Ofcom rings up £250m hike in mobile band fees

Mobile operators expressed their disappointment after regulator Ofcom pushed through a five-fold increase in the fees for existing phone spectrum bands yesterday in a move that will net the Treasury a windfall of almost £250m a year.

Ofcom said it was raising the licence fees Vodafone, O2, EE and Three must pay for using the 900 MHz and 1800 MHz bands on the orders of the Government. They were originally "gifted" to the operators two decades ago in the early days of mobile, and Ofcom said the fees needed to rise to "reflect full market value", particularly in light of the auction of new 4G spectrums that raised £2.3bn earlier this year.

EE, owner of T-Mobile and Orange, faces the biggest increase as it will have to pay £107.1m, up from £24.9m. Vodafone and O2 will each have to pay £83.1m, up from £15.6m, and Three must pay £35.7m, up from £8.3m.

A price hike had been expected but the size of the increase surprised some of the mobile networks. Vodafone said operators were investing heavily in their networks "and the regulator doesn't seem to have taken that into account."

EE said: "There must be a balance between licence fees and the critical 4G network investment consumers and businesses are demanding to drive growth and jobs."

An industry insider said it was unlikely the cost would be passed on to customers, but it could mean slower mobile investment in rural areas.