From 1 November 2009, BT introduced a new pricing structure for originating operators (OCPs) whose customers call 0845 and 0870 numbers provided by BT. Up until that point, they were all charged the same.

The new charging structure is a sliding scale, based on the retail charges each OCP imposes on its customers (callers). The higher the average retail charge, the more the OCP will have to pay BT for connecting calls to these numbers it operates.

In reality, this only affects the mobile operators as the threshold for the first step up is 12.5ppm inc VAT. The figures are published in the BT Wholesale Carrier Price List (CPL), section B1, part 1.06, table 1.6.3.2.

To illustrate what I'm referring to, here's a summary of the main rates (in pence per minute) in that table:

Retail price (inc VAT)		Daytime		Evening		Weekend
Less than 12.5		2.6654		0.8430		0.6422
12.5 or greater and less than 17.5		4.6654		2.8430		2.6422
17.5 or greater and less than 22.5		7.1654		5.3430		5.1422
22.5 or greater and less than 27.5		9.6654		7.8430		7.6422
27.5 or greater and less than 32.5		12.6654		10.8430		10.6422
32.5 or greater		15.6654		13.8430		13.6422

A sliding scale exists for termination of BT's 0870 numbers, although the rates charged are different. These are shown in table 1.6.4 of the same section and part of the CPL.

Unsurprisingly, Ofcom has now received a complaint from one of the OCP's affected by this change:
http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/open-cases/all-open-cases/cw_01042/


Quote:

Dispute between BT and Vodafone about BT’s termination charges for 0845 and 0870 calls Dispute between: British Telecommunications plc (BT) and Vodafone Limited (Vodafone) regarding BT's termination charges for calls to 0845/0870 number ranges. Case opened: 4 March 2010. Issue: Vodafone has asked Ofcom to resolve a dispute under section 185(1) of the Communications Act 2003 (the Act) between itself and BT concerning termination charges for 0845/0870 calls introduced on 1 November 2009. Relevant instrument: Ofcom intends to resolve this dispute using its powers under Chapter 3 of Part 2 of the Act. This dispute concerns the extension by BT of a new wholesale charging structure for terminating calls to 0845 and 0870 number ranges. The new wholesale charging structure essentially involves BT setting its wholesale charge by reference to the individual retail pricing practices of each originating communications provider ("OCP"). … Scope of the dispute: After consideration of the submissions received by Vodafone and BT, the scope of the dispute is to: a. determine whether it is fair and reasonable for BT to apply new termination charges for calls to 0845 numbers hosted on its network, which are based on the level of the retail charge made by OCPs for calls to these numbers, as specifically set out in BT's NCCN 985 dated 2 October 2009; and b. determine whether it is fair and reasonable for BT to apply new termination charges for calls to 0870 numbers hosted on its network, which are based on the level of the retail charge made by OCPs for calls to these numbers, as specifically set out in BT's NCCN 986 dated 2 October 2009. …

Table 1.6.1 gives the termination charges for BT's Freephone (0800/0808) numbers and shows that from 1 July 2009 a sliding scale was introduced for them. On 1 April 2010 this scale will steepen. For OCPs whose BT Freephone numbers are free to call for their customers (usually landline providers), they continue to be paid by BT for making those calls free.

Mobile providers whose customers pay 40 pence per minute to call 0800 numbers currently pay BT 13.00 pence per minute at all times when one of their customers calls one of its 0800 numbers. From 1 April this will increase to 26.42 pence per minute.


These sliding scales only exist when customers of the affected OCPs (generally the mobile operators) call 0800, 0808, 0845 and 0870 numbers operated by BT. For these numbers operated by other communications providers, charges remain the same.

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~ Edited by Dave: URL updated

I haven't decided where I stand on this issue yet and I would like to know what others think. I will, however, make the following comments which may help form an opinion:

• In an ideal world, the premium carried along with any call would be related to the size of the premium attached to the retail price, perhaps in a linear or exponential fashion. In a round about way, BT is attempting to address this issue by increasing the premiums it levies to nearer match those of the OCPs it receives calls from. Ofcom really needs to get a grip of the issue of some OCPs levying high premiums on 08 calls.
  
• Mobile operators now find themselves paying more then they did before, when their customers call some BT 08 numbers. Maybe they could get round this by transitting such calls via another operator.
  
• A dispute was referred to Ofcom last year when BT changed the charging structure for 080 numbers. The determination can be found on Ofcom's website here and was discussed on the forum here.
  
• If affected OCPs were to respond by increasing their retail charges, then BT could counter that by increasing its termination charges and so on. This would be bad for consumers as a whole.

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~ Edited by Dave: URL updated

Dave offers some useful thoughts on this matter. I have to confess that I would not know what to make of this move if it stood in isolation from other issues. It does not, and so I offer some rough and ready thoughts, largely on the broader issues.


A key question to ask about this particular issue is, what does BT do with the extra money:

• Return it to the callers who it believes are being overcharged?
  
• Pass it on the users of the numbers as an addition to their revenue share?
  
