Simplifying Non-geographic Numbers - Detailed proposals on the unbundled tariff and Freephone
Plain English Guide
Non-geographic numbers include 03, 080, 0845, 0870, 083/4, 0871/2/3, 09 and 118 numbers. People use these numbers to call businesses and Government agencies, to get information, make payments for services and vote on TV shows. Virtually every consumer and every company in the country uses these numbers in some way.
How does Ofcom regulate them at the moment?
Ofcom decides how these numbers can be used. For most numbers, there is a limit on how much BT can charge for calls. Other providers are not restricted on price, but in many cases the landline providers set their call charges around BT's prices. From mobiles, charges are typically much higher and have been increasing.
Consumers spend over 1.5 billion for calls to these numbers. They account for around 12% of total call traffic volumes, and generate 10% of the total revenue.
The current system does not work for consumers
Consumers face problems when making calls to these numbers including:
- Confusion about the price: People are confused about what these numbers mean and how much calls cost. As a result, they lack confidence and trust in these services.
- Even freephone is not clear cut: It is not free on most mobile services and this is leading to consumers having doubts about the cost on landlines (where is it normally free)
- Concerns about revenue sharing: In most cases, those receiving calls to 08 revenue sharing' numbers only actually recieve a small share of the price.. However the lack of transparency and high charges by some phone companies means many customers have suspicions that they are deliberately being exploited by companies, being held on the line unnecessarily for example. This is unduly causing consumers to restrict calls to these numbers - reducing the benefit to companies of using them.
Consequences for consumers and those providing services.
- Consumers make fewer calls and sometimes go to great lengths to contact organisations in other ways, possibly at higher cost or inconvenience. The lack of scrutiny by consumers means that phone companies can set prices with less concern about the impact on callers. Providers of services, particularly smaller businesses (such as tradesmen or other small firms) and charties, are discouraged from using these numbers, the number of new ideas for delivering service over the telephone is smaller and there is less competition than there should be for those services offered.
- Impact on low-income households. The cost of calling these numbers is generally significantly more from mobiles. The impact of the higher cost on mobiles is particularly pronounced for people on lower incomes who are more likely to live in mobile-only households - and using their mobile to call essential services on these numbers; such as some benefit offices, councils, utility services and doctor surgeries. Lack of clarity over how much these calls cost on mobiles makes it difficult for consumers to choose the best phone service for their needs, further aggrevating the situation.
What we are proposing to do
Last year we set out a range of possible solutions, which could be implemented subject to changes proposed for the Communications Act in May 2011.
Now that the Act has changed, and after extensive discussions with the industry and consumer groups, we are setting out firm and detailed proposals for change.
Simpler numbering ranges:
The aim is to make non-geographic numbers and their prices more intuitive, with clearer division between number ranges. Our main proposals are:
- Freephone: (080 and 116 numbers) to be free from all telephones, landline and mobile;
- 03: to become the only non-geographic number range linked to the price of a call to a geographic number (i.e. the 01/02 number ranges);
- Revenue sharing ranges: (084, 087, 09 and 118 numbers -where a portion of the retail charge is passed back to the receiver of the call) are to have a common simplified structure.
Below is an illustrative example of how the number ranges could in future be displayed on Ofcom's and consumer advice websites as a result of these proposals. Communications Providers may also provide this guide to their customers when they sign up to a new telephone package.
Clarity in the retail price for non geographic calls
We aim to simplify the way calls to revenue sharing numbers are priced.
Under the new proposals, the call cost will be unbundled' so that consumers will know exactly how much is paid to their phone provider and how much is passed on to other companies. The cost would therefore be made up of two parts:
- an Access Charge a set price, in pence per minute, which goes to the phone company connecting the call (this will be set out in the consumer's tariff package); and
- a Service Charge the price, in pence per minute, paid to the terminating provider and the company providing the service.
This will allow service providers to be clear and unambiguous about how much the call to them costs and will encourage competition between phone companies in the cost of connecting such calls.
Currently, callers are told:
"This call will cost you X pence per minute on a BT line, calls may vary on other landline and cost considerably more on a mobile."
Under the proposed new structure, Ofcom expects call cost descriptions to follow the format:
"This call will cost you X pence per minute plus your phone company's access charge."
Consumers would be advised of their Access Charge at the point of sale when buying any new phone service. Subject to the results of the consultation, Ofcom intends to make a final decision on the new rules by early 2013.
Below is an illustrative example of how call costs could be advertised for a television voting show in the future under these proposals.
When will the changes happen?
The changes will affect virtually every company in the country to a greater or lesser extent. There will need to be changes to telephone billing systems, the way numbers are presented in marketing material, choices of number ranges to use and telephone contracts with consumers.
We need to ensure that there are no unnecessary costs to consumers or companies or losses of services. And importantly, we need to make sure all our changes are understood by everyone.
So we need to proceed with care we expect that given the complexity of the changes there will need to be at least 18 months transition time which will start when the proposals are finalised by the end of this year.
The full document is available below