Home
 » ISP News » 
Sponsored Links

Ofcom UK Propose to Cap the Wholesale Price of Bulk Business Texts

Tuesday, Jan 28th, 2025 (11:39 am) - Score 1,120
Smartphone-chat-and-text-SMS-messages-uk-123rf-106949094

The communications regulator, Ofcom, has today proposed to cap the wholesale price charged by mobile network operators (e.g. EE, O2, Vodafone and Three UK) for the delivery of automated text messages, known as application-to-person (A2P) SMS, which are widely used by business and organisations across the public and private sectors.

Such messages are often sent, for example, by the NHS when issuing medical appointment reminders, as well as parcel delivery notifications, and one-time passcodes etc. The regulator states that over 20 billion A2P messages like this were sent in 2023-24 and are worth around £400m a year to the mobile operators.

The market for these particular text messages is complex, as businesses do not usually buy them directly from mobile operators and will instead go through intermediaries. A business will first contract with a Messaging Service Provider (MSP), with whom they have a direct relationship. The MSP will often then use the services of an Aggregator, who contracts with the main mobile operators for delivery (‘termination’) of the text messages.

Advertisement

However, wholesale prices for the termination of these messages (A2P SMS termination rates) have increased significantly in recent years, with Ofcom seeing prices rise by as much as 70% since 2021 (the consultation document actually expresses this as a range from 15% to 75%). Naturally, these increases are starting to translate into increases in retail prices (i.e. the prices charged by MSPs to business senders for sending A2P SMS), which has prompted Ofcom to examine competition within this space (an area they haven’t previously regulated).

The regulator’s assessment of the A2P SMS termination market has now provisionally found that MCPs have Significant Market Power (SMP) in this market, including the “ability and incentive to increase their termination prices to an excessively high level“. As a result, Ofcom are proposing to intervene by imposing a price cap.

Ofcom’s Proposal

Our preliminary view is that there are 51 separate markets for wholesale A2P SMS termination, one for each of the MCPs allocated mobile phone numbers on which they terminate A2P SMS (or MCPs which are planning to do so during the review period).

We consider that these MCPs have SMP in those corresponding markets. This derives, in part, from our assessment that there are currently no effective substitutes to A2P SMS messaging services in the retail market and an effective substitute is unlikely to develop during the proposed market review period.

We consider that, in the absence of intervention, the MCPs would be likely to exercise their market power by increasing pricing to an excessively high level.

To address the competition concerns we have identified, including the risk of these rates being set (and maintained) at an excessively high level, we are proposing a price cap on the A2P SMS termination charges of each relevant MCP:

• We propose applying the cap for all A2P SMS termination, both ‘on-net’ termination via Aggregators and for termination on interconnect routes between MCPs. The cap would be set at the same level for both channels.

• The cap would be based on an average of ‘on-net’ December 2020 prices charged for termination by the four large MNOs (1.60p), equal to approximately 1.96p in September 2024’s prices (when allowing for inflation at CPI since 2020)4 and going forwards it would be adjusted by inflation.

Ofcom’s new consultation is now inviting comments from stakeholders on the proposals until 8th April 2025, and they aim to then reach a final decision during Q2 2025/26. The final remedy would then be introduced only 3 months after the publication of their final decision and this would be subject to a 3-year review period, which they plan to run from 1st January 2026 to 31st December 2028.

We consider that by promoting competition in valued A2P SMS services these proposals will help enable private and public sector efficiency (e.g. by reducing missed appointments) while facilitating innovation in the business messaging market,” said Ofcom.

Advertisement

Share with Twitter
Share with Linkedin
Share with Facebook
Share with Reddit
Share with Pinterest
Mark-Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and .
Search ISP News
Search ISP Listings
Search ISP Reviews
Comments
6 Responses

Advertisement

  1. Avatar photo Steve says:

    Talk about mixed messages and ineffective regulation! Ofcom won’t ban mid contract price increases, I lobby them, they say the considered a ban but it could stifle innovation and there’s enough competition to get deals in the market (I’ve asked them for an equality impact assessment as traditionally lower social economic households and elderly groups less likely to switch to better deals).

