Ofcom Changes

On 28 September 2005, Ofcom published a consultation entitled "NTS: A Way Forward" ('the September 2005 Consultation'), setting out a number of proposals for the regulation of Number Translation Services. The deadline for responses was 6 December 2005. Ofcom has reviewed its proposals in the light of the responses received, which numbered 1308, and this Statement sets out Ofcom's conclusions.

Proposals

Ofcom has decided to implement measures proposed in the September 2005 Consultation, with some modifications to take account of points raised by respondents. The measures are as follows.

Restore geographic link for 0870 calls

Ofcom proposes to amend the National Telephone Numbering Plan ('the Plan') to establish the principle that every Originating Communications Providers ('OCP') should charge no more for 0870 calls than national calls to geographic numbers. OCPs who wish to charge higher rates for 0870 calls will be required to make a free-to-caller price pre-announcement at the beginning of the call, informing the caller of the cost of the call. This option will be available to BT, as well as to other OCPs. Such pre-announcements would have to specify the precise basis on which the call will be charged e.g. in pence per minute or per call; generic announcements will not be considered sufficient.

The convention will mean that, if you are on a call package where national calls to 01 and 02 numbers cost, for example, 3 pence per minute in the peak period, calls to 0870 numbers during the same period will cost no more than 3 pence per minute, unless a pre-announcement is made. Similarly, if you are on a call package where national calls in the evenings or at weekends are free, then in the absence of a pre-announcement calls to 0870 numbers will also be free at these times. Ofcom recognises that many Communications Providers ('CPs') make no distinction in their pricing plans between national and local calls to geographic numbers. In these cases, the convention will mean that 0870 calls should cost no more than calls to all geographic numbers.

This convention will apply to all calls including those made from all fixed lines, including payphones, and from mobile phones. It will not mean that CPs will charge the same as each other for 0870 or geographic calls – each provider will be free to set its own retail prices for these calls. But it will mean that, unless there is a price pre-announcement, an 0870 call will cost no more than an equivalent national call to a geographic (01 or 02) number.

Remove 0870 calls from the scope of the BT NTS Call Origination Condition

Ofcom proposes to remove 0870 calls from the scope of the BT NTS Call Origination Condition ('the NTS Condition'), which requires BT to originate and retail these calls on behalf of Terminating Communications Providers ('TCPs'). This will remove the regulatory underpinning for revenue sharing on the 0870 range, and allow interconnect arrangements for these calls to be aligned more closely with those for geographic calls with BT purchasing call termination from TCPs rather than originating and retailing 0870 calls on behalf of TCPs. This is likely to lead to a reduction in the payments, which OCPs make to TCPs for terminating 0870 calls, and to lower prices at the retail level. BT will continue to be subject to the other regulatory remedies to its Significant Market Power ('SMP') in the markets identified in Oftel's Review of the fixed narrowband wholesale exchange line, call origination, conveyance and transit markets.

Timetable for implementation of 0870 proposals

Ofcom intends to introduce the above changes for 0870 calls 18 months after the publication of its forthcoming statement on numbering policy. Ofcom published a consultation Telephone Numbering – Safeguarding the future of numbers ('the Numbering Review') on 23 February 2006. The closing date for responses to the consultation is 4 May 2006. Ofcom hopes to be able to publish a statement setting out its conclusions in relation to that consultation in July 2006.

Ofcom recognises that the changes to the 0870 range will be disruptive for CPs, for resellers of inbound NTS services and for many of the Service Providers ('SPs') which use 0870 numbers. It will be important to allow the parties involved a reasonable amount of time to plan for the changes, in order to reduce the costs associated with their implementation.

The Numbering Review Statement is significant because it will provide additional information that will be useful to SPs who may wish to move from an 0870 number to a number in another range. In particular, it will set out Ofcom’s plans for opening up new non-geographic number ranges, at different price levels and for different service types. In Ofcom's view, this information is sufficiently important that the 18-month planning period should not begin until the Numbering Review Statement has been published.

1.10 As the Numbering Review Statement is currently scheduled for publication in July 2006, this would suggest that the changes for 0870 are likely to come into effect in January 2008. Ofcom has no plans to change the pricing and interconnect arrangements for 0870 calls before the end of the 18-month period.

