This topic began discussion deep down in the following threads OFCOM - FUTURE OF 0870 NUMBERS - CONSULTATION and Read the public's 807 comments to Ofcom here... but felt this issue was important enough to have its own thread.

The matter first caught my attention on reading Flextel's consultation response.  The company called for revenue sharing to be moved to 09 numbers BUT also sought higher than geographic 0870 call charges!  To me this seemed contradictory.

It seems simplistic in hindsight but I'd thought that an end to revenue sharing would automatically mean that calls on 087x/084x would automatically be charged at regular geographic rates.   I guess I'd believed that the higher cost of  NGN's was purely as a result of revenue sharing but I now understand that this isn't the case.

NGM helpfully makes the distinction below between revenue sharing and micro payments.


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After considering matters more carefully it is obvious to me that a "micro payment" is what you are left with on any 0870 number that continues to charge above geographic rates and has a call price announcement once "revenue share" is abolished.  A "micro payment" clearly goes to the telco for phone services provided (including services given in turn to the call centre for "free") whereas a "revenue share" goes into the pocket of the actual final recipient of the call.

Flextel justify the charging of these micro payments as follows:


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NTS communications provider adds value to the call by performing additional routing facilities. These facilities can include call diversions, hunt groups, load balancing, call distribution to different areas, call control and statistical information. These additional services cost money. There has to be a cost differential between NTS and geographic numbers to fund these value added services, so who pays? Currently the company being called has a choice: · 0800 – the company being called subsidises this service with a (large) pence per minute call charge. · 0845 - the company being called subsidises this service with a (small) pence per minute call charge. · 0870 – the company being called pays no additional charges, the calling party pays the full cost of the call. This is a “calling party pays” model. Each option has its pro’s and con’s, but it is up to a company being called to decide which type of number they use, and which is appropriate for its callers. In a free market the consumer will test this decision. The consumer will compare the cost of calls against the level of service given. If they are not satisfied, they will use the services of a competing company, who may offer a cheaper call rate or Retail price.

Reading Flextel's submission initially was confusing to me but perhaps its lead to a greater understanding of the charges involved in NGNs.  Whereas I'd previously thought 'revenue sharing' was the bad guy I'm now beginning to feel that his younger brother 'micro payments' could be just as bad!

There is no proper, acceptable commercial or technical reason that any NGN other than 09 should be charged at a higher rate than the normal GN rate of the intitial carrying telco, if revenue sharing (use as covert Premium numbers) were abolished. Diversion (simple or intellegent) can be accomplished very easily by modern digital exchanges, and any resulting micro-cost is fixed, not a call-duration related cost as those with a vested interest in the current regime of abuses attempt to claim. (The only real instance in which any true duration-related cost occurs is where there is International diversion, but in any case there is no acceptable reason that the caller should bear this cost without specific agreement in any case. The called party requiring the International diversion should pay those duration-related costs, as with a mobile telephone when receiving calls from the UK whilst abroad. The caller does not pay the additional costs then.) Any transitionary costs within particular routeings should be accounted for between telcos on a similar non-accounted algebraic basis to that now used by car insurers to settle claims between themselves, on the basis of paying for their own insured's losses, even when fault is not with their insured. The whole point of this is that statistically over a large period any imbalances tend to cancel out, and the costs of accounting, settling and legislation are eliminated by this approach, which actually reduces the insurer's overall costs and would similarly reduce each telco's overall costs.

This is the simplest solution to all of the current problems for consumers, and at the end of the day implementing this type of approach would avoid any need for any so-called (misnomered and deliberately misleading) micro-payments between telcos. There really is not any need for this in a properly configured structure. This then eliminates any opportunity for abuses with revenue being shared despite an intent to prohibit it, as has been allowed in the reversion with 070 PNS.

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There is no proper, acceptable commercial or technical reason that any NGN other than 09 should be charged at a higher rate than the normal GN rate of the intitial carrying telco, if revenue sharing (use as covert Premium numbers) were abolished.

