Stefano Nicoletti, Head of MEF’s Sender ID Registry in the UK, explains the latest shift in the UK messaging market, as Ofcom revises its approach to A2P SMS regulation. Following new industry commitments and evolving market dynamics, the regulator is taking a lighter touch. This development highlights changes in pricing, alternative messaging adoption, and the balance between oversight and market flexibility.
The UK telecom regulator, Ofcom, has reversed its earlier proposal to regulate A2P SMS termination rates. This shift follows new voluntary commitments submitted by major UK mobile network operators (MNOs) and fresh market evidence suggesting that formal regulation may no longer be necessary. Ofcom confirmed it will continue monitoring the market.
From Market Power to Voluntary Restraint
In its March 2025 consultation, Ofcom concluded that all UK MNOs held significant market power in the A2P SMS termination market. It argued that competition law alone was insufficient to ensure fair pricing, citing steep post-COVID price increases as evidence of a non-competitive environment. These increases were seen to harm aggregators, large business senders (including the NHS, banks, and logistics firms), and ultimately consumers.
However, last week, Ofcom softened its stance. It acknowledged “increased uncertainty regarding the potential for competitive constraints to develop” and stated that the new voluntary commitments “reduce the risk of our competition concerns being realised.”
This outcome delivers predictable pricing and strategic clarity for aggregators and messaging providers, allowing SMS to remain a viable channel.“
Negotiated Outcome Over Regulation
Several factors contributed to this shift:
- Growing adoption of WhatsApp for Business, RCS Business Messaging, and in-app notifications, which offer viable alternatives to SMS.
- MNOs’ willingness to negotiate to avoid regulation.
- A broader recognition that regulation might have introduced complexity and unintended consequences.
The result: a negotiated framework that offers pricing stability for aggregators and business senders, while sparing Ofcom to impose new measures and MNOs from intrusive regulatory oversight.
Evidence of Market Evolution
Since March 2025, Ofcom observed:
- A slowdown in SMS price increases.
- A rise in alternative messaging volumes, particularly WhatsApp and RBM.
- New pricing introduced globally by Meta, increasing competitive pressures on traditional platforms
- A mixed picture in business sender behaviour, with some moving away from SMS.
Major operators—BT/EE, Vodafone/Three—and MVNO Sky proposed that voluntary commitments would be a more proportionate response than formal regulation. Ofcom agreed.
Commitment Terms and Pricing Outlook
The commitments, effective 1 January 2026 to 31 December 2028, cover:
- Pricing levels
- Frequency and timing of increases
- Notice periods and Ofcom notification
While the exact pricing terms remain redacted and are not available to the wider public, some data points offer clues:
- Ofcom’s March 2025 consultation proposed a cap of 1.96 pence per SMS, based on December 2020 on-net rates adjusted for inflation.
- Ofcom’s published charts show:
- A pricing range between 2.00p and 2.80p across MNOs. (see chart 1 below)
- Aggregators price charged to business sender of roughly 2.00p (see chart 2 below)
Chart 1: changes in the lowest and highest standard A2P SM on-net1 termination prices across the large MNOs (UK pence per message)
Source: Ofcom
Notably, aggregators appear to have absorbed some price increases, and overall SMS volumes are rising—net of inter-aggregator traffic.
As we have often argued on this blog, Ofcom charts show an 18% increase in A2P SMS volume among five aggregators between 2023/24 and 2024/25, suggesting resilience and growth despite pricing pressures.
Chart 2: total direct A2P SMS service values and average effective A2P SMS price for five aggregators (left axis: Mn of messages, right axis UK pence per message)
Source: Ofcom
Stability for the Years Ahead
Under the new Commitments:
- Price increases can occur only once every 12 months.
- A minimum 60-day notice is required—up from the previous 30-day standard.
This outcome delivers predictable pricing and strategic clarity for aggregators and messaging providers, allowing SMS to remain a viable channel. For Ofcom and MNOs, it avoids regulatory entanglement and aligns with broader deregulatory trends.
All in all, a pragmatic win for all stakeholders.