Two-year review for 0845 calls

Ofcom has no plans to make any changes to the pricing and interconnect arrangements for 0845 calls of its own initiative over the next two years. Revenue sharing will continue to be supported on 0845 numbers, which are still heavily used for dial-up internet traffic. Ofcom intends to publish a further consultation document reviewing the arrangements for 0845 calls within two years of the publication date of this statement. That consultation document will review the case for restoring the geographic price link for 0845 calls and for removing 0845 calls from the scope of the NTS Condition. In particular, it will consider whether dial-up internet traffic volumes have fallen to a level, at which the benefits of making these changes are likely to exceed the associated costs. Ofcom would encourage interested parties to take account of the likelihood that, if these changes were to be introduced, revenue sharing would no longer be possible on the 0845 range.

Extend premium rate services regulation to the 0871 numbers

Ofcom intends to extend the regulatory framework for Premium Rate Services ('PRS') to include 0871 numbers. The Independent Committee for the Supervision of Standards of Telephone Information Services ('ICSTIS'), the regulatory body for PRS has agreed in principle to regulate 0871 numbers and Ofcom will modify the Premium Rate Services Condition ('the PRS Condition') to extend the definition of Controlled PRS to include the 0871 range so that Ofcom has backstop powers to support ICSTIS. The 0871 range will not be subject to the same level of regulation as the premium rate 09 number range. However, it will be subject to requirements designed to improve price transparency and to provide an appropriate level of consumer protection. Amongst other things, SPs using 0871 numbers will be required to include information about the price of calls in advertisements and on promotional material. In order to minimise the risk that consumers will be deterred from making 0871 calls by the association with more expensive 09 services, Ofcom will ask ICSTIS to consider the possibility of a distinct branding for 0871 regulation. ICSTIS will take the lead in developing regulatory proposals for the 0871 range and will consult on its plans before they are introduced. The intention is that the new regulatory provisions for the 0871 range will come into effect at the same time as the proposed changes for 0870 calls.

Extend PRS regulation to adult services currently provided on 08 numbers

Ofcom intends to amend the Plan to clarify that adult services should only be provided on the 0908 and 0909 number ranges. As a result of this clarification, adult services currently provided on 08 numbers will have to move to the designated 09 ranges, where they may continue to be provided at prices of less than 10 pence per minute. ICSTIS has agreed in principle to regulate these additional services. Ofcom intends to amend the PRS Condition to extend the definition of controlled PRS to include all adult services, regardless of price. This will extend Ofcom's backstop powers to support ICSTIS. Ofcom will introduce these changes before the end of 2006.

Use of 08 numbers by public bodies

As indicated in the September 2005 Consultation, Ofcom believes that public bodies should consider carefully whether it is appropriate to use 084 and 087 numbers in place of Freephone or ordinary geographic numbers. Ofcom believes that, at present, it is inappropriate for public bodies to use 084 or 087 numbers exclusively (i.e. without at a minimum giving equal prominence to a geographic alternative) when dealing with people on low incomes or other vulnerable groups. Once the geographic link has been restored for 0870 calls, consumer concerns are likely to ease in relation to 0870 numbers. Ofcom is also consulting, in the Numbering Review consultation, on a proposal to open up a new number range (the 03 range), for SPs who would like to use a non-geographic number but which do not require a revenue share. Ofcom believes that this new range, on which revenue sharing would be banned, would if introduced be well suited to meeting the requirements of many of the public bodies currently using 084 and 087 numbers.

Better visibility of NTS tariffs

The lack of pricing transparency and low level of price awareness has been a major cause of consumer concerns about NTS calls. As one of several measures aimed at tackling this issue, Ofcom intends to amend General Condition 14 (which relates to Codes of Practice) to require all CPs to give greater prominence to NTS call prices on websites, published price lists and promotional material. This proposal is the subject of a separate Statement.

As noted above, one of the aims of bringing 0871 calls within the remit of PRS regulation is to ensure that these numbers are subject to ICSTIS requirements in respect of pricing information. In addition, Ofcom has contributed to the Advertising Standards Authority ('ASA')/Committee on Advertising Practice ('CAP') guidance to advertisers on advertising NTS numbers. Ofcom will continue to work with ICSTIS and ASA/ CAP on this issue.

The 0871 range

Ofcom does not intend to change the pricing and interconnect arrangements for 0871 calls at the present time. However, further consideration will be given in the Numbering Review to the possibility of amending the Plan so that the price points selected by TCPs/SPs for 0871 calls apply not only to BT, but also to a wider range of fixed and possibly mobile CPs.

The 0844 range

Ofcom does not intend to change the pricing and interconnect arrangements for 0844 calls at the present time. However, further consideration will be given in the Numbering Review to the possibility of amending the Plan so that the price points selected by TCPs/SPs for 0844 calls apply not only to BT, but to a wider range of fixed and possibly mobile CPs.