Taxpayers 'lose £300m to phone operators'

By Jon Rees
Updated: 07:58 EDT, 29 May 2011

Taxpayers are missing out on payments of up to £300m because media regulator Ofcom has not levied charges on mobile phone companies.

Change: Ofcom allowed 3G services over 2G airwaves

Labour MP Tom Watson, who sits on the Culture, Media and Sport Committee, made the claim in a letter to Culture Secretary Jeremy Hunt, seen by Financial Mail.

'It is a matter of public concern that when major spending cuts are impacting across our communities, mobile operators have been granted additional rights to use 2G spectrum with benefits of nearly £300m without any revision in their payments.

'If we are all in this together it is surely incumbent on the Government to ensure corporate interests are paying a fair share to the Exchequer for benefiting from taxpayer assets,' wrote Watson.

The letter follows the appearance of Ofcom chief executive Ed Richards before Watson's committee this month, when he was asked about annual fees levied on the phone firms for using radio airwaves.

This year, Ofcom allowed Vodafone, O2, Orange and Everything Everywhere to offer 3G services, such as mobile internet access, over 2G airwaves, which were previously used for voice calls.

Ofcom accepts that this makes the 2G airwaves more valuable and will revise its charges next year after an auction of airwaves for the next generation of mobile phones.

Watson has told Hunt that as a result of that decision, Ofcom, and ultimately the taxpayer, will miss out on £300m.

This is the sum Watson claims should be paid by the phone providers based on the current annual payments of £64m and Richards' comment that the market value of the 2G airwaves was worth 'multiples' of this sum.

The Government said: 'Fees are used to deliver efficient use of spectrum. The Government does not use them to maximise revenue.'

Ofcom said it could not increase fees retrospectively.