Welcome to the forum and well done with what you have laid out.

It may help to offer some standard terminology which is used to describe who is who.

Service Provider (SP): the person / organisation called - the "bank / Local Government Office" in your example.
Originating Communications Provider (OCP): the caller's telco - Sky in your example.
Terminating Communications Provider (TCP): the SP's telco - the "third party company" in your example.

Once the 0845 call has been terminated at the exchange, it may be routed in any number of ways. Using a line rented from another telco is but one of many possibilities. This phase of the operation obviously has to be paid for in some way.

With each type of non-geographic number an arrangement exists between the OCP and the TCP as to how money changes hands. This is however done on a standardised basis. In the case of all 0845 numbers, every OCP pays every TCP around 2p per minute. It is then for the OCP to decide how much of this to recover from the caller through its call charge.

At present, this 2p per minute, or whatever is the rate for the particular type of number, represents an addition to the "termination fee" which is paid, in the same way that it is hidden within the call charge. When Ofcom introduces the "unbundled tariff", these amounts will be further standardised and brought into the open.

The 2p per minute (in this case) will be known as the "Service Charge" and will have to be declared by the SP.
Whatever is added to give the call charge will be known as the "Access Charge" and will have to be declared by the OCP.
Ofcom intends that there be only one "Access Charge" per tariff, covering all types of number to which it applies.

Ofcom refers to this as "Simplifying Non-Geographic Numbers". Having two separate elements to consider, rather than one, may seem to be more complicated, however the inherent complexity of this arrangement is presently hidden from view - prompting the question which you posed and the answer which has been provided.


How the TCP "shares the revenue" with the SP is a matter between them. One must assume that the benefit derived by the TCP is somehow reflected in the cost to the SP. Any SP which claims that it is not must explain why it is allowing itself to be "ripped off" by its telco.


At the caller's end one would expect the value of the "Service Charge" to be a surcharge on the cost of calling a geographic number, however things are not that simple.

Calls to geographic numbers are now generally included in Call Plans and Bundles and thereby not normally subject to a call charge. Those who call geographic numbers outside the terms of their Call Plan or Bundle incur a "penalty charge". In some cases this "penalty charge" may actually be greater than the call charge for calling some numbers that are subject to a "Service Charge".

The issue is further complicated where the OCP includes calls to some (generally only 0845) such numbers within the terms of its Call Plan. In this case they are currently collecting the Service Charge from all subscribers to the plan.


I will not go further into detail here, however I will comment that certain special arrangements presently apply to BT as a OCP, on top of the general case which is described above. These will be lifted as part of the Ofcom "Simplifying Non-Geographic Numbers" project. In fact, Ofcom has no choice, as BT's share of the calls market has long been below the level where such special regulation could be sustained under the law. Regulation of BT's charges for geographic calls was lifted years ago.

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To address the specific points made, in the light of the above:

In this context, the term "Service Provider" is formally used to refer to "the bank", rather than to any provider of telephone service (there is nothing wrong with the use of the term to refer to a telco in standard English).

Once the 0845 call has been terminated at the "0845 exchange" it may be delivered in any number of ways.

The difference in the call charge for a 0845 number and a geographic number is what emerges from two separate elements of a telephone tariff. It will generally be positive, but may be zero or even negative.

One may analyse that difference with respect to the "Service Charge", however the level of the Service Charge is constant for the type of number called, regardless of the call charge levied.

(The term "revenue sharing", alongside some aspects of the unique BT regulations, have naturally given rise to the idea that the amount paid to the person called is determined as a proportion of what the caller pays. There is some truth in the underlying idea, but that is not how it actually works.)

I hope that this is helpful. I also hope that this will all become clearer to everyone once Ofcom has made its definitive announcement about how the "unbundled tariff" will work, early in the New Year. The concept of the "unbundled tariff" should be easy to grasp; the problem will be in relating it to the hideously complicated situation that exists at present.

Thank you for your replies.
Most enlightening.
It is a great pity that these explanations are not more widely available.

SilentCallsVictim wrote on Dec 7^th, 2012 at 1:07pm:
Ofcom is only interested in silencing consumers. Early consultations attracted hundreds of responses from the general public. More recent ones attracted very few. The regulator has therefore succeeded. It created this monster and it could, if it wished, get rid of it just as quickly. It will not as there are too many vested powerful interests. We can debate service charges, access charges and call cost verbiage as much as we like, but it still brings us no closer to resolving the core problem - the public is subsidizing telephone systems through premium call rates to regular numbers where no such premium is warranted.

When faced with the message "Call us now on 0842 789 7890 (service charge of 3 pence per minute applies, plus your standard network access charge)" I guess that at least initially, most people will dismiss the access charge as likely to be only a couple of pence, and not look it up, when in fact it can be anything up to about 35 pence per minute from mobile phones.

The parallel here is that voting for contestants on TV shows, entering competitions, and donating by text is already done in a similar way: "Text the word 'donate10' to 12345. The text message will cost you 10 pounds plus your standard network