Thanks drrdf2 for your response.  Although I lack your technical understanding, I too struggle to accept that micro-payments are justified for esentially routing a non-geo to a geo. (Where larger companies want to dynamically move calls around different call centres, then surely these larger companies should foot the bill for this?).

Below, however, I've quoted DonQuixote whose arguments very closely mirror those of the recent FleXtel consultion response.  


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Perhaps I can help by making the difference between micropayment and revenue share a bit clearer...   Let look at the traditional financial model of the UK (and international) telecom network using BT as an example, in a typical 0870 call... Caller --£a--> BTin --£b--> 0870sp  --£c--> BTout ---> Called of course BTin could be replaced by any phone/mobile operator e.g. NTL or Vodafone   and BTout could be different from BTin. So money flows from left to right, following the call... £a is paid by Caller (monthly/quarterly bill). £b is the money paid by BTin to the 0870 service provider, about 5p/min £c is the money paid to BTout to pay for carrying the call to Caller about 1p No money is given to Called. So the NTS company is living off about 4p/min. £b and £c are micropayments made in the telecoms network. They are very efficient, because they are made in bulk monthly.   There is little credit risk, so collection costs are very low.   ...for the economists amongst us!  Cool £b-£c is the margin needed to pay for the number translation services. e.g. databases, switches (exchanges), software, webservers, optical fibre, it is not free!  cry Here it comes... Now add Revenue Share to the end user - Called. To compete, then 0870sp MUST now pay the Called for every minute of answered time.   Imagine an additional arrow with £d money flowing directly from 0870sp to Called. £d can be as high as 3p/min! Clearly Revenue Share pushes up the cost of £b and hence £a.   Now the NTS guys get 5-1-3 = 1p/min (useing full-on revenue share as a bribe).

This post is both comprehensive and persuasive although I'm not sure on the point below that ending revenue sharing will force people to use BT's call diversion ?


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Yep, that'll stop revenue share.  Wink Good one! ...but that means we're back to expensive BT's call diversion charges (& mobiles too!) or Called pays the NTS operator a lot. Why?... Because you have to collect payment to pay for the NTS/Diversion   and that is very, very, expensive  -> high collection risk, small bills! ...bad people can disappear without paying! ...BT's argument for retaining so much!

Any further feedback will be appreciated.

Everyone seems to have lost sight of the fact that it was the various forms of local diversion functionality which led to the idea (suspect in my view) of NTS in the first place. BT wanted another gambit to milk revenue out of the system.

Diversion may be accomplished, including intelligent diversion, locally without any NTS. In fact in 1981 BT was offered an intelligent local call processing solution which included engaged call processing with international numbers LOCALLY; and they eventually rejected that and decided to implement a similar part function in exchanges so as to be able to milk the system more and be able to control and rip-off the consumer. In fact still BT do not yet offer, nor does any other telco in my knowledge yet offer, international engaged call processing, which was included in that local solution. BT provides it within the UK for UK calls only still now, almost 25 years later. This is progress?

I repeat there is no justifiable technical or commercial reason that any NTS call (other than 09) should cost any caller more than a normal GN call at the initiating caller's duration rate. Of course, if the system were restored to sanity and an equitable position, making the interests of the consumer paramount, there would be some enterprises which have capitalised on the current distorted coherence and ineffective regulation, which would go to the wall so to speak. This is purely because they have been allowed to hold the consumer to ransom due to ineffective regulation.

I don't believe that the consumer would miss any of them. I for one certainly would not!

It's all very well for the large companies that DO have the equipment to move calls around at great expense, however I use a mix of 0845 and 0800 for some small scale stuff - 0845 isn't that expensive and I don't get paid to recieve calls, i'm also perfectly happy to give out my mobile number or a geo to people that I speak to alot, or call back anyone that asks. The point is that it would cost a considerable amount in equipment for functionality which is free through NGN's. I wouldn't want to use 0870 or 0871, but all the time BT charge for facilities that should be free but aren't (on a voip network there is no reason why calls can't be routed intelligently via a web based interface, have voice2email, time based routing, hunt groups etc but they don't, let alone bt.)

That is the whole point SAlbrow. That is exactly what we object to. These calls may be free to you but they are much more expensive for consumers.

