Trigger situation

A provider receives an annual administrative charges invoice from Ofcom and questions the basis for calculation. A business expanding its operations needs to understand how its fee obligations will change as turnover increases. A spectrum licence holder faces an unexpected fee increase following Ofcom’s periodic fees review. A provider believes it has been incorrectly classified for charging purposes or that its relevant turnover calculation is wrong. An acquiring party is assessing the impact of an acquisition on post-acquisition fee obligations.

Why it matters now

Ofcom funds its regulatory activities through two distinct charging regimes. The first, administrative charges under section 38 of the Communications Act 2003, applies to telecommunications providers and is based on “relevant turnover” of the regulated business. The second, spectrum fees under section 12 of the Wireless Telegraphy Act 2006, applies to spectrum licence holders and is based on spectrum holdings and use. Both regimes are subject to periodic reviews by Ofcom and to consultation with the regulated industry.

Ofcom sets out the calculation methodology, and the grounds on which a provider can challenge it, in its annual Statement of Charging Principles. Ofcom publishes an annual Statement of Charging Principles setting out how it will calculate fees for the coming year. A provider that checks Ofcom’s calculation against its own turnover figures can identify an error and challenge it before it pays.

Ofcom reviews spectrum fees periodically to ensure they reflect the opportunity cost of spectrum use and the regulatory framework of the day. Fees can increase substantially following a review, and a licence holder that does not respond to the consultation cannot challenge Ofcom’s assumptions before the fees are set.

Common Ofcom fee compliance failures

Relevant turnover for administrative charges is easy to over-report or under-report. The definition of “relevant turnover” in the Communications Act 2003 has a specific meaning that does not correspond to total revenue. Relevant turnover includes revenue from telecommunications services and from ancillary services, but excludes certain categories (notably, revenue from apparatus sales and revenue from non-telecoms services). A provider that includes too much revenue overpays. A provider that excludes revenue which should be included is exposed to enforcement. The distinction between what is included and what is excluded is not always obvious and often requires detailed financial analysis.

Ofcom may levy administrative charges on any communications provider operating in the UK. This includes fixed and mobile operators, WISPs, MVNOs, wholesale operators, virtual operators, and any other provider of public electronic communications services. Size, MVNO status or operating primarily outside the UK does not exempt a provider from Ofcom’s charging scope. A provider of a public electronic communications service in the UK is a communications provider for charging purposes.

Spectrum fees are not a fixed cost: they are subject to periodic Ofcom review and can change materially. When Ofcom reviews spectrum fees (which it does periodically, typically every 3 to 5 years), it consults on the methodology and the fee levels. Providers that do not engage with these consultations have no voice in determining the outcome. Ofcom’s review is driven by its assessment of the opportunity cost of spectrum, the comparative spectrum fees in other jurisdictions, and the policy objectives it is pursuing (coverage, competition, spectrum efficiency). A response to the consultation is the only opportunity to put an alternative methodology to Ofcom before the fees are set.

Changes in business structure affect fee obligations. An acquisition, a merger, a sale of business line, or a change in how your business is structured (e.g. moving to an MVNO model from a facilities-based operator) may change your relevant turnover, your classification, or your fee liability. Acquisition agreements often do not allocate the risk of post-acquisition fee increases or changes in fee classification. A buyer that finds a higher fee liability after completion has no recourse to the seller unless the agreement allocates that risk.

Managing Ofcom fee exposure

A provider’s fee exposure starts with the Statement of Charging Principles for the charging year and how it applies to that provider’s activities. The next step is to work out which revenue is “relevant turnover” and to check that the figure reported to Ofcom matches it.

For administrative charges the exercise is to classify each revenue stream as inside or outside “relevant turnover”, which means working through the accounting records and financial statements line by line, then checking Ofcom’s calculation against the reported figure. A provider that considers its fee classification wrong can put the point to Ofcom and ask for reclassification.

On spectrum fees the questions are whether to respond to a periodic review, which of Ofcom’s assumptions to challenge, and whether a different allocation of fees across bands would be defensible. A licence holder can also reduce exposure by changing how it holds or uses spectrum, and should price an anticipated increase before the review concludes.

An acquisition, a divestment or an internal restructuring changes relevant turnover, and with it the administrative charge for the following charging year. On a purchase, the fee position of the target should be quantified as part of diligence.

Administrative charges follow relevant turnover and spectrum fees follow spectrum holdings, so an operator holding substantial spectrum pays on both bases. The total cost of regulation is the sum of the two.

