The Ofcom consultation on Simplifying Non-Geographic Numbers proposes a change that has long been called for in this forum - 080 and 0500 to be "free to caller" in all cases.

The question of who is to pay the extra cost involved in originating "freephone" calls from mobiles does however need to be resolved.

The Ofcom consultation appears not to address the question of what is to happen as a result of the steadily reducing levels of termination payment for calls to mobiles. It has always been my view that there should be a single answer to both questions.

Ofcom does not state a preference, however its arguments weigh heavily towards replicating the equivalent of the present termination rate premium, i.e. passing the additional cost to the person who is paying for the call anyway - the service provider in the case of Freephone calls.

This seems to me to be counter-intuitive, especially in a situation where Ofcom is seeking to remove external subsidy for the cost of mobile telephony.

Whilst there may have been an argument for external subsidy to get the mobile networks up and running and there remains a social argument for continuing to subsidise the availability of a telephone connection for those of lesser financial means, the former has expired and the latter is poorly answered by a subsidy to all mobile users.

I would argue strongly for there to have to be some equivalent of a "line rental" charge for mobile services. This would (as with landlines) meet the costs associated with receiving incoming calls and also be sufficient to enable services such as Freephone to be provided on the same terms (to service providers) as calls originated from landlines.

I therefore favour the option for Freephone service providers to incur no additional cost for receiving calls from mobiles. The consequences of any alternative approach are likely to be contrary to the objectives of the simplification project.

It is for the mobile providers to determine how their customers pay to meet the costs of the services they offer. They are already facing a much larger issue with the reduction of the incoming termination fees. I believe that the additional costs of not being fully reimbursed for originating Freephone calls should be addressed in the same way, whatever that may be. If they are to continue to rely on call revenues to cover all network operations then call and package charges will have to be increased to meet both situations.

Ofcom has noted that the increased call volumes generated as a result of making Freephone free could cause some Freephone service providers to withdraw altogether, or modify their offering. I see such an effect as unavoidable. The possibility of some seeking to block calls from mobiles because of an additional cost should be avoided. In the context of a "simplification", it would not make sense for Ofcom to propose an alternative range for "free to landline caller" numbers, although having two different classes of Freephone would have to be considered if there were to be two different cost structures. Had the issue not been raised in the context of "simplification", then it could have been proper for Ofcom to offer the idea for consideration.

I hope that other who have contributed to discussions on this topic will add their views.

It will also be interesting to hear 0800Buster and others celebrate success for their campaign! - or perhaps bemoan the shutting down of their business.

Dave wrote on Dec 18^th, 2010 at 8:14pm:

If giffgaff can do it, why not others?

Heinz wrote on Dec 18^th, 2010 at 8:26pm:

Ofcom has announced that this is what will happen - they will have to "do it" - I am not sure where the idea that some will not comply came from.

We are discussing how it may be achieved by regulation. Compelling every existing provider to mirror the tactics used by market entrants is to enforce a cartel. If new entrants were to be effectively denied the opportunity to offer competitive benefits over the prevailing norm in order to build up a customer base, the market would be closed. Large established players often have the resources necessary to stamp out new entrants, by matching or exceeding their special deals so as to take out their usp, if they perceive a threat. This need only be applied for as long as is necessary to halt the progress of the interloper. It is arguable as to whether this is a good or bad feature of competitive markets.

Is giffgaff celebrating the Ofcom announcement?

I'm probably missing something obvious to everyone else, but I wonder whether we need freephone numbers at all, if Ofcom regulates so that the price of geographic and non-geographic calls is transparent.
Everyone with access to a landline can get included or cheap calls to 01 02 and 03 numbers. Everyone with a mobile has either some included minutes to 01 02 and 03 numbers, or can make a one-minute call for 8p (Asda).  Therefore, companies that want to attract business can advertise 01 02 or 03 numbers, including an option that they'll call us back if we ring (or text) them. This would cost them less than an 0800 number does now.
I don't know how many people rely on street call boxes to call 0800. I think BT makes a huge charge to the recipient for such calls, because I notice that many 0800 numbers do not work from call boxes, and I deduce that there must be an option for 0800 owners to refuse calls from call boxes. I don't know how this affects Childline, for instance. I surmise that distressed children would usually prefer an option to text Childline to call them back on their mobile, and that this would be cheaper for Childline than their present 0800 number.
If 0800 is abolished, we could then have a clear distinction between
1. Honest calls to honest companies that use 01 02 or 03 numbers.
2. Annoying calls to grasping or ignorant companies that use 08xx. I'd like Ofcom to regulate that these have to be charged and advertised on the lines 'costing what (if anything) you would pay to call an 01 02 or 03 number, plus an x pence a minute surcharge, most of which is passed on to whoever you are calling.' (I say 'most', because I assume the telecom providers must deduct a handling fee.)
3. Foolish calls to (more or less) honest companies that use 09, with a similar regulation about making clear the revenue for the recipient.