    Here they’re saying competition isn’t working so are now wondering should they do something about it.

    It’s a huge shame the regulators seem to be acting on whatever whim takes their fancy rather than listening to those lobbying them. The telecoms market in the UK has got a lot better over the years with more choice and consumer options but we have a long way to go and an industry that is squeezing consumers just because they can with poor regulation.

    1. Avatar photo Declan McGuinness says:

      Spot on Steve

    2. Avatar photo owo says:

      If morons don’t want to look for a better deal, why is it Ofcom’s job to conduct an assessment on it? The fact the morons are poor means nothing

  2. Avatar photo - says:

    This is really so, so, so stupid. So can’t they regulate that consumers don’t have mid contract price rises, but they can stick their nose into what Amazon is paying Vodafone or British Telecom for SMS messages? Seriously?

    1. Avatar photo Mark Smith says:

      🙂
      I think there is a bigger picture here.
      Microsoft (not an insignificant company) has recently started using WhatsApp for sending these types of verification texts instead of SMS and so have others. There is obviously a commercial thing at play here over costs (WhatsApp is cheaper than SMS), but WhatsApp is also more secure with end to end encryption.
      SMS technology is old and not end to end encrypted.

      I think there is a fear amongst ofcom that SMS will become increasingly irrevelant (as with traditional phone calls)
      There are a number of reasons why the likes of Ofcom and others fear this but ultimately it’s the direction of travel.

  3. Avatar photo greggles says:

    Ofocom are not consistent, they wont ban mid contract rises, but then this gets their attention instead.

Leave a Reply

Your email address will not be published. Required fields are marked *

NOTE: Your comment may not appear instantly (it may take several hours) due to static caching and moderation checks by the anti-spam system. Please be patient. We will reject comments that spam, troll, post via known fake IP/proxy servers or fall foul of our Online Safety and Content Policy.
Javascript must be enabled to post (most browsers do this automatically)

Privacy Notice: Please note that news comments are anonymous, which means that we do NOT require you to enter any real personal details to post a message. By clicking to submit a post you agree to storing your entries for comment content, display name, IP and email in our database, for as long as the post remains live.

Only the submitted name and comment will be displayed in public, while the rest will be kept private (we will never share this outside of ISPreview, regardless of whether the data is real or fake). This comment system uses submitted IP, email and website address data to spot abuse and spammers. All data is transferred via an encrypted (https secure) session.
Cheap BIG ISPs for 100Mbps+
Community Fibre UK ISP Logo
150Mbps
Gift: First 3 Months Free
Vodafone UK ISP Logo
Vodafone £23.00
150Mbps
Gift: None
Youfibre UK ISP Logo
Youfibre £23.99
150Mbps
Gift: None
NOW UK ISP Logo
NOW £25.00
100Mbps
Gift: None
Virgin Media UK ISP Logo
Virgin Media £25.99
132Mbps
Gift: None
Large Availability | View All
Cheapest ISPs for 100Mbps+
BeFibre UK ISP Logo
BeFibre £19.00
150Mbps
Gift: None
Gigaclear UK ISP Logo
Gigaclear £19.00
300Mbps
Gift: None
Community Fibre UK ISP Logo
150Mbps
Gift: First 3 Months Free
toob UK ISP Logo
toob £22.00
150Mbps
Gift: None
Vodafone UK ISP Logo
Vodafone £23.00
150Mbps
Gift: None
Large Availability | View All
The Top 15 Category Tags
  1. FTTP (6150)
  2. BT (3691)
  3. Politics (2777)
  4. Business (2481)
  5. Openreach (2446)
  6. Building Digital UK (2364)
  7. Mobile Broadband (2200)
  8. FTTC (2094)
  9. Statistics (1951)
  10. 4G (1856)
  11. Virgin Media (1811)
  12. Ofcom Regulation (1615)
  13. Fibre Optic (1490)
  14. Wireless Internet (1477)
  15. 5G (1453)
Promotion
Sponsored

Copyright © 1999 to Present - ISPreview.co.uk - All Rights Reserved - Terms , Privacy and Cookie Policy , Links , Website Rules , Contact
Mastodon