When to instruct

Instruct if you receive an administrative charges invoice from Ofcom and believe the calculation is wrong or that your classification is incorrect. Ofcom may have made an error in calculating your relevant turnover or may have misclassified you. Challenging an invoice can result in a material fee reduction, particularly if the turnover figure Ofcom has used is too high.

Instruct if you are expanding your business or changing its structure and want to understand how this will affect your fee obligations. A merger, acquisition, or divestment can change your fees materially and it is better to understand the implications before completing the transaction than discovering them afterwards.

Instruct if Ofcom is conducting a spectrum fees review. Engaging with Ofcom during the consultation process can influence the outcome. If you do not engage, you have no voice in determining your fees.

Instruct before acquiring another operator. Fee due diligence should be part of your acquisition due diligence; understanding your post-acquisition fee obligations is essential to understanding the true cost of the acquisition.

How Bratby Law helps

Bratby Law works on the application of the Statement of Charging Principles to a provider’s own activities, on the classification of revenue as inside or outside relevant turnover, and on checking Ofcom’s calculation against the reported figure.

That work extends to challenging a calculation, applying for reclassification, and acting for the provider in a fee dispute with Ofcom.

On spectrum, the work covers responses to periodic fee reviews, the calculation methodology itself, and how a different allocation or usage pattern would change the fee.

On transactions and restructurings, the work is to quantify the post-completion fee position across both charging bases before the deal is signed.

Frequently asked questions

What is relevant turnover and how is it calculated?

Relevant turnover is defined in the Communications Act 2003 as the turnover of the regulated business derived from the provision of electronic communications networks and services, plus ancillary services. It does not include revenue from apparatus sales (e.g. sale of mobile handsets), from non-electronic communications services, or from services provided outside the scope of the regulated business. Calculating relevant turnover requires detailed review of your revenue streams and classification of each one. For operators with diverse revenue streams, this can be complex. Common problem areas include: whether to include revenue from selling apparatus (excluded), whether to include revenue from related services like value-added services (may be included or excluded depending on facts), whether to include revenue from roaming (included), and whether to include revenue from intercarrier payments (excluded). Ofcom publishes detailed guidance on what is included and excluded, but the guidance is dense and interpretation often requires specialist knowledge.

Can Ofcom get my fee calculation wrong?

Yes. Ofcom calculates fees on the basis of information you provide and on its own analysis of your business. If you have provided incomplete or inaccurate information, Ofcom’s calculation will be wrong. If you have misreported your turnover or your business structure, Ofcom will have calculated fees based on wrong assumptions. If you believe Ofcom’s calculation is wrong, you can challenge it. The process for challenging a fee calculation varies depending on the circumstances; you may be able to request that Ofcom recalculates on the basis of corrected information, or you may need to initiate a dispute. Early engagement is better than waiting until the next invoice.

How often does Ofcom review administrative charges?

Ofcom reviews its charging methodology annually and publishes an updated Statement of Charging Principles each year. However, the methodology does not change materially every year. The most consequential changes are the result of policy review or changes in Ofcom’s cost base. Ofcom can also change how it calculates fees if circumstances change (e.g. a change in the definition of “relevant turnover” if the legislation changes). Providers should review the annual Statement of Charging Principles to understand whether changes affect them.

How often does Ofcom review spectrum fees?

Ofcom reviews spectrum fees periodically, typically every 3 to 5 years, as part of its spectrum management strategy review. The review considers whether spectrum fees reflect the opportunity cost of spectrum and whether they support Ofcom’s spectrum policy objectives. Ofcom publishes a consultation document inviting comments from spectrum holders and from the public. Spectrum holders should engage with these consultations; they provide an opportunity to advocate for fee levels and to influence the outcome. If you do not engage, you have no voice in determining the outcome.

What is the difference between administrative charges and spectrum fees?

Administrative charges are a general fee payable by all communications providers, calculated by reference to their relevant turnover. They fund Ofcom’s general regulatory activities. Spectrum fees are additional fees payable only by spectrum licence holders, calculated by reference to their spectrum holdings and use. A large MNO with extensive spectrum holdings will pay both administrative charges and substantial spectrum fees. A smaller operator with less spectrum may pay lower spectrum fees. Spectrum fees are not included in the administrative charges calculation; they are separate.

If I acquire another operator, what are my fee obligations?

