UK: Ofcom updates

We provide an update on three recent developments from Ofcom, the UK’s communications regulator, covering net neutrality, efforts to combat scam calls and proposals to set maximum rates for wholesale Application-to-Person SMS termination.

Proposed price cap on A2P SMS termination rates

Ofcom proposes to introduce a price cap on the wholesale prices charged by mobile operators for Application-to-Person (A2P) SMS termination (see here). This will be the first time that such charges are regulated and aims to tackle concerns around high termination rates for SMS messages sent from business applications to consumers, a practice commonly referred to as A2P messaging.

In this context, "termination" refers to the process by which an SMS message sent from a business (via A2P messaging) is routed through a mobile network operator's infrastructure and delivered to the recipient (the consumer). A2P SMS refers to the messaging services that companies use to send notifications, alerts, and promotional messages to customers. These include everything from delivery notifications from retailers to two-factor authentication codes used for online security. Other uses of A2P technology include but are not limited to:

• Transaction alerts from banks which alert account holders of withdrawals, deposits and suspicious activities.
• Appointment reminders.
• Notifications regarding bill payments and payments due dates.
• Government emergency alert systems

The use of A2P messaging saw significant growth during the Covid 19 pandemic and has reached a point where 20 billion A2P SMS messages were received by UK mobile users in 2023/24.

Ofcom report that A2P wholesale rates have increased by a range of between 15% - 75% since 2021 resulting in higher costs. Ofcom considers that these price increases have been beginning to filter into an increase in retail prices and have proposed a price cap on wholesale A2P SMS termination rates.

This price cap will be based on the average on-net termination rates charged by the mobile operators in December 2020. This will equate to approximately 1.96p per SMS termination at September 2024’s prices. Ofcom proposes that this figure will be adjusted by inflation going forwards. Ofcom considers that the price cap would improve market efficiency and enhance competition in the telecoms sector by encouraging more transparent and fair pricing models.

The consultation period for Ofcom’s proposal is currently open and closes at 5pm on 8 April and a copy of the response form can be found here. Subject to responses to the consultation, Ofcom anticipates publishing a final decision later in 2025 with the price cap coming into effect at least three months after the final decision (if it decides to proceed).

Net Neutrality Monitoring Report 2024 published

The 2024 Net Neutrality Annual Monitoring Report was published by Ofcom in January (see here). The Report highlights progress and areas for improvement. Net neutrality is the principle that Internet Service Providers (ISPs) must treat all traffic on the internet equally, without discriminating or charging differently based on user, content, website, platform, or application. 2024 was the first full year under which Ofcom’s updated guidance on net neutrality was in force (see here). Key aspects to highlight are as follows:

• Traffic management: Following the updated guidance, which allows ISPs to undertake traffic management measures to manage their networks in the interest of quality of service for consumers, the report indicates that ISPs have made minimal use of such practices. However, one ISP conducted trials involving the speed limiting of specific content categories, such as short-form video and live TV, during network congestion. These measures were temporary and targeted. The report stresses that such measures should only be undertaken to deal with actual or imminent congestion and should treat equivalent content equally.
• Zero-rating services: Zero-rating is where the data used by certain websites or apps is not counted towards a customer’s overall data allowance and the requirements were clarified in Ofcom’s updated guidance. Mobile ISPs have continued to offer zero-rated access to non-commercial content, such as public sector websites and emergency services, which Ofcom views as beneficial for consumers. Some ISPs also provided zero-rating packages for commercial content, generally open to all content providers within specific categories. Despite being allowed in the UK, it should be noted that this practice is not permitted in the EU.
• Specialised services: Ofcom’s guidance further clarifies where ISPs can make use of ‘specialised services’ to deliver specific content and applications that need to be optimised (e.g. real time communications and driverless vehicles). ISPs have made limited use of specialised services, with some prioritising voice services and employing 5G network slicing for specific events. Additionally, ISPs generally did not differentiate services based on terminal equipment, maintaining compliance with net neutrality rules.

Looking ahead, Ofcom plans to continue monitoring net neutrality compliance and engage with ISPs where concerns arise.

Targeting the misuse of numbers and scam calls

Ofcom has made considerable efforts to implement measures aimed at combating scam calls and reducing the associated consumer harm. In July 2024, Ofcom issued guidance for Communications Providers on the effective use of Calling Line Identification (CLI) facilities. CLI data informs call recipients about the origin of a call, enabling them to make informed decisions on how to respond.

The guidance places emphasis on the accurate presentation of CLI data to enhance consumer confidence and includes measures to prevent scammers from misusing CLI information to spoof calls. Ofcom’s updated guidance on the provision of CLI facilities and other related services came into force on 29 January 2025 (see here). Providers must therefore ensure that they have compliant processes in place.

As part of the updates to the guidance, providers will be required to block international calls that use UK CLI as a Network or Presentation Number, except in certain prescribed circumstances where there is a legitimate use case (e.g. a potential legitimate reason may exist where the customer is a UK business that uses offshore call centres and / or has employees based abroad). This is an extension of the current guidance that only covers the blocking of Network Numbers.