Summary

  • Ofcom stopped short of a price cap without concluding that its earlier competition concerns were unfounded; four voluntary commitments and uncertain switching signals bought the review a pause through 2028.
  • The commitments cover specified on-net standard prices charged to aggregators, not every route or negotiated price. The central test is whether alternatives take enough real traffic to change prices at the recipient network's termination point.

A pause is not a finding

Ofcom's October 2025 decision is easy to misread as a regulatory retreat. In January that year, the regulator had proposed a price cap on the wholesale service that lets an operator deliver a business text to one of its subscribers. The consultation provisionally considered that each terminating provider had significant market power and the ability and incentive to raise prices excessively in future. Those were provisional findings. They never became a final market determination.

On 31 October, Ofcom made an administrative-priority decision not to continue the review “at this time”. It expressly said it was reaching no conclusive view on the steps in the market-review process. The decision reflected three things: more uncertainty about whether other channels might constrain prices over the review period; commitments from four large operators that Ofcom judged to reduce the risk of its concerns materialising; and its stated bias against intervention where action is not needed. Ofcom retained the option of intervening promptly if risk rose.

That distinction matters. A consultation proposal is not a price rule, and a decision to pause the review is not proof that competition has cured the problem. The live question has moved from whether an ex-ante cap should be imposed now to whether the evidence changes enough to justify reopening that question.

The unavoidable step in the delivery chain

Application-to-person SMS includes the messages many organisations rely on without treating them as a separate communications product: bank passcodes, healthcare reminders, delivery notices, and other bulk texts. The route usually runs from a business sender to a messaging service provider, through an aggregator, and then to the mobile communications provider serving the intended recipient. The recipient's provider performs the final termination step. A sender may change its messaging platform, but an SMS still has to reach the network assigned to that recipient.

That structure gives the wholesale price a particular character. It is charged at a destination-specific point in a chain that aggregators use to reach subscribers across networks. The sender can bundle, renegotiate, or shift some messages to another channel; it cannot make the recipient's terminating network irrelevant while it is still sending SMS to that person.

Ofcom's concern came from the price record. It described repeated, sometimes steep wholesale increases from 2021 to 2024. Over a period just under three years, nominal increases ranged from above 15 per cent to below 75 per cent. Short notice made it harder for messaging providers to price longer customer contracts, and some wholesale increases were beginning to pass through to business senders. Since April 2024, Ofcom observed fewer increases; the two it reported were broadly in line with inflation. Slower increases reduce immediate pressure, but do not by themselves settle whether the underlying constraint has changed.

What the commitments cover

BT/EE, Sky, Virgin Media O2, and VodafoneThree separately submitted commitments in October 2025. They run from 1 January 2026 to 31 December 2028. Ofcom estimated that, including in-scope mobile virtual network operators, they cover more than 90 per cent of the overall provision of A2P SMS termination to aggregators.

The measure is not a general ceiling on every SMS price. The commitments limit specified maximum standard prices for on-net termination charged directly to aggregator customers. They also limit increases to one per relevant twelve-month period, require at least 60 days' or two months' notice, and require advance notification to Ofcom. The commitments do not cover the interconnect price for off-net termination between mobile providers, discounts, or bespoke price reductions.

An operator can therefore comply with its standard-price commitment while the effective cost for a given sender still depends on route, volume, contract, and discount.

There is a second visibility limit. The non-confidential decision redacts the maximum price levels. Ofcom says it has the price levels or formulas; an outside reader cannot compare the numerical ceilings in the published document. The regulator's estimate of broad coverage is useful, but it describes the provision of termination to aggregators, not the share of all retail messages protected from every price change.

The commitments may still matter. A ceiling on standard-price increases and longer notice give aggregators time to renegotiate their own contracts and may make fixed-price offers to senders more workable. But that is a mechanism to reduce risk, not evidence that the wholesale rate has fallen or that every buyer has received a saving.

Switching is a hypothesis until traffic moves

Ofcom cited lower prices for some WhatsApp Business services, wider availability of RCS and business messaging, aggregator tools that route across channels with SMS fallback, and more use of public-service apps. It also heard that some large senders were considering a shift and that one had moved most of its volumes to WhatsApp Business.

The same decision qualifies those signals. The overall picture from Ofcom's engagement was mixed. There was limited evidence that senders had already switched or decided to do so, and Ofcom expected SMS to remain important in the short and medium term. It had not seen a clear mobile-provider price response to WhatsApp's reductions beyond the absence of further increases. A lower alternative-channel tariff may put pressure on a sender's negotiations, but it is not yet proof of a wholesale constraint at each recipient network.

The difference is practical. A message can be technically routable over another platform and still fail as a substitute for a particular use. WhatsApp requires an installed application and a data or Wi-Fi connection. A business may need separate recipient consent and changes to its systems. SMS remains familiar and reaches the number assigned to a handset without requiring the sender to know which app is installed. A multi-channel aggregator can move suitable traffic but keep SMS as a fallback. That architecture can lower dependence for some messages without eliminating the termination service for others.

Ofcom's earlier research, based on 30 business-sender interviews and an October 2024 online survey of 2,086 UK adults, found that alternatives were often used alongside SMS for particular audiences or purposes. That evidence is a baseline, not a 2026 traffic report. Ofcom's later statement also recorded 21.4 billion A2P messages terminated by the large UK mobile networks in 2024/25, up 3.2 per cent year on year. Rising volume can coexist with gradual migration in some use cases; it does not establish which mechanism is dominating.

Evidence quality is part of the market test

The substitution case depends partly on information supplied by platforms. In September 2025, Meta told Ofcom that earlier WhatsApp Business conversation-volume data it had provided were incorrect. Meta resubmitted figures for October 2023 to March 2024 and new estimates for July 2022 to September 2023, including direct and indirect sales. Ofcom withdrew its earlier correction note and amended the consultation data.

In January 2026, Ofcom opened a separate investigation into whether Meta had complied with formal section 135 information notices issued in July 2024 and June 2025. The regulator said some responses may not have been complete and accurate. The investigation page still describes an open case. That is not a finding that Meta breached the law, nor does it establish that the corrected figures were wrong or that they caused Ofcom's October decision. The decision followed the correction note and separately described the evidence and uncertainty on which it relied.

The narrower point is about measurement. If channel volumes are revised, the regulator needs to distinguish actual migration from changing definitions, estimates, or reported sales. A claim that a platform is cheaper has little force as a competitive constraint until usage, recipient reach, and the resulting price behavior can be observed together.

A market pause that needs a public meter

Ofcom promised periodic monitoring of compliance with the commitments and prices charged by providers that did not make them. The published decision does not state an automatic numeric trigger for reopening the review. That leaves a reasonable question for aggregators and business senders: what public evidence would show that the alternative-channel constraint is real enough, or that the original risk has returned?

The minimum useful record would separate on-net standard prices from off-net interconnect prices, show how much traffic is covered by each commitment, and follow volume by message type across SMS, WhatsApp Business, RCS, and app notifications. It would also distinguish a sender's stated intention from a completed migration, identify where SMS remains a fallback, and show whether a wholesale saving appears in the contracts paid by businesses.

Ofcom has not said that it will publish every such measure, and confidentiality can constrain disclosure. But without a visible monitoring frame, the market cannot tell whether a broad coverage estimate is translating into competitive pressure or only stabilising one slice of the old route. That is the unresolved test behind the pause.