Ofcom's massive price hike could cost us and the UK telecoms industry dearly

There is a general stereotypical view of the telecommunication industry, stating that corporations are just “fat-cat companies that are milking us poor customers for every penny we have.” (Linge, 2015) Their suspicions have only been intensified since September 2nd, 2015. United Kingdom telecommunications regulator Ofcom had announced on Friday that they intended to “triple the license fees paid by UK mobile network operating companies.” (Linge, 2015) Such mobile networks like EE Limited, O2 (a branch of Telefonica UK Limited), Vodafone and internet service provider Three UK will have to pay the British government to use the established Ofcom radio frequency spectrum (the 900MHz spectrum and the 1800MHz spectrum), which will cost the telecommuncations industry roughly £200 million per year. Ofcom has been trying to relay to the public that this is a fair price to set and that “the industry has been benefiting from fees below the market rate for years.” (Linge, 2015) The fact remains that Ofcom’s view of the market is influenced by the “results of a recent spectrum license auction in Germany, Europe’s largest mobile market with 108.5 million subscribers, compared to the UK’s 75.1 million.” Ofcom is comparing itself to a country that has almost 30% more subscribers than their own, which is why there has been such outrage in the increased price system.

“The mobile phone industry is a global business, and the UK is one of the most regulated markets in the world.” (Linge, 2015) Ofcom needs to realize that if competition starts to grow between corporations because of this increase in license fees, these companies will just take their business and investment somewhere else besides Ofcom, leaving this telecommunication’s regulator powerless and without profit or business. This is an entirely counterproductive attempt to grab more money for themselves. We live in a society that has a much more higher dependency on connectivity, smartphones, laptops, etc. that it is more of a hinderance for the government to create these taxes on connection. Instead, it should really be creating incentives for operators to invest their money so that these companies can improve the services they offer while benefiting from the continued usage from loyal customers. 

Linge, Nigel. "Ofcom's Massive Price Hike Could Cost Us and the UK Telecoms Industry Dearly." Ofcom's Massive Price Hike Could Cost Us and the UK Telecoms Industry Dearly. The Conversation, 02 Oct. 2015. Web. 04 Oct. 2015.