Wednesday, 1 July 2015

OFCOM's latest folly

Some phone numbers have had "special" charges for some time.

0845 was "local" and 0870 was "national" and this dates back to the times that local and national call charges made sense. The problem is that over time these have stayed expensive as inclusive packages and lower costs have meant that "normal" calls (01, 02, 03 numbers) are lower.

There have also been various "Premium rate" services, which OFCOM can regulate (as Communications Act says they can). These are now generally in 09 numbering.

The problem is that it is a mess. Some numbers cost as much as £6 a call, some are free, and it is not clear. Mostly 09 is expensive and 08 is not so much. People using 0845 and 0870 are being encouraged to move to 0345 and 0370 at "normal" rates.

So OFCOM have made some rules and said that the new system applicable to 084, 087, 09 (and 118) calls is that they have a service charge and an access charge. The service charge is set by the range holder, and the access charge by the telco you use to make the call.

The idea is that instead of saying "Calls charged at 50p/min from a BT landline but may be more from other operators and much more from mobile" you now get "Calls charged at 50p/min plus your telcos access charge".

Sounds sensible, until you realise many retail telcos, even BT, have an access charge of 10p/min and one charges as much as 44p/min. This access charge has to be the same over all codes (except those "inclusive" in bundles) which makes a mockery of those that are 1p/min or 5p/min, etc.

It will confuse people that services advertised as "1p/min plus your telco's access charge" are costing them 45p/min from some telcos!!!

But it is worse - how does a telco know what the service charge is. After all, no telco has contracts with every service provider (range holder) directly. So they have a contract with some carrier (maybe even BT directly) to route the calls. As a telco, how do I know what to charge for a number.

Well, OFCOM have distanced themselves from any responsibility saying we have to look at the contract we have with our carrier to find the cost of the service charge. However, they have only made this new system apply at retail to consumers, and not to our carriers. It seems our carrier does not have to do anything. To be fair, they are, mostly, doing something sensible, but OFCOM are not insisting that they do. They don't have to tell use the service charge for each number.

OFCOM suggested the BT Carrier Price List as a reference, but if I was BT I would expect OFCOM to pay me to run that database! OFCOM won't actually tell me what the service charge is for each number even though they REQUIRE that I charge calls to that number based on the service charge (and my access charge). That is MADNESS!!!

Seriously, WTF are OFCOM on?

1. No definitive list of service charges. BT CPL is already wrong and out of date.
2. Access charge means calls cost massively more than they used to for many numbers.

If, as OFCOM have said, telcos should use the contracts with their suppliers as the reference for service charges - what is to stop a telco selling all 084/087/09 at £10/min, and its customer using that as the reference for all such numbers? Not OFCOM rules for a start - heck! these rules do not apply to "business tariffs" let alone CP to CP tariffs...

We already have issues that OFCOMs right to regulate Premium Rate numbers comes from the definition in the Communications Act. We have a few 0871 numbers that were never "Premium rate" and we still provide no "service" via these, only communications (fax to email) as per their original numbering plan allocation. As such OFCOM have no legal right to regulate our use of these numbers as "Premium rate". Thankfully it is mostly academic but they really lack clue some times.

Update: OFCOM have stated "The charges that you apply are a contractual matter between you and other elements in the supply chain." which makes no sense. It means that we basically can change whatever we want as the other elements in the supply chain supplying us have no reason to follow the new OFCOM rules (as we are not consumers). It means that the price consumers get charged is not fixed or clear at all.

Update: OFCOM now suggest we contact each and every range holder, having previously suggested the BT CPL which seems incomplete. I have asked them to confirm which GC compels a range holder to tell us the information.

Update - based on replies from OFCOM:-

It appears there is no regulatory requirement for a range holder to tell us the service charge for a number range. They may have a contractual incentive to tell parties they contract with, but not us.

It appears there is no regulatory requirement for the CPs with which we have a contract to tell us the service charge for numbers they route. As we are not consumers, but another CP, there seems to be no regulatory requirement for the charges we pay to be based on a service charge plus access charge or for any access charge to be consistent. As such, even though we may know what we pay for a call, we cannot, from that, determine a service charge to charge our customer.

So, it seems, OFCOM have made a regulation but have failed to join the dots and provide a means for us to comply with that regulation.