In addition, frankly if you use NGNs and have not negotiated a revenue share with your providers you must be unaware commercially, in my opinion. If you are going to use NGNs at all you should have revenue share whilst it is still permitted. Otherwise you are loosing a contribution to your business profits which you could have had, and which is instead just going to the telcos to boost their profits. That doesn't mean I agree with revenue sharing - quite the reverse. But whilst we consumers continue to be exploited I would rather see it going to you than to the telcos who have perpetrated this fraud on a huge scale.

wrote on Dec 7^th, 2005 at 11:22am:

That is the whole point SAlbrow. That is exactly what we object to. These calls may be free to you but they are much more expensive for consumers. In addition, frankly if you use NGNs and have not negotiated a revenue share with your providers you must be unaware commercially, in my opinion. If you are going to use NGNs at all you should have revenue share whilst it is still permitted. Otherwise you are loosing a contribution to your business profits which you could have had, and which is instead just going to the telcos to boost their profits. That doesn't mean I agree with revenue sharing - quite the reverse. But whilst we consumers continue to be exploited I would rather see it going to you than to the telcos who have perpetrated this fraud on a huge scale.

Dorf,

This gentleman only uses 0845 and 0800 is I am sure only a small business and revenue share is not availalble to small businesses who want 0845 for call redirection.  Its only available to 0870 and 0871 users.

The point is that there should have been an NGN code guaranteed to always cost thes same as 01/02  and then people like this gentleman's small business and others would have hunted around to find the provider on these geograpicly rated NGNs who charged the least additional price premium for the services they need.  Plus Ofcom/OFTEL should have taken steps to force BT to allow you to divert calls with any other phone network of your choice on their phone lines.

wrote on Dec 9^th, 2005 at 4:53pm:

The point is that there should have been an NGN code guaranteed to always cost thes same as 01/02..

There was - 0845 and 0870 - oh g*d I feel a head ache coming on Heeeeeeeeeelp

Tanllan wrote on Dec 9^th, 2005 at 5:26pm:

There was - 0845 and 0870 - oh g*d I feel a head ache coming on Heeeeeeeeeelp

Sorry Tanllan but I have tracked these numbers carefuly and from as long ago as 1997 I could make calls to ordinary geographic numbers with AXS Telecom at 2p per minute on my BT line but 0845 cost 4p per mimute and 0870 cost 7.91p per minute.  Thus they never ever were non geographic numbers charged at geographic rates and with no revenue sharing and with the call recipient paying fees for the line services they uses.

0845 and 0870 were always revenue sharing, premium rate numbers as evidenced by the fact that BT always refused to give its Friends & Family discount or Best Friend discount for 0870 numbers when it would give the discount for all normal geographic numbers.

I repeat why was there never a non geographic revenue wihout revenue share or micro payments and charged at geographic call rates.

It's interesting to read about transfering calls from location to location being the excuse for a higher than geographical charge on these 0845 and 0870 numbers. Equally, it's interesting that every post here seems to be suggesting denial of the fact that the destination company is receiving a proportion of the revenue from those 0845 and 0870 calls in almost every case.

There are any number of companies today offering these non geographical numbers as a source of income. There is no mention of switching and the like.

I have just added a series of 0870 numbers, all relating to one geographical number, to the site list, and these numbers all terminate in the same building.

Let's not be altruistic or make feeble excuses. These are money makers. With many 0870 numbers offering 6p per minute to the owner of the number, £3.60 per hour for doing nothing isn't a bad rate of return, is it? There is no question of this being to pay staff or anything else; those costs would occur anyway, whatever number was dialled.

One group of numbers which hasn't been covered is the 070 series, some of which are charged at up to 50p per minute. These are sometimes more complex than the others, being personal numbers where switching is often employed. I use an 070 number myself for my fax line, so the faxes go direct to my computer. I hasten to add that I get no share of the money, just the convenience of getting the faxes where I want them.

Thanks to all that have replied to this thread.  I've been trying to get it clear in my mind of there difference between revenue sharing and micro-payments.


