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.

Most providers understand that they pay fees, but do not understand the calculation methodology, the scope for challenge, or the implications of changes in business structure or turnover. Ofcom publishes an annual Statement of Charging Principles setting out how it will calculate fees for the coming year. Providers often treat this as a technical document and do not engage with the detail. This is a mistake. The charging methodology contains scope for interpretation and dispute; understanding how Ofcom calculates your fees and how to verify the calculation is material to cost control.

Spectrum fees have been particularly volatile in recent years as Ofcom’s spectrum policy has evolved. 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 businesses that do not engage with the consultation process have no opportunity to challenge Ofcom’s assumptions or to advocate for their interests.

Where clients get it wrong

The most common error is over-reporting or under-reporting relevant turnover for administrative charges. 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). Many providers include too much revenue (overpaying fees) or exclude revenue that should be included (creating enforcement risk). The distinction between what is included and what is excluded is not always obvious and often requires detailed financial analysis.

Providers also frequently fail to understand the scope of Ofcom’s charging regime. Ofcom can levy 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. A provider that assumes Ofcom cannot levy charges on it (because it is small, or because it is an MVNO, or because it operates primarily outside the UK) may be wrong. If you provide any electronic communications service to the public in the UK, you are likely a communications provider within Ofcom’s charging scope.

Spectrum fees are often treated as a fixed cost, but 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). Engaging with Ofcom during the consultation process can influence the outcome; not engaging means accepting whatever Ofcom decides.

Many providers also fail to appreciate that changes in business structure affect their 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. If the acquiring party discovers post-acquisition that it has inherited a materially higher fee liability than anticipated, the seller has often already walked away.

What good looks like

Bratby Law’s approach to Ofcom charging begins with a clear understanding of your fee obligations and how they are calculated. We review Ofcom’s Statement of Charging Principles and identify how it applies to your specific business. We then analyse your turnover to determine what is “relevant turnover” for fee purposes and verify that you are reporting the correct amount to Ofcom.

For administrative charges, we conduct a detailed analysis of what revenue streams fall within “relevant turnover” and what are properly excluded. This often requires detailed review of your accounting records and financial statements to identify all the component parts of turnover and to classify each one correctly. We then verify Ofcom’s calculation against your reported turnover and challenge it if we believe it is wrong. If you believe your fee classification is incorrect, we advise on how to engage with Ofcom to seek reclassification.

For spectrum fees, we monitor Ofcom’s periodic reviews and advise on whether and how to engage with Ofcom’s consultation process. We review Ofcom’s fee assumptions and help you identify areas where you wish to advocate for different fee levels or different allocation of fees across spectrum bands. We also advise on the commercial implications of anticipated fee increases and on whether there are efficiency measures or operational changes you might make to minimise fee exposure.

We also advise on the fee implications of changes in business structure. If you are acquiring another operator, divesting a business line, or restructuring how your business is organised, we advise on how these changes will affect your Ofcom fees post-transaction. For acquisition targets, we conduct fee due diligence to quantify the acquiring party’s post-acquisition fee obligations.

We advise on the interaction between administrative charges (based on relevant turnover) and spectrum fees (based on spectrum holdings). An operator with substantial spectrum holdings can have material spectrum fee obligations. Understanding how these interact with your total fee exposure is important to understanding your total cost of regulation.

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 Ofcom has over-reported your turnover.

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.

Instructing Bratby Law is appropriate if you need advice on your existing fee obligations, if you want to challenge an Ofcom fee calculation, if you need to advise an acquisition party on post-acquisition fee implications, or if you want to engage with Ofcom on spectrum fees during a periodic review.

How Bratby Law helps

We review Ofcom’s Statement of Charging Principles and advise on how it applies to your business. We conduct detailed analysis of relevant turnover, identifying what revenue falls within scope and what is properly excluded. We review Ofcom’s fee calculations and verify their accuracy against your reported turnover.

We advise on challenging fee calculations where we believe Ofcom has made an error. We advise on fee classification and on applying for reclassification where we believe your current classification is incorrect. We provide representation in fee disputes with Ofcom.

We monitor Ofcom’s spectrum fees reviews and advise on engaging with Ofcom’s consultation process. We advise on spectrum fee calculation methodology and on how different spectrum allocations or usage patterns would affect your fees. We conduct fee due diligence on acquisition targets and advise acquiring parties on post-acquisition fee implications.

We advise on fee implications of business restructuring, acquisitions, mergers, or changes in business model. We advise on the total cost of regulation, including both administrative charges and spectrum fees, and on how to minimise fee exposure through operational or structural decisions.

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

See also our other telecoms regulation pages:

• Interconnection regulation
• Ofcom General conditions of entitlement
• Numbering
• Spectrum
• Lawful intercept and the Investigatory Powers Act 2016
• Code Powers and access to land
• Am I regulated?
• SMP regulation and market reviews
• Telecoms Security
• Ofcom
• Complaints and investigations
• Connected Vehicles and IoT Regulation

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. We assist with queries, disputes and regulatory engagement with Ofcom concerning 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 – Telecoms” in London (TMT – IT & Telecoms): The Legal 500
• Lexology: Rob Bratby is featured on Lexology’s expert profiles as a Global Elite Thought Leader for data: Lexology