OFCOM tried to maintain a master list and failed - yet they expect every single tiny telco to somehow maintain such a list in order to comply with the regulations. If OFCOM can't manage it - how the hell are we expected to? Heck! OFCOM have a legal ability to require telcos to answer questions and still they did not manage this!

Update: I have re-read the GCs, and the "service charge" is defined as the charge set at the first CP handover point, i.e. what we pay to carriers. That means that when an advert says "calls cost 20p/min plus your telcos access charge" it will not in fact be the case. We would charge the "service charge" which is what we pay (which is more than 20p/min) plus our access charge. What a crazy system. I have asked OFCOM to confirm.


  1. Equally crazy is they've only actually mandated this for consumer stuff, they said when they announced the changes: "The changes announced today will apply to calls made from residential lines, although Ofcom anticipates that providers will extend the same pricing arrangements to business customers."

    1. "Anticipates" - why not just make it "the rule" - right now it's ridiculously confusing.

  2. When first proposed, it sounded entirely sensible: a premium rate call is basically a phone call, plus a payment to the recipient - so why not split the two components? If only Ofcom had been bright enough to set that call charge equal to the others (01/02/03), rather than allowing random numbers. (A small percentage of the premium portion, credit-card style, would then cover the relevant costs in the premium payments.) Is there any excuse for higher call charges, besides perhaps a need to cover overheads if those aren't deducted from the premium part?

    The original NTS pricing for 0845 and 0870 was a stupid mistake, pegging the wholesale price of those calls to BT's retail prices rather than wholesale; I think the new pricing is an improvement, but being Ofcom, they still managed to miss something important.

    1. In agree - a simple rules such as access charge being no more than maximum of "normal charge for 01/02/03" and "5% of service charge" would have worked fine.

  3. It's frustrating that Ofcom is supposed to be promoting competition, yet they never think about the impact of their changes on smaller providers - I run an ITSP and there's been several things recently which make me start to question whether its worth it as I'm spending what feels like all my time adjusting to seemingly pointless rule changes rather than trying to do useful things like adding features or supporting customers etc!

  4. I'm not sure I understand. How did it work previously? Was it entirely access charge before, or entirely service charge?

    The general idea seems fairly good for the consumer. You can now see that you're being charged X by the person you're calling and Y by your telco, and if you don't like the size of either X or Y you can choose to take your business elsewhere. I hope this finally kills 08 and 09 numbers. It's certainly given us a reason to start pushing our 03 number instead of our crufty old 0845.

    1. It used to be simple - we set a price for calls as we felt we wanted to, and published the price, and people called and we charged what we said. Typically we would look at what we paid for calls and add some as profit. Simple. Ultimately, for some numbers, some of the money might go to the final recipient.

    2. I see. So now you're stuck with "our access charge is x pence per minute, and we'll bill you now if we know the range holder's service charge already, or after our carrier has billed us if not" or "we won't connect this call as we don't know the service charge for this range"?

    3. Sort of - but the carrier we are using does not have to follow this model, as we are not consumers, and does not have to tell us prices based on service charge and access charge, or have a single access charge even if they do. So only way to actually comply is know the service charge. We are also expected to publish prices in advance for consumers.

    4. Oh, so are there three charges, from the range holder, the carrier and A&A? I was presuming the service charge came from the range holder and the access charge from A&A, with the service charge being charged by the carrier to A&A, and the sum of the two charged by A&A to the customer.

    5. Consumer sees two - the range holder service charge and their telco access charge. There is, of course, what each telco pays the next to get the call to where it goes. As a telco, we do not see all of the access charge.

    6. The worst thing about the new system from a consumer's point of view is, as RevK stated, that access charges will mean a massive increase in call costs. I currently use two 084 access codes, one costing 0.5p/min to landlines and the other 1p/min to mobile numbers. Added to that was a small one off set up charge but from July this will be replaced by a 9.58p/min access charge. Well done OFCOM, you useless self-serving waste of space. It wasn't broke before and didn't need fixing.

    7. You do realise T that the Access Charge has been set by the provider you've chosen to supply your services (presumably BT), not by Ofcom, and that if a lower Access Charge is something which is important to you, then you could take your business to another provider? I'm sure the author of this blog could recommend one.

