SAYNOTO0870.COM - 03 termination rates

japitts

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North Bristol
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03 termination rates
Mar 22^nd, 2011 at 1:42pm

Apologies if this is old news to anyone on here, I couldn't see anything mentioned but it seems pretty relevant... I randomly found this whilst digging around on the Ofcom site (as you do!)

http://tinyurl.com/694acmd

In short, even though telcos are required to treat 03 the same as 01/02, it looks like BT is allowed to charge other telcos 087x rates and Everything Everywhere (Orange & T-Mobile) have complained.

From my (possibly incomplete) knowledge of this, it does seem a little strange - if you and I get 01/02/03 all the same, then why shouldn't the wholesale rates be the same? Isn't this the whole point? Or have 087x termination rates come down, to the point where they should be the same as geographic calls anyway?

I found somewhere in the PDF file, that Ofcom's reasoning was partly based on the low call volumes to 03x meaning that the problem "wasn't as bad as EE make out". I'm not sure where to start with that.

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Dave

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Re: 03 termination rates
Reply #1 - Mar 23^rd, 2011 at 1:12pm

I have always (and still do) think that the termination charges of 03 (and 0870) calls should be the same¹ as those of geographic calls. I am alarmed that the onward termination of 03/0870 non-geographic calls to geographic numbers appears to have been taken into consideration.

I make these comments having read only the summary of the determination. If there is something else I've missed, then I will appreciate clarification.

In particular, read the following paragraph:

Quote:

1.5.1 BT aligned the termination rates for calls to 03 numbers with the termination rates for calls to 0870 numbers, as set in the 0870 Determination. We have therefore considered whether the appropriate analytical framework to determine this Dispute is that used in the 0870 Determination. In the 0870 Determination, the termination rates were set with a view to enabling OCPs to retail 0870 calls at geographic call rates. They were calculated on the basis of the cost of termination of 0870 calls, i.e. geographic call termination charges plus relevant additional costs of termination for 0870 calls on a fully allocated cost basis.

Whilst it does say that 0870 (and hence 03) termination rates were set "with a view to enabling OCPs to retail 0870 calls at geographic call rates", which stands to reason, it goes on say that they are higher than geographic ones!

Of course, where an NGN 'translates' to a geographic one, there will be a cost on the operator of the NGN for passing the call onto the operator of the geographic number (assuming that they're not the same operator). Perhaps a simple diagram will help:

Caller ----- Provider A ========== Provider B ========== Provider C ----- Receiver

Explanation

Caller
rings 03 number
Provider A
is
Caller
's telephone company
Provider B
operates 03 number on behalf of
Receiver
and passes call to
Receiver
's landline number operated by
Provider C
Provider C
is
Receiver
's landline provider

So Provider B incurs the Geographic termination charge with Provider C. I say that this should be met by Provider B's customer (the receiving party) and not the caller (Provider A's customer). I therefore agree with the OP here; the cost of 03 termination should be aligned with that of geographic numbers.

Why calculate the cost of 03 termination on the basis of it being a translation service? What about where a 03 number doesn't translate? It would appear that there would be an excess in those cases.

It perhaps is also interesting to note the statement (MS Word file) on BT Wholesale Carrier Price List on how it has arrived at the termination payments it makes where BT customers call other providers' 03 numbers:
Quote:

In calculating its rates for 03, BT has had to take into account its current pricing for calls to geographic numbers and the costs associated with the level of discount available to these calls within call packages in order to comply with the above statement. As part of this costs analysis BT has looked at the charges it pays out to other Communications Providers for geographic calls and has calculated an average outpayment based on these rates.

They may not be exactly the same, owing to the fact that for geographic calls, there is far-end handover and for non-geographic calls there is near-end handover.

Basically, with a geographic call, the originating communications provider (OCP; the caller's network) carries the call as near to its destination as possible (assuming that the two providers interconnect at that location) and then hands the call over. The OCP knows the location of the receiving party (point of termination) from the STD prefix. The further away from the point of termination the call is handed over to the terminating communications provider (TCP), the more the TCP charges for termination. So there is an incentive to hand over as near to the point of termination as possible.

With a non-geographic number, the OCP doesn't know the location of the receiving party, so hands over the call at the earliest interconnection point. So, on average, TCPs will carry non-geographic calls further than geographic ones.

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