which lie between 900MHz and 1800MHz and are used by mobile phone providers in the UK in the provision of voice as well as data services via 2G, 3G and 4G. Currently, consumers can only hope that the UK mobile phone providers will not transfer the increased costs down to them. However, in this instance, the reality of the situation is that UK mobile phone users should get ready for increased rates.
Increase for Each Provider
Currently, Vodafone and O2 have been paying £15.6 million each in network license fees per year. Each of these providers will have to dig deeper to raise the £49.8 million that Ofcom requires them to pay as license fees. When T-Mobile and Orange merged, they created EE, which has been paying £24.9 million in network license fees, but will now see the amount rise to £75 million. Three will see its license fees rise from £8.3 million to £25 million each year.
Fortunately, for the UK mobile phone providers, Ofcom does not expect them to pay the new fees at once. Under the new regulations, all the mobile phone providers in the UK will be required to pay half of the fees by October 2015. Ofcom will then require the providers to clear the remaining half by October 2016. As from 2017, Ofcom will expect all the providers to pay the new license fees in a single lump sum each year.
Ofcom believes that the new network license fees are a true reflection of the actual value of the spectrum bands. In the past, Ofcom felt that the fees that mobile phone providers in the UK paid was not a true reflection of the actual worth. Ofcom believes that the spectrum offers network providers a finite source. The only problem with this argument is that the providers will have no option other than to pass the new charges down to their consumers. At this point, UK mobile phone users have little that they can do other than paying the new rates.