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NGCS – Commercial Group 30th June 2011

Meeting notes & Actions

Attendance

  • Sean Hartley, BT Wholesale (Chair)
  • Justin Hornby, Cable&Wireless Worldwide (NGCS Group chair)
  • Elizabeth Gannon, Ofcom
  • Peter Farmer, Gamma
  • Alistair Dixon, Colt
  • Sandra Reid, Virgin Media
  • Matthew Peake, Verizon
  • Michael Barford, The Number UK
  • Andy Martin, IV Response
  • Kath Embleton, BT Wholesale
  • Nicola Robbins, BT Retail
  • Keiron James, FCS
  • Helen Edwards, Vodafone
  • Don Wilson, Vodafone
  • Sarah Godfrey, 4D Interactive
  • Louise Lancaster, Magrathea
  • Grant Forsyth, Sky
  • Yulia Kossykh, Three
  • Lesa Green, Kcom (on the phone)
  • Debbie Singh, Telefonica O2 (on the phone)
  • Rickard Granberg, TalkTalk (on the phone)

Introduction Migration to Service Charges

Sean Hartley introduced the group. He noted that for the purpose of the meeting and following discussion it was assumed that Ofcoms proposal for unbundling the tariff would be going ahead, even though he acknowledged that that was yet to be decided.

He noted that if unbundling did go ahead then it would not be practical to assume that the current price chargebands would remain the same. He noted it would be down to the TCP to decide what their Service Charge (SC) would be. He noted his suspicion was that there may need to be a new set of chargebands to reflect the new SCs.

He noted that the new chargebands would take time to implement and there was a question of how many chargebands, which he suggested might be an issue for the technical group to consider.

He noted that if it may not be possible to have all new chargebands in place by a particular point then they would need to think about how to identify which should be done first (e.g. which were the most popular).

Discussion - Granularity

Pete Farmer (Gamma) noted that without regulations set by Ofcom, for example through General Condition 17 and the Numbering Plan (NTNP) if would be a free for all, with SPs selecting whichever price point they wanted. He noted that if there were no restrictions there would be a risk of operators raising their AC to cover their risk level.

Michael Barford (118 118) suggested that any price bands would have an upper and lower limit which was different to a complete free for all.

Don Wilson (Vodafone) asked whether there was any publicly available data on the current use of chargebands. He noted that if there was data to show that some were hardly used, or that 90% of traffic was on a certain range of chargebands then that could be used to help inform the question of how many chargebands was reasonable.

There was some debate about whether all SPs would necessarily want to make any changes to their number range and the example of 0870 was highlighted, where a number of SPs remained on the range, despite the removal of revenue sharing. Vodafone noted that as part of Ofcoms proposals some of the ranges would be treated the same, where previously they had been treated differently, e.g. 0844 and 0845. He noted that it was not inconceivable that SPs would just stay on those ranges rather than migrating, because the types of SPs on the 08 range were not necessarily considering whether they would be competing with other SPs on the same range.

Michael Barford (118 118) noted that the situation was very different for the DQ ranges and the 09 range, which had a much wider range of chargebands.

Pete Farmer (Gamma) noted that the SC would need to be connected to 10k blocks, as it was currently and he understood that Ofcom also agreed with that. Elizabeth confirmed that Ofcoms current thinking was that the SC would not vary beyond the existing 10k blocks.

Grant Forsyth (Sky) suggested that a move to unbundling did not necessarily require the creation of a lot of different price points. He noted that as an originator he would tend to prefer fewer price points, because it was more manageable for them. He suggested that there could be 5 within each number block with an overall cap on the number range.

Michael Barford (118 118) noted that proposal would not work for the DQ ranges. He noted that price was a major aspect of the competition and the number of price points could be infinite, because providers would want to keep changing their prices in order to compete.

Grant Forsyth (Sky) noted that the question that needed to be focused on was what principles could be presented to Ofcom on the issue of the number of chargebands. Gamma suggested that there must be a sweet-spot, i.e. the number of chargebands that could be understood by consumers and not undermine the purpose of improved transparency but at the same time giving SPs a sufficient degree of control over their prices.

Sean noted that there would be a question over how the prices were policed. Gamma suggested that the chargebands would have to be defined by Ofcom and sit within the Numbering Plan.

Andy Martin (IV Response) noted that it would be useful to see something on paper on the number of existing chargebands. He understood that there were around 150, not including DQ but including PRS.

Gamma noted that Ofcom had previously requested data in a s.135 that might relate to this issue, although they may have asked for the data by number range rather than chargeband. Elizabeth said she would check Ofcoms data to see whether there was anything that could be circulated (with aggregated figures) which would help inform the discussion. Several members noted that it would be happy to provide that data to Ofcom.

Justin Hornby (C&W) asked whether the group thought it would be possible to come up with a proposal on the number of price points that would be workable. He suggested that Andy Martin (IV Response) take this away as an action point to present a straw man on the possible number of price points and potential principles for the number of price points at the next meeting.

Grant Forsyth (Sky) questioned whether anyone in the group was saying that they could not charge currently what happens at the wholesale level. Don Wilson (Vodafone) noted that the charging for retail and wholesale did not necessarily happen in the same place. Some operators have wholesale billing systems which are separate from their retail billing systems and therefore there are difficulties in just passing through the prices. He noted there needed to be a permanent link between the number and the price point so the SP would decide on a price point by sitting on a particular number range. He noted that it was an administrative issue, not just a question of billing systems.

Pete Farmer (Gamma) questions whether there was a need to allow complete freedom of pricing to the SP. Sarah Godfrey (4D Interactive) noted that they could have a service that operates at 10p a minute without making a profit but the same service at 9p would make a profit, therefore 1p could make a significant difference. They suggested that a granularity level of 1p might therefore be sufficient.

Louise Lancaster (Magrathea) noted that it would need to be wider than 1p on the 09 range, because of the greater range in prices, especially if the maximum was raised. Kath Embleton (BT Wholesale) noted that it would at least be possible to remove the p price bands.

Michael Barford (118 118) suggested that it was not a question that could be answered in the current meeting because of the different views involved.

Migration of POLOs to Service Charges

Justin Hornby (C&W) went through a set of slides, detailing what would happen under different scenarios with the migration of POLOs to Service charges. He noted that because of the current call-set up charges and issue of rounding the SC, a TCP would not break even until the SC reflected the current headline price (in the Numbering Plan). He noted this could be considered price inflation to the consumer.

Pete Farmer (Gamma) noted that the slides assumed that OCPs would match BTs retail rate, whereas some fixed OCPs charged differently and mobiles also charged differently so on some ranges there would be price deflation rather than inflation.

Don Wilson (Vodafone) noted that what the slides highlighted was that the current designations in the Numbering Plan were misleading and that Ofcom would need to take into account the issue of call-set up fees in setting maximum SCs.

Nicola Robbins (BT Retail) noted that this issue of perceived price inflation might need to be considered by the Communications Working Group.

Time of day variation in the SC

The discussion turned to time of day variation on the SC and whether it was necessary. It was noted that if POLOs were migrated directly to SCs then there would be some time of day variation. However, the group broadly agreed that time of day variation on the SC did not seem necessary and would risk increasing the complexity of the SC without any obvious benefits. Michael Barford (118 118) noted that DQ providers wanted as much variation in the SC as possible but that if time of day variation in prices was not common currently, then there was unlikely to be a strong argument that it would be needed for SCs under an unbundled tariff. It was agreed that there may be a case for treating 118 118 differently in this respect in any case.

Number range Certificates

Sean noted that he had put this on the agenda to highlight that if unbundling was introduced Ofcom would need to take account of the fact that these certificates would have to be reissued.

Internationally Originated Calls

Sean noted that if unbundling was introduced, BT would be required to re-negotiated with every individual country and operator that it had an agreement with for terminating NGN calls.

The rest of the group noted that this was a BT specific issue. Kath Embleton (BT Wholesale) noted that the issue was specifically a concern about increased arbitrage opportunity.

Sean noted that BT would look into this issue further and raise it bilaterally with Ofcom.

Managing implementation of chargebands

Sean noted that the question of how the change would be managed once it was implemented needed to be considered. He noted that it would not be appropriate for BT to issue OCCNs to all their SPs, because the onus should be on SPs/TCPs to tell the TCP what their SC was going to be.

Kath Embleton (BT Wholesale) noted that there would be difficulties dealing with those SPs that did not respond and were not aware of what was happening.

Charge Change notifications

Don Wilson (Vodafone) noted that every originating operator would need to know and implement changes to their prices. He noted that the same issue of having advance notice of any changes would apply industry-wide and it would need standardising.

Helen Edwards (Vodafone) noted that currently they would sometimes be given only 2-3 days notice of price changes and it was therefore very difficult to price correctly. She noted that because they did not have a direct relationship with all TCP hosts they had to find out about prices by going through the BT carrier price list which was only updated twice every month. She noted they would be able to provide examples of this if necessary.

Lesa Green (KCom) and others noted that a notice was sent out for any price changes. However, Helen stated that this only happened for those that were directly interconnected.

Alastair Dixon (Colt) noted that this issue was being discussed within the SIA review forum so it was perhaps something that could be picked up there.

Justin Hornby (C&W) noted that Kim Hilton from Everything Everywhere had previously highlighted the issue of a change management process for SC price changes and he would speak to her (she had been unable to attend the meeting) about setting out some proposals on this for group discussion.

VAT treatment

There was a brief discussion about how VAT should be added to the SC. It was noted that any SC advertised to the consumer would need to include VAT so there was potentially an issue of rounding.

Don Wilson (Vodafone) noted that this still left Ofcom with a decision to make as to whether to express any price caps by number range in the National Telephone Numbering Plan inclusive or exclusive of VAT. Either could be consistent with a requirement on SPs to communicate VAT inclusive prices to consumers. Ofcom had recently moved from inc. VAT to ex. VAT at the time of the last VAT increase.

Kath Embleton (BT Wholesale) suggested that Ofcom would need to build in a mechanism for a review of SCs to ensure that any changes in VAT were taken into account.

It was agreed that further discussion of the VAT would need to take place at a separate meeting.

Next Commercial Group meetings

It was agreed that the next group meeting would take place in two weeks time (14 July) at Ofcom. Justin Hornby (C&W) confirmed that he would be presenting the issue of Assumed Point of Handover(APH) for discussion and would circulate some material in advance.

Technical Group

Elizabeth Gannon highlighted the slides that had been sent round with the agenda detailing Ofcoms view on the potential scope of the technical working groups. She asked for any comments on those slides to be sent to them and noted that she would circulate a date for the first meeting of the group.

Justin Hornby (C&W) said he would be selecting a chair for that group and contacting them individually.

Date of next meeting: 14 July 2.30pm, Ofcom

Action points

  • Andy Martin (IV Response) to draft strawman on number of chargebands for SCs and circulate to group ahead of next meeting
  • Elizabeth Gannon (Ofcom) to confirm whether any data on the traffic on different chargebands and send out date for first technical group meeting
  • Justin Hornby (C&W) to draft background paper and options for AHP discussion at next meeting
  • All, to submit comments on technical group slides.

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