      I do agree, however, that the addition of the Access Charge will make many indirect dial access numbers significantly less valuable, and that there's nothing which can be done by the operator of the service.

    8. The reason that, specifically, BT retail call prices for calls to 084, 087, 09 and 118 numbers were lower than all other provider was all down to the NTS Retail Condition. This capped their retail call prices such that BT made zero margin on calls to these numbers. That regulation has now ended. BT has since set their Access Charge at 9.58p per minute, similar to other mainstream landline providers. The lowest on the market is around 2p per minute and the highest is 11p per minute.

    9. Re: How did it work previously? Was it entirely access charge before, or entirely service charge?

      Previously, if you made the call from a BT landline and paid BT for the call, almost all of what was paid by the caller was passed on to the benefit of the called party and their telecoms provider. BT's call price was, effectively, almost all Service Charge.

      If you made the call from any other landline or from a mobile, then the amount passed on was much the same but your landline or mobile provider added on a bit, or a lot! in the case of many mobile operators, which they kept for themselves. Their call prices were a mix of Access Charges and Service Charges but neither component was separately declared.

      The massive complication seen in retail call price tariffs came not only from the fact that there were almost 300 tariff codes each with a different price but that every landline and mobile provider charged each one at a different rate to everyone else. Added to that, some of the rates changed between day, night and weekend, and landline providers usually added an additional, and not insignificant, call connection fee. Additionally, the Access Charge component varied depending on the number called, sometimes massively. Mobile operators often took 30 or 40p per minute for themselves on 084 calls and several pounds per minute for themselves on 09 or 118 calls.

      This mess ensured that looking up the cost of a call was complicated. On landlines, it usually required looking through several hunded pages of prefix listings to find the tariff code for that number (e.g. 0844 477 was "g6" but 0844 478 was something else, etc) and then looking through another document to find the price for that code when called from that provider.

      Mobile operators "simplified" the tariffs and simply charged, e.g. 40p per minute for all 084 and 087 calls irrespective of whether they were passing on 1p or 10p per minute to the benefit of the called party and their telecoms provider.

      The new system effective 1 July 2015 requires landline and mobile operators to publish one number, the Access Charge, covering all 084, 087, 09 and 118 calls. It has also banned call connection fees on these numbers. The changes have led to an increase in call costs for long calls to 084 and 087 numbers. The removal of connection fees has made short calls cheaper. Setting a single Access Charge has led to significant price drops for calls to 09 and 118 numbers.

      Separately, there is still a big table matching prefixes with Service Charges, but callers should have no need to look at it (unless there is perhaps a dispute). Service providers should be looking at it to see what level of Service Charge they should be declaring next to their number. Landline and mobile providers should be looking at it to see what they should be charging callers for these calls.

      Presumably, carriers through the chain receive a smaller and smaller proportion of the Service Charge as the call travels towards its destination.

    10. A good explanation but for one thing "there is still a big table matching prefixes with Service Charges"... There is no such table and no party who is responsible for making such a table or maintaining it.

    11. I asked a contact in Ofcom how the Access Charge and Service Charge should work.

      The reply I received said "The Access Charge covers all the originators costs including any charges of call intermediaries."

      It would be helpful if there was a diagram showing various types of call routing and the flow of funds from party to party.

    12. I did not see "call intermediaries" in the GCs at all - they say the assumed handover is defines as closest to the ingress of the call to the network, so that is first Retail CP handing to their first connected carrier.

      I wish they would make up their mind.

    13. Did you ever get to the bottom of how all of this is supposed to work?

      Does paragraph 3.46 of Ofcom's 13 December 2013 Final Statement clarify things, or simply add further confusion?

      3.46 We also provisionally decided that the ‘assumed handover point’, i.e. the dividing line between the AC and SC elements of the call, should be the digital local exchange (‘DLE’) for BT originated calls. For calls originating on other networks we said it would be the originating switch or the closest point of interconnection to the origination of the call. This represented a near-end handover model (‘NEHO’). In addition we decided that, as part of that model, the TCP would be responsible for any transit payments, which meant any additional transit cost would need to be absorbed in the SC element of the call, rather than the AC.

      The word "provisional" is worrying. Is this what actually happened in the end, or does it now work some other way?