SAlbrow wrote on Dec 7^th, 2005 at 12:17am:

I use a mix of 0845 and 0800 for some small scale stuff - 0845 isn't that expensive and I don't get paid to recieve calls.  The point is that it would cost a considerable amount in equipment for functionality which is free through NGN's. I wouldn't want to use 0870 or 0871, but all the time BT charge for facilities that should be free but aren't.

Am I right in thinking that in this kind of scenario where the party being called does NOT receive any income then there is NOT any revenue sharing.  And the reason that calls of this type (i.e 0845) cost more than geo calls is down to micro payments - have I got that right ?  Responses on this appreciated.


wrote on Dec 9^th, 2005 at 5:53pm:

I repeat why was there never a non geographic revenue wihout revenue share or micro payments and charged at geographic call rates.

Might 0870 become this ?  Ofcom are proposing  to restore the link between 0870 and geo numbers (ignoring some clause which allows a company to charge more providing they include a call cost announcement).

gdh82 wrote on Dec 11^th, 2005 at 3:07pm:

Thanks to all that have replied to this thread.  I've been trying to get it clear in my mind of there difference between revenue sharing and micro-payments.

A Micro Payment is a payment to the TCP - Terminating Call Party - the telecoms service provider who provides various NGN services to the called party including so called Intelligent Call Routing (advanced call diversion patterns)

Revenue Share is a direct transfer out of the Micro Payment money received by the TCP to the Service Provider (this service provider may even be a private individual or it may be a large call centre).

Either way it comes down to the same thing essentially.  Namely the caller paying extra for NGN phone services (including possible call diversion and intelligent call routing) for which the called party should be paying.  The BBC is a classic case where no money is paid to the BBC but where it saves money on its outhgoing call costs and gets a lower service fee from the call centre operator (Capita) than it otherwise would do due to the micro payments to Cable & Wireless and the revenue share to Capita.

These people with 0845 numbers who say I don't get any money from it aren't facing facts that they are receiving for free enhanced call routing facilities that they should be paying a service charge for.  But the fact of the matter is that these call routing facilities are being charged to the caller at ridiculously over the odds and would be far cheaper all round if the called party paid the phone call cost, thus creating a transparent and competitive market where prices were driven down.

Unless a Service Provider is one who receives far more incoming calls than they make outgoing calls (eg BBC, British Airways and Sky) then for most businesses who use 0870 numbers even they lose.  That is because the incoming revenue share they get is far smaller than the extra telecoms costs they have to pay outgoing.

The main people who win from NTS and revenue share are people like Totem Communications, who have responded to the consultation and who on Page 9 in effect admit that their whole business would not exist without these Terminating Call Payments and using revenue share to bribe more and more companies to use NGNs against their own long term interests.

Basically its all a micro payment.  The Revenue Share is the part of the micro payment that is passed on to the called party using the number as a direct bribe to use NGN numbers.  But even when the person or company to whom the phone number directs the calls doesn't receive a revenue share (as with most 0845 numbers apart from ISPs and some 0870 services like fax to email) they are still receiving a service paid for by the caller for which they the called party should be paying extra.

I hope this clarifies matters.

wrote on Dec 11^th, 2005 at 3:42pm:

Namely the caller paying extra for NGN phone services (including possible call diversion and intelligent call routing) for which the called party should be paying....  ...But even when the person or company to whom the phone number directs the calls doesn't receive a revenue share (as with most 0845 numbers apart from ISPs and some 0870 services like fax to email) they are still receiving a service paid for by the caller for which they the called party should be paying extra.

If you follow this logic, then mobile phone calls should be charged at local rate and the called party should pay the rest, right? So all mobile phone users would pay for incoming calls...  ::)

DonQuixote wrote on Dec 12^th, 2005 at 12:35am:

If you follow this logic, then mobile phone calls should be charged at local rate and the called party should pay the rest, right? So all mobile phone users would pay for incoming calls...

I already do pay for incoming calls to my cellphone and I am quite happy to do so. It makes the system here a significant improvement to that in the UK, and whilst some may be wary of a 'called party pays' model, it does have some significant advantages. Once again, the UK could learn a lot from across the ocean. The cultural shift adopting a similar model, would, I suspect, be too much.