Your fee obligations post-acquisition depend on your post-acquisition turnover and spectrum holdings. If the acquired operator has turnover that falls within the scope of “relevant turnover”, that turnover will be added to your own relevant turnover and your administrative charges will increase accordingly. If the acquired operator holds spectrum licences, those licences will transfer to you (subject to Ofcom’s consent) and you will become liable for the associated spectrum fees. Your total post-acquisition fee liability is the sum of your pre-acquisition fees plus the acquired operator’s fees. This can be material; acquisition due diligence should quantify the total post-acquisition fee obligation.

Can I appeal an Ofcom fee decision?

If you believe Ofcom has calculated your fees incorrectly, you can challenge the calculation. The process depends on the circumstances. You can request that Ofcom recalculate if you have provided new information or if Ofcom has made an arithmetic error. If Ofcom refuses to recalculate or if the issue is a matter of interpretation rather than arithmetic, you may be able to escalate the matter within Ofcom’s complaints process or to seek judicial review if Ofcom’s decision is unreasonable. However, judicial review of Ofcom fee decisions is rare; courts are generally reluctant to intervene in regulatory determinations about fees unless there has been a clear procedural error or misinterpretation of law.

Representative experience

Recent and representative matters include:

• Advised a national operator on the calculation and challenge of Ofcom’s administrative charges under section 38 of the Communications Act 2003, including the allocation methodology for multi-service providers.
• Supported a spectrum licence holder in reviewing annual licence payment (ALP) calculations for multiple frequency bands, identifying calculation errors and securing a revised assessment.
• Advised on the fee implications of a spectrum licence transfer and restructuring following a corporate acquisition.
• Prepared submissions to Ofcom’s consultation on the administrative charging methodology, advocating for a more proportionate allocation basis for smaller operators.
• Advised a wireless broadband provider on exemption from certain Ofcom charges based on turnover thresholds and the scope of “relevant activity” under the charging framework.

Related telecoms regulation pages

Other telecoms regulation pages:

Am I regulated?
Ofcom General conditions of entitlement
SMP regulation and market reviews
Numbering
Code Powers and access to land
Spectrum
Lawful intercept and the Investigatory Powers Act 2016
Telecoms Security
Ofcom: Advice for Operators, Investors and Platforms
Interconnection regulation
Complaints and investigations
Connected Vehicles and IoT Regulation
EU Digital Networks Act

Related services

• Telecoms Regulation Overview
• General Conditions of Entitlement
• Spectrum Regulation
• Code Powers and Access to Land
• Transactions and M&A

Frequently asked questions

What are Ofcom licence fees?

Ofcom licence fees are charges imposed on providers of electronic communications networks, services and associated facilities to recover the cost of regulation. They include administrative charges, spectrum licence fees and number charges.

Who must pay Ofcom administrative charges?

Providers carrying on a relevant activity with relevant turnover of £5 million or more in the last but one calendar year before the charging year.

How does Ofcom calculate relevant turnover?

Turnover must be based on audited accounts and adjusted in accordance with Ofcom’s Designation and Relevant Activity Guidelines.

Do providers have to submit information annually?

Yes. Providers above the threshold and liable for administrative charges must submit a Telecoms Annual Revenue Return (TARR) each year.

Are spectrum licence fees separate from administrative charges?

Yes. Spectrum licence fees are paid under the Wireless Telegraphy Act and are independent of administrative charges under the Communications Act.

What telephone number charges apply?

Charges apply to certain non-geographic and corporate numbering ranges as set out in Ofcom’s Tariff Tables.

What fees apply to Code power operators?

Code operators pay a £10,000 application fee and a £1,000 annual fee.

How are Ofcom’s charges allocated across providers?

Allocation is based on relevant turnover data and the method described in Ofcom’s Statement of Charging Principles.

What happens if a provider does not submit a TARR?

Failure to submit can lead to enforcement action under the Communications Act and potential interest or penalties.

Can Bratby Law help challenge a charge?

Yes. Bratby Law acts on questions, disputes and regulatory engagement with Ofcom on charging decisions.

Independent directory rankings

Our specialist expertise is recognised in major independent legal directories:

• Chambers & Partners: Rob Bratby is ranked as a Band 2 lawyer in the UK Guide 2026 in the “Telecommunications” category: Chambers
• The Legal 500: Rob Bratby is listed as a Leading Partner for Telecoms in London (TMT: IT and Telecoms). The Legal 500
• Lexology: Rob Bratby is recognised in the Lexology Index as a Global Elite Thought Leader for telecoms and media, and as a Thought Leader for data privacy and protection: Lexology