Britain’s biggest mobile network operators have warned ministers they may be forced to ration access to phone signals and introduce surge pricing at peak times, as the war in Iran sends wholesale energy costs spiralling and Whitehall shuts the sector out of its flagship industrial support package.
In a pointed intervention to Government, VodafoneThree, Virgin Media O2 and BT-owned EE have confirmed they are drawing up emergency contingency plans to manage ballooning electricity bills, after being pointedly omitted from the Chancellor’s British Industrial Competitiveness Scheme (BICS).
Among the measures being modelled behind closed doors are the throttling of data speeds, restricting access during periods of high demand, and charging customers a premium at peak times, a move that would mark a significant departure from the all-you-can-eat tariffs that have dominated the British mobile market for more than a decade.
Voice calls and mobile data are expected to bear the brunt of any rationing, though fixed-line broadband services could also be affected. Senior industry figures have further cautioned that relentless cost pressures could see 5G rollout plans shelved, with jobs either cut outright or shifted overseas.
Frustration is running deep in the industry following Rachel Reeves’s announcement last week that 10,000 manufacturers would see their electricity bills cut by up to 25 per cent under BICS. Although the measures are not due to take effect until April 2027, telecoms bosses argue that their sector, classed as critical national infrastructure, has an equally compelling case for state intervention.
“It’s a serious oversight,” one industry source told Business Matters. “It raises real questions about which parts of the economy this Government actually considers strategically important.”
The sums involved are far from trivial. Britain’s mobile networks consume just under one terawatt-hour of electricity annually, enough to power 370,000 homes. While operators routinely hedge their exposure to the wholesale market, prices have still climbed by 70 per cent in recent years, first on the back of Russia’s invasion of Ukraine and more recently following the closure of the Strait of Hormuz, the vital shipping lane that carries roughly a fifth of global oil and gas trade.
With UK electricity pricing still tethered to the gas market, the 33 per cent jump in gas prices since the outbreak of hostilities with Iran has fed directly through to operator cost bases. Unlike steelmakers or chemical plants, executives argue, mobile networks cannot simply shift demand to cheaper overnight hours. The “always on” nature of the infrastructure leaves them structurally exposed.
Any move to ration signal, understood to represent a worst-case scenario, would prove politically toxic in a country where consumers are already exasperated by patchy coverage. The UK currently props up the G7 table for 5G download speeds, and the broader economic stakes are considerable: digital connectivity is estimated to contribute £6.6bn annually to UK output.
The warning lands at an awkward moment for the Chancellor, who is already fielding criticism from manufacturing bodies that BICS is both too modest and too slow to arrive to stem further job losses.
A spokesman for Virgin Media O2 said: “Mobile and broadband networks are critical national infrastructure that almost every consumer and business relies on, yet despite their importance, telecoms companies have been excluded from support offered to other energy-intensive sectors. If the Government wants growth, productivity and resilience, it cannot overlook the digital networks the country depends on.”
VodafoneThree struck a similar note, with a spokesman adding: “We are disappointed that the Government has chosen not to include the telecoms sector in the British Industrial Competitiveness Scheme. At VodafoneThree we are committed to building the UK’s best network, creating jobs and fuelling billions of pounds of value to the UK economy. We urge the Government to consider the impact of rising energy prices on the vital telecoms sector that unlocks growth in all parts of the economy.”
For SMEs already grappling with patchy rural coverage and rising operating costs, the prospect of peak-time surcharges or throttled data could represent yet another headwind, and another reason to question whether Britain’s industrial strategy is keeping pace with the realities on the ground.