DonQuixote wrote on Dec 12^th, 2005 at 12:35am:

If you follow this logic, then mobile phone calls should be charged at local rate and the called party should pay the rest, right? So all mobile phone users would pay for incoming calls...  ::)

This is absolutely what should happen since it is the called party and not the caller who derives any advantage from the mobile phone's use.  As idb highlights this is already the common practice with many mobile phone operators in the USA and is why when one makes an international call to the USA a mobile phone call doesn't cost any extra.

Under this system the mobile phone call cost is driven as low as possible because the recipient doesn't want to pay excessive charges.  But under a system where a £250 mobile phone is presented as free to the owner and this is in fact recouped through excessive contract charges and ripoff charges to your mobile phone callers uk mobile phone call costs are some of the most expensive in the world.  And yes the extra charge made to the mobile phone operator by the caller is indeed a micro payment for the provision of that mobile phone network.  However when there isn't a competitive market in incoming call costs (as with European roaming which most people only do for a week or two each year) then you can see what happens to the micro payment charge levels.  This is because people wrongly (due to withholding of information by the mobile operators) don't make their mobile phone buying decision on the basis of this hidden week or two a year of ripoff charges that will in fatct make up a large part of their annual phone bill.

So I stick to my original position that any money that doesn't go to the called party is a micro payment to the telco.  For instance when you call from BT to NTL fixed line a small element of the call cost goes to NTL as a micro payment although a larger amount goes to BT.  One of the oddities of NTS calls is that the OCP (originating call provider) earns less on NTS calls than other calls just so that everything can go to the TCP to allow for maximum revenue share to bribe more people to become part of the scam system.  The same disgraceful cycle of perpetuation, self enlargement and distortion of the truth happens with uk speed camera partnerships.

07 mobile calls are only vaguely fair because people do have an idea that 07 is likely to cost them extra but the system is still unfair because there is not a call price announcement to announce the cost of the call per minute and this is not at all clear from the actual mobile phone number which does not identify the mobile phone operator.  Again this system works in the mobile phone industry's favour and against the consumer and the lowering of prices.

Call price announcements are the only fair system because as mobile phone numbers are portable then the number you have doesn't necessarily bear any relation to the mobile network that you are now on.

Of course in the USA this is all unnecessary because the caller pays for the mobile phone advantage and mobile phone calls cost thes same as fixed line.

wrote on Dec 12^th, 2005 at 8:26am:

DonQuixote wrote on Dec 12th, 2005 at 12:35am: If you follow this logic, then mobile phone calls should be charged at local rate and the called party should pay the rest, right? So all mobile phone users would pay for incoming calls...  ::) This is absolutely what should happen since it is the called party and not the caller who derives any advantage from the mobile phone's use.  [...]

Whilst I agree that the payment to the mobile network can be seen as a micro-payment, on balance, I don't agree that the receiver should have to pay per minute for receiving calls. I also think that the assertion that it is the receiving party who is benefiting is suspect. What alternative contact methods are there when mobile?

Remember that NTS just routes to a landline. Therefore a normal landline number could be given out instead. It is the receiving party who has put that barrier in the way, as it were.


wrote on Dec 12^th, 2005 at 8:26am:

Under this system the mobile phone call cost is driven as low as possible because the recipient doesn't want to pay excessive charges.  But under a system where a £250 mobile phone is presented as free to the owner and this is in fact recouped through excessive contract charges and ripoff charges to your mobile phone callers uk mobile phone call costs are some of the most expensive in the world. [...]

Whilst this makes sense, my principal objection would be that I would have to pay to receive calls, probably on a per minute basis, the same as we have to pay for NTS now. I object to paying to receive calls on a telephone because the system works on the principal that the caller pays to call the recipient subscriber.

All subscribers should have to pay a service charge, and this is known as 'line rental' with a landline telephone. IMO this term is misused with mobile providers because it goes to subsidising a 'free' or reduced price handset and to pay for inclusive minutes. Calls outside inclusive minutes are often as expensive as pay as you go rates.

