Consultation: Business messaging - Review of the A2P SMS termination market

Ofcom is proposing to cap the wholesale prices charged by mobile operators for the delivery of text messages, known as application-to-person (A2P) SMS, which are widely used by businesses and organisations across the private and public sectors.

Common examples include NHS medical appointment reminders, parcel delivery notifications, and one-time passcodes. They're also used by small businesses such as hair salons, restaurants and taxi companies to confirm or remind customers about bookings.

More than 20 billion A2P SMS were sent in 2023-24 in what has become a market worth about £400m a year to the mobile network operators.

The A2P SMS value chain

The value chain for A2P SMS is complex, as businesses do not usually buy them directly from mobile operators. Typically, a business that wants to send these messages to its customers will go through intermediaries, by contracting with a Messaging Service Provider (MSPs), with whom they have a direct relationship. The MSP will often then use the services of an Aggregator, who contracts with mobile operators (like EE, Three, Vodafone, VMO2 and others) for delivery (‘termination’) of the text messages.

Wholesale prices for the termination of these messages have increased significantly in recent years, in a range from 15% to 75% since 2021.

Our proposals

Ofcom’s initial view is that the mobile operators hold significant market power and, without intervention, would be likely to use this to increase their termination charges to an excessively high level.

We are therefore proposing to cap the A2P SMS termination prices charged by mobile operators to Aggregators and to other interconnecting mobile operators. 
This should have a positive knock-on effect for small businesses and organisations like the NHS, by keeping down the amount they pay for A2P SMS messaging services in the future. It should also enable innovation in the business messaging market.

The wholesale cap would be set at an average of the termination prices charged by the big four mobile network operators in December 2020, adjusted for inflation. This would equate to approximately 1.96 pence per message (in September 2024 prices) and would rise in line with inflation over time.

Consultation and next steps

We are inviting feedback on our proposals, which must be submitted by 8 April 2025. 

Subject to responses to our consultation, we’ll publish our final decision later in 2025. Should we decide to impose a price cap, it would come into effect at least three months after that decision is published. 

Responding to this consultation

Please submit responses using the response form no later than 5pm 8 April 2025.