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Agenda Item (3) NCCN908, 958, 985, 986 and 1007 0800, 0845 and 0870 transit charging (All)

Sean Hartley took the Focus Group through the previously circulated slide (see attached) in relation to BTs ladder pricing. From BTs perspective it is the terminator which is setting up the number and driving value, therefore the money should flow through to the Service Provider. BT does not believe that this is happening and as a result it has introduced ladder pricing (variable wholesale charges according to the level of retail charge) through the NCCNs listed above.

Transit calls have always received BT pricing and BT would like to be able to set a default termination price. Either BT is free to set a rate or operators are free to set their own rates; it is a simple either / or.

Claire Robinson asked how the billing would work? Stephen furthered this point by asking how BT could charge by a mobile operators retail price when even T-Mobile didnt know the retail prices of those MVNOs using its networks. MNOs according to Stephen fluctuate their price points on a monthly basis and he questioned how BT was able to bill such changes? The developments were in his opinion only going to exacerbate the current difficulties. Not to mention that the prices charged by MVNOs and for international calls are very different to those charged by T-Mobile at a retail level and that fluctuation in their pricing could affect the band charges. Stephen argued that the smaller gaps between tiers in BTs NCCN 1007 pricing ladder means that monthly fluctuations increase the chances of an operator moving between pricing bands from one period to the next in comparison to the wider bands of NCCN956.

Stephen acknowledged that there were no precedents for BT billing in this manner and whilst he found the offer of BT to act as a regulator interesting it was felt that applying such a model without consideration would only lead to chaos in the marketplace.

Andy Martin responded that MNOs should simply reduce their charges for calling 080 numbers to which Stephen responded that the mobile market was competitive and therefore it was inappropriate to constrain MNOs in this manner. Geoff concurred that Ofcom would need to be able to justify any attempt to regulate the mobile market on competition grounds.

There followed a debate on the exact pricing charged by mobile operators for calls to 080 numbers with Stephen responding from T-Mobiles perspective.

Warren Berdo argued that the PRS Scope Review has recognised that there was a growth in mobile usage and pointed to the price transparency measures taken on 0870 for calls which cost only between 7 and 8ppm. He contrasted this with the confusion caused to consumers by the mobile operators charging between 30 and 40ppm for a freephone call. Stephen pointed out that any 080 call for which there is a charge has an announcement played before the start of the call as demanded under the Numbering Plan.

Thomas Gransaalke agreed with Stephen and asked why BT was introducing pricing which penalised originators. Pete Farmer suggested that it was a financially compelling argument and recommended an approach which allowed revenue share once the fair and reasonable costs of origination were covered. Stephen highlighted that the impact would affect those organisations which had arranged with the mobile operators for their calls to be made at no charge, citing DWP and THA organisations who had different commercial arrangements to ensure no retail charges were applied. For THA in particular MNOs would be operating at a loss. Sean indicated that BT had always been willing to discuss the implications of NCCN911.

Justin asked BT how they believe they had met the third condition in relation to NCCN 956 in light of the Focus groups debate and how it could be practicable to bill. Claire also introduced the impact the changes have on the transit market where Cable&Wireless Worldwide is forced to price at the highest possible rate as there is no billing solution in place.

Stephen added that BTs use of publicly available information had essentially been given the ok by Ofcom, however it would be entirely impractical to require T-Mobiles Financial Director to regularly sign off average T-Mobile and wholesale rates.

Sean asked how Stephen was able to prove that the average rate would move between tariff bands each month if T-Mobile was unable to calculate its average price. Stephen responded that he had modelled scenarios from an un-assured database which revealed the various changes across the mix. Such information would not be robust enough to be signed off by T-Mobiles Financial Director as being accurate. When asked why T-Mobile could not take a longer period Stephen responded that they bill from actuals not approximations. T-Mobile require to be charged the right amount and not to have to continually catch up in terms of billing particularly as some of their MVNOs are very sizable with millions of customers and therefore it has a significant impact. Doubt was cast upon the difference in pricing between MNO and MVNOs.

Andy asked Ofcom to confirm that their intention was for 080 calls to be free or as close to free as possible and stated that Ofcom should step in. Geoff agreed highlighting the forthcoming review and stated that the disputes were necessary sticking plasters ahead of the review.

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