I would therefore be quite happy to pay a fixed amount in line rental for my mobile connection in return for lower call charges. This would also replace the increased costs that my callers have to pay to call me. After all, mobile calls are presumably higher rate because of the higher cost of running a mobile network (or so you would think).

Dave wrote on Dec 12^th, 2005 at 12:33pm:

Whilst I agree that the payment to the mobile network can be seen as a micro-payment, on balance, I don't agree that the receiver should have to pay per minute for receiving calls. I also think that the assertion that it is the receiving party who is benefiting is suspect. What alternative contact methods are there when mobile?

Just to give some info about what happens in the US, where admittedly, the cellular market is often fragmented. I have a contract with Cingular, a GSM provider on the 850MHz and 1900MHz frequencies. Other providers' plans are similar, perhaps more minutes, perhaps less. For $60 per month (with FL and other taxes, this increases to ~$75 per month) for two handsets (me and the wife), we get 500 peak-time minutes shared across both handsets for incoming and outgoing calls. These minutes can rollover up to twelve months. The plan gives unlimited night (after 9pm) and weekend minutes, again for incoming and outgoing calls. To be honest, we have way too many minutes for our needs, so paying for the odd false or incorrect inbound call really isn't a problem (this is an issue, however, with pre-pay/PAYG). The advantages are that the cellular codes are exactly the same as ordinary land numbers, so a Miami cellular phone will have a 305 area code. These numbers are also portable to landline phones. I can call a 'local' Miami number at exactly the same cost as a number in Los Angeles or Chicago. I can also call a toll-free 800 number which is also taken from inclusive minutes. It is simple, effective, and the model of paying for incoming calls does not appear to be a problem to people here given that we do not need separate numbering for cellular systems. One downside is that calls are billed in one-minute intervals - no per-second charging here. I guess it's a balance, but I favour the system here. PAYG is somewhat different, and the called party pays model may not be appropriate, but for contracts with plenty of minutes, it really does not present a problem.

Forgot to mention, the plan gives unlimited calling to other Cingular phones at all times (I think this is referred to as 'on-net' in the UK). Also, roaming is free throughout the country, which may sound odd to UK residents, but this county has all sorts of mobile operators).

idb wrote on Dec 12^th, 2005 at 1:07pm:

Just to give some info about what happens in the US [...]

Do most tariffs provide for subsidised handsets or can you opt for a 'contract' that just provides your connection?

Dave wrote on Dec 12^th, 2005 at 1:30pm:

idb wrote on Dec 12th, 2005 at 1:07pm: Just to give some info about what happens in the US [...] Do most tariffs provide for subsidised handsets or can you opt for a 'contract' that just provides your connection?

Handsets are subsidised, but (generally), not to the same extent as to that in the UK. Of course there are offers of free advanced handsets but you have to submit rebate claims (a common activity here). I believe that Cingular will provide a contract SIM without handset, but it is not an advertised offering as the demand is not great. Another difference is that contracts are often 24 month minumum with a $120 early termination penalty.

I paid around $200 for a 'smartphone' device and around $40 for my wife's Nokia, a basic but decent phone. I could have got the smartphone cheaper at Amazon and the Nokia free, but I couldn't be bothered to wait and to mess around with all the paperwork!

wrote on Dec 12^th, 2005 at 8:26am:

This is absolutely what should happen since it is the called party and not the caller who derives any advantage from the mobile phone's use.  As idb highlights this is already the common practice with many mobile phone operators in the USA and is why when one makes an international call to the USA a mobile phone call doesn't cost any extra.

Nice point, shows how knowledgeable ngm is!  8-)

However, he forgot to add that in the US many folk don't publish their mobile number for fear of running up big bills due to unsolicited calls. So many end  up using pagers and voice mail. How quaint and how time inefficient!

I suppose it depends on how valuable your time is?  ;)

Just imagine all those silent or sales calls to our mobiles, which we will all pay for, if NGM has his way!

Mind you he's right about those roaming charges. What a ripoff !  >:( >:(