    14. I guess General Condition 17 has the last word...

      17.33 For the purposes of this Condition:

      (a) “Access Charge” means a rate set by a Communications Provider in accordance with paragraph 17.25 in respect of the retail and origination of a call to an Unbundled Tariff Number and its conveyance up to and including the Assumed Handover Point for the purpose of calculating the amount payable by a Consumer for making such a call;

      (e) “Assumed Handover Point” means the point of interconnection nearest to the origination of a call to an Unbundled Tariff Number at which the call may be handed over to the Electronic Communications Network of another Communications Provider for conveyance. For these purposes, where the call is routed via a Transit Network, the Assumed Handover Point is deemed to be the nearest point of ingress from the Electronic Communications Network on which the call originates to that Transit Network;

      (u) “Service Charge” means the rate set by a Communications Provider in accordance with paragraph 17.26 in respect of the conveyance of a call to an Unbundled Tariff Number from the Assumed Handover Point to the point of termination and the enabling of a Consumer to use an Unbundled Tariff Number to access any service provided by means of that number;

      (x) “Transit Network” means the Electronic Communications Network of a Communications Provider used to convey a call from the Electronic Communications Network of another Communications Provider to the Electronic Communications Network of a third Communications Provider;

    15. We basically never got a straight answer out of OFCOM either on the errors in their definitions or the means to obtain the codes and prices. We are just left in a mess.

  5. I think the problem here is you are assuming that Ofcom's job is to look after consumers and small businesses.
    Their behaviour (in my opinion) indicates that they see their role as being to support large enterprises and to encourage monopoly behaviours.
    This ill-conceived scheme means that a consumer now has to look up two rates when calling a number rather than one, it means that for a large chunk of the numbers, consumers will be paying more and it means that smaller telcos are severely disadvantaged. One has to assume that Ofcom are not a bunch of blithering idiots and therefore that this was their intention.

    1. A Consumer should not have to look up two rates when calling a number - after making a couple of calls they should be aware of their provider's Access Charge (which will be the same all of the time) and the Service Charge should be written down right next the the number wherever it is advertised. However, since Ofcom have made it the ASA's job to ensure this is the case, and the ASA will not take action when it isn't, that plan won't really work that well.

      If the Access Charge was set at a sensible level, then Consumers might not pay too much more than previously in a fair number of cases, since the new rules don't allow for a connection charge within the Access Charge, making short calls cheaper. However, since providers are using this as an excuse to massively inflate costs (I don't see how it can be justified making the Access Charge significantly more expensive than a national, or even mobile, call) consumers will probably end up paying more. Expensive calls may also become cheaper, since the provider's markup is now a fixed amount, whereas previously more expensive calls tended to be marked up more.

    2. It seems that many retail providers have set their Access Charge at the same rate as non-inclusive calls to 01, 02 and 03 numbers.

      A few have set it a few pence per minute less than that. Several have set it a bit higher than that.

  6. One thing this will certainly do is put the cheap prefix number companies out of business. I've just calculated that a ten minute call I made in April, from a Plusnet landline to an 020 landline number costing 47p, will now cost £1.06. The 9.5p/min access charge negates the saving and renders using the prefix code dearer than dialling directly and paying Plusnet's 9p/min call rate. Most telco's access charges per minute are at least as much: BT 9.5p, Virgin 10.25p & Sky 9.5p. Only TalkTalk & Tesco are a little less unreasonable with 0.5p/min but then you'd be forced to suffer their broadband.
    Yes indeed, OFCOM's sole intention was to boost the profits of the telecom industry at the expense of the consumer. As well as trying to justify its own existence of course.

    1. The phone company I use for my own landline (IDNet) has very sensibly set the access charge at the same price as geographic calls - 0p/min in my case, since I have a flat-rate package for landline calls. I had hoped Ofcom would have the sense to mandate this - as they did for 03xxx calls recently - but sadly, they missed that.

      I imagine the rather hefty fees from Sky and co will be motivated by a desire to stamp out those indirect access services - a shame if Ofcom allows it. Is BT's fee fixed regardless of your tariff?

  7. Its as if they deliberately leave loopholes so those they regulate dont take legal action and the public thinks they fixed everything as every change ofcom makes always seems to have a massive gaping loophole.