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I think it will be helpful to explain revenue sharing and what will happen for those telephone providers, like Virgin Media, that choose to retail calls to 0870 numbers at higher rates than geographical (01/02) calls following the changes. They will be the ones ripping off consumers rather than banks and insurance companies, as it is at the moment.


What is a revenue sharing number?

Use of a revenue sharing number allows an organisation to take a share of the call charges, either directly in cash and/or offset against the cost of other telephony services. In both cases, the organisation receiving the call is charging the caller directly for use of the service.

What types of number are revenue sharing?

Up until 1 August, 0870 is a revenue sharing range. Others are 0844, 0845 and 0871. The exact same principle that underlies these numbers functions on "premium rate service" numbers starting 09; just to allow the call recipient to impose a greater charge on the caller.

What is happening on 1 August? Is Ofcom simply banning revenue sharing on 0870?

From a practical point of view, the changes that Ofcom is making will almost certainly result in the ceasation of revenue sharing. It is the framework which facilitates revenue sharing that is being removed and it is this which is the real bone of contention and reason for saying no to 0870.

What is the framework that facilitates the revenue sharing process and how is it being changed on 1 August?

To answer this, it is necessary to understand how a telephone call is connected from caller to receiver and the way in which call charges a divided up. I present an example to illustrate the point:

Let us consider a telephone call where calling and receiving parties are with different telephone companies. The caller is with BT and the person they are calling has a Virgin Media telephone line. BT takes the call from its customer and carries it along its wires (network) until it gets to a point where it inter-connects with Virgin Media. The call is then carried by Virgin Media's network to its customer who is the destination party in this example.

Virgin Media imposes a charge on BT for connecting this call to its customer. With a revenue sharing call, such as 0870 (prior to 1 August), this wholesale inter-operator "termination charge" is far greater than had the call been made to a normal geographical number. Such a circumstance would allow Virgin Media to "revenue share" with its customer.

The changes will see the termination charges for 0870 brought right down. The reduction in this "wholesale" burden on call retailers, such as BT in this example, will be such that they will be able to include these type of calls in packages and at the same rate as geographical destinations.

This is akin to a manufacturer lowering the amount it charges for a particular product. Such a move will allow the reduction to be passed through the supply chain and/or absorbed by it.

Come 1 August, some telephone companies, including Virgin Media, have chosen to retail 0870 calls at higher rates than geographical (01/02) numbers. Does this mean that revenue sharing is continuing in such cases?

No. If some telephone call providers choose to charge more, then the extra call revenue is going into their pocket, rather than being collected and passed on for the benefit of the organisations receiving calls, as is the case at present.

Companies such as Virgin Media have chosen not to pass on the savings, instead retaining them as additional profit. So in real terms, this amounts to a price increase.

Note that in this question and answer I am referring to Virgin Media in its capacity as the caller's telephone company rather than, as in the previous question, the receiver's telco.

Reserved for future use.

Dave wrote on Jul 31^st, 2009 at 9:37am:

So, just BT then.

Incredible.

I find this whole thread and issue remarkable - BT appear to be coming out of it with flying colours but let us remember that they are not giving away free calls to 0870 numbers AT ALL; there is a fixed cost per month of £4.95 and the call allowance is only 1,000 minutes. 'Lies, damn lies and statistics' we say or 'give it in one hand and taketh away with the other'.  i.e. they have recently announced that minimum call charge of 9p (nine pence) on those customers not on anytime plan - which is most of us.

Now lets consider what this means - if you dial a number and they are not there - which, in most cases this is the case, then BT pocket the 9 p (nine pence) and none gets past back to the consumer, so I think Virgin Media are OK to continue to charge for 0870 as people who care will see through the BT offer. I cant believe Ofcom allow BT to get away with their antics.

We applaud those organisations that that have been early adopters of

noelster wrote on Aug 2^nd, 2009 at 12:03pm:

Different providers offer different services at different prices, that's the nature of any free market. When a supermarket offers "buy one get one free" on a particular product, should there be a notice to say that it isn't actually free (in the true sense) and that the cost is actually offset in charges elsewhere?

noelster wrote on Aug 2^nd, 2009 at 12:03pm:

The whole rip-off "connection fee" or "call set-up charge" as BT call it, is something which Virgin Media has used for a number of years. Such a method of charging helps distort the true call price; the minimum call charge is much fairer.

As a member of the industry, you well know that the termination charges imposed on Virgin Media for 0870 calls have been lowered, so in real terms, by maintaining the retail price, it is infact increasing the call charge. Bizarrely, you condone this, probably because it's OK so long as BT doesn't do it.

I also refer back to your previous question which, as an industry member, you well know the answer to:

noelster wrote on Jul 27^th, 2009 at 11:09pm:

For those who don't know, the reason BT doesn't discount 0844 numbers is because the telephone providers that operate them don't want it to because they will loose out!

Instead, they suggest BT should act as a charity to other telephone companies by operating such calls at a loss.

noelster wrote on Aug 2^nd, 2009 at 12:03pm:

Please stop spamming the forum with links to your own company. There is a line between making a point by using such a link and spamming and the way in which you are writing has transgressed it. You are evidently posting as representative of your company as you constantly refer to "we". Steven from qxtelecom makes no secret of this fact and I politely request you do the same.

A list of users of 03 numbers is on SAYNOTO0870.COM here.

Hi Towry,

Yap, Sky used to charge 0870 like BT, then hike the price to 10p I think. But post 1st August, they have now make it normal call:

http://www.sky.com/portal/site/skycom/skyproducts/skytalk/pricesandoptions

UK calls are to 01, 02, 03 & 0870 numbers only (excludes calls to Channel Islands, indirect access numbers, dial-up Internet access and 070 numbers). C

qxtelecom wrote on Aug 4^th, 2009 at 10:28am:

Thanks for the info. it has made me look a bit more carefully at the actual non-geo numbers, good to see Sky have now included 0870 numbers as part of the free package, however firms like Free-UK-numbers appear to encourage their clients to opt for 0871 or 0701 numbers.
Sky also make no mention of the charges for 0844/5 numbers on this web page, on my last price change letter dated 28/3/08 these were listed as 6p per minute, I wonder if these are changing.
Being a cynic I suspect that most higher rate non geo lines have migrated away from 0870, which is why Sky are now prepared to give 0870's away for free.
Looks as though i will still need to study SAYNOTO0870 for most of my non geo calls.

I hadn't realised the ofcom rules were so flakey.

My phone company changed 0870 call charges to be the same as standard national calls from 1st August - I just presumed that's what everyone was doing. This makes 0870 free on some tariffs.

My phone company - The Phone Co-op - don't charge a connection fee either on chargeable calls either.

I've never really thought of the Phone Co-op as price competitive (I'm with them for ethical reasons). Given what my mobile company are trying to charge for 08xx calls, I might investigate The Phone Co-op's mobile tariffs, too.