• Use it as income in place of that which it is denied due to its own enforced low rates for calls it originates to 0845 numbers.

I suspect the latter is nearest to the truth.

BT cannot expect to be taken seriouly if it claims that it is trying to force mobile companies to lower their charges. That is however what it would probably claim, perhaps not without some justification.


I see this largely as a political move by BT. It is part of its campaign to get revenue sharing on 0845 calls stopped and for all operators to be required to charge for 0870 (and eventually 0845) calls at no greater rate than that for geo calls. I suspect that most of us would wish to join it in that general effort. Whether we feel that this particular tactic is proper is another issue. The inclusion of both 0845 and 0870 calls in packages was part of this same strategy, as in both cases this anticipated such a change.

This is also loosely connected to the quite separate “Terminate the Rate” campaign which attacks mobile operators gaining income from call charges, although in that case on incoming and inter-operator calls, rather than outgoing calls to BT.

I am of the view that if mobile operators do not gain income from call charges they will be required to seek to gain it in other ways. Given the place that mobile use has in society at present, I hope those who support radical change will be happy to accept the consequences. For this reason, I remain somewhat agnostic on this matter, as I want to understand the consequences clearly before I sign up to any radical proposal.


Overall I believe that Ofcom will have to return to this issue in a more comprehensive fashion when it undertakes its review of NTS shortly. As Ofcom has to specifically weigh particular competing interests in settling this dispute, this work could inform its later determinations on general policy, be totally irrelevant to them or actually distort the position. The disciplines followed in resolving disputes are not necessarily the same as those used in determining general regulatory policy.


I note that engagement from stakeholders is invited - either as direct parties to the dispute or simply out of interest. If sufficient interest is shown by members of this forum, then I believe that saynoto0870.com should consider registering and making representations.

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As a side issue, which is not totally unrelated. I have seen no sign of Ofcom taking action in relation to the new requirements in respect of clear notification of the charges for calling 0870 numbers introduced on 1 August 2009. I cannot recall seeing anything in this forum from any aggrieved party who finds the call cost information inadequate.

A quick update on this, and a related, issue.

Ofcom is dealing with this matter as a dispiute - http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/open-cases/all-open-cases/cw_01042/

The dispute about the similar move in respect of 0800 calls has now progressed to an appeal to the Competition Appeals Tribunal - http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/closed-cases/all-closed-cases/cw_01036/

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~ Edited by Dave: URLs updated

A further update.

Ofcom has now issued its draft determination on this matter - http://stakeholders.ofcom.org.uk/consultations/draft_deter_bt_0845_0870/

As with the attempt by BT to introduce termination rates that reflect retail prices on calls to 080 numbers, Ofcom has thrown it out.

One may expect BT to again appeal to the CAT.

The determination does make reference to the review of NGCS, which was recently the subject of a consultation.

I hope that Ofcom sees both of these issues being better addressed by proper regulation that will come out of this review, rather than by this attempt by BT to do Ofcom's job for it (and to itself perhaps profit as a consequence).

The draft determination is open to a brief consultation. Members may wish to join me in offering some brief comments. I would urge emphasis to be placed on Ofcom itself doing the job properly, rather than on it allowing BT to do it in its own way. As ever, others may disagree.

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~ Edited by Dave: URL updated

I,m not clear how this fits in with my post recently put on your site re : different charges for 0845 numbers, sorry , I,m new to this it,s alot to take in all of this..I,m just not clear about this post and where it fits in with my post , anyone explain ?

dandy wrote on Aug 15^th, 2010 at 4:21pm:

I,m not clear how this fits in with my post recently put on your site re : different charges for 0845 numbers, sorry , I,m new to this it,s alot to take in all of this..I,m just not clear about this post and where it fits in with my post , anyone explain ?

I don't believe that it does.

Ofcom has now published its final determination - blocking BT's changes. I have issued a media release which tries to exploit this news to make some general points.

In the light of further imminent developments, the underlying truth of this matter is for the anoraks only. If this move by BT were to have had any effect on prices then most likely it would have been overtaken by further forthcoming regulatory changes.

Anoraks may wish to read the 300-page document, but I advise general readers to await further developments on this front.

More updates are coming in on the subject of BT's varying termination charges for 0845/0870 and 080 calls:

http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/open-cases/all-open-cases/cw_01055/

What was Ofcom's judgement on this?  :-?

From the page I linked to above, there are links to two other cases:
http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/closed-cases/all-closed-cases/cw_01036/
http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/closed-cases/all-closed-cases/cw_01042/

These are for 080 and 0845/0870, respectively, and both say they're got to the Competition Appeal Tribunal (CAT).

The CAT website gives links to three appeals, all to be held on 3 November:
1151/3/3/10 British Telecommunications Plc (Termination Charges: 080 calls) v Office of Communications
1168/3/3/10 Everything Everywhere Limited v Office of Communications (Termination charges: 0845 and 0870 numbers)
1169/3/3/10 British Telecommunications PLC v Office of Communications (Termination charges: 0845 and 0870 numbers)

Where are we with this? I thought that the gist was that Ofcom had decided that BT could not do this.