Ofcom
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How is Ofcom funded?

In this article we want to address some misunderstandings about how we're funded. Contrary to what some people think, Ofcom is not funded directly by taxpayers or the Government.

Most of Ofcom’s funding comes from fees paid to us by the companies we regulate, to cover the cost of the work we do in their sectors.

These could be broadcasters, telecoms providers or firms in the postal sector. We publish these overall amounts publicly, so people can see how our funding is split between industries.

Our charges are based on companies’ individual revenues and the amount of work we carry out in their area. Companies must pay these fees. It’s a funding structure that is set by parliament, and it’s the same model used for many UK regulators.

Our overall spending cap is set as part of the Government Spending Review.

We’re a fully independent regulator

While we’re funded by fees paid to us by the companies we regulate, this does not affect our independence. Ofcom is an independent regulator and we make evidence-based decisions without fear or favour. Although Ofcom is accountable to Parliament, we are independent of government and the companies we regulate.

At times, decisions we make can have financial impacts on the companies who pay our fees. For example our work to protect consumers, or requiring telecoms providers to make sure their networks are fit for the future.

As well as this, we sometimes issue significant fines to companies who fail to comply with our rules – including some of the largest companies we regulate.

Examples of recent fines we’ve issued include: a £10.5m fine for O2 for over-charging its customers; a £5.6m fine for Royal Mail for missing delivery targets; and a £1.5m fine for Sepura for a breach of competition law.

The biggest fine we’ve levied was in 2018, when we issued Royal Mail with a £50m financial penalty for breaking competition law.

Any income received through issuing fines is passed directly to HM Treasury and does not contribute to Ofcom’s running costs.

Other fees paid to u

As the UK’s communications regulator we also manage the radio spectrum. This is a finite national resource that needs to be carefully managed, with certain bands of spectrum being used for different purposes. For example, mobile companies use different parts of the spectrum to TV companies.

As part of this management role, we license specific spectrum bands to the different companies and organisations that use them – and they pay for these licences.

We collect the revenue raised through issuing these licences, and pass most of it to HM Treasury. With the agreement of HM Treasury, we retain a proportion of the revenue to cover our costs in authorising and managing the use of radio spectrum and representing the UK internationally, as well as our competition work such as our market studies and enforcement work under the Competition Act.

In addition to these fees, we receive funding for managing and allocating numbering resources like the telephone numbers we use every day. For example, if a telecoms provider wants to use a block of numbers for its customers, they are required to pay to do this.

Our funding model gives us financial independence and sustainability, allowing us to effectively regulate the communications services people in the UK use and depend on every day.

 

Channel website: https://www.ofcom.org.uk/

Original article link: https://www.ofcom.org.uk/news-centre/2024/how-is-ofcom-funded

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