Simplifying Non-Geographic Services

Issued March 31, 2011

Executive Summary

1.1 Background

We welcome Ofcom’s comprehensive review of non-geographic call services (NGCS). We believe Ofcom’s proposals form a good basis for a new set of rules for the operation of NGCS to the benefit of all parties – the calling consumers, network operators and service providers.

Ofcom has gathered unequivocal evidence of serious market failure. The current patchwork of regulation has failed to deliver either consumer satisfaction or stability for the NGCS industry.

1.2 Consumer impacts

Ofcom’s research shows that consumers are confused by non-geographic call prices. This has been exacerbated by mobile operators, in particular, charging high prices. As a result consumers are making fewer calls to these numbers and this has impacted the whole of the NGCS value chain. Consumer protection is an important feature of any well functioning regime and we believe that any rules should be rigorously applied across the industry in a technology-neutral way.

1.3 Current and future regulation

We welcome the proposal to remove the current NTS Call Origination Condition. At the retail level the market has changed significantly since the NTS regime was first introduced. BT has not had retail Significant Market Power (SMP)1 for some time. However, regulatory restrictions remain in place which apply solely to BT. This is no longer appropriate (see section 2). BT should not be placed in a different regulatory position from any other player at any stage of the NGCS value chain.

We believe that no additional SMP conditions are appropriate beyond the general requirement to provide call origination at the wholesale level, including for NGCS services.

1.4 Ofcom’s options

Each of Ofcom’s options, other than the status quo, offers varying benefits. We agree with Ofcom that the unbundled tariff is the most attractive option. It will address many of the problems identified when combined with some supporting measures (see section 3) and will greatly benefit consumers by improving price transparency.

For the unbundled tariff to be effective, we agree that access charges should be set at a reasonable level to stimulate demand for NGCS and that originators should have flexibility to market these services in packages if they choose. We also agree that service charge maxima at the 08x/09x level should be set. Below that, the service charge for each number range should be the same for all providers as variations would lead to considerable consumer confusion (which would be made worse/unworkable by number portability). This approach is compatible with vigorous competition in termination and we agree with Ofcom that this market is effectively competitive. 

A further issue is the extent to which individual players (originators and service providers) may wish to offer bespoke terms. We believe that the rules for such differences need to be made clear and that any restrictions should not be aimed solely at BT.

1.5 Numbering strategy

We support much of Ofcom’s proposed approach to numbering, although one of our key differences is that we do not feel that forced number changes would be justified (see section 4).

1.6 Transition and implementation

We agree with Ofcom that the transition to a new regime will be challenging and take some time. There are a number of practical issues which need to be resolved about the operation of the unbundled tariff, including, for example, how the access and service charges will be set (see section 5). As a result, we have not yet carried out any detailed feasibility work regarding costs and timescales of implementation. We do, however, believe that the benefits sought by Ofcom from disaggregated billing could be substantially achieved by greater pricing visibility at - or before - the point of making the call and through messages on customers’ bills that explain how the total cost of the call is shared between the access and service charge.

1.7 Wholesale regulation

We feel that Ofcom has not been clear on how it will regulate at the wholesale level but believe that no additional constraints on BT are justified (see section 6). Ofcom must ensure fair access by all to all parts of the value chain – from caller through to service provider.

1.8 Moving forward

In summary, we welcome this review and consider that Ofcom has provided a wide set of possibilities and that the proposed model is the most appropriate. There are practical issues to sort out and a number of areas where greater clarity on the unbundled model is needed. Clear rules at the outset will help ensure that all of industry complies with a common and practical framework. An early launch will benefit both consumers and the NGCS industry and we would recommend a phased implementation if this is the most effective means to bring about the changes more quickly. We are keen to engage with Ofcom and industry on how best to develop fair and practical solutions. 

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BT welcomes comments on the content of this document. Comments can be addressed via e-mail to Nicola Robbins at the following address: nicola.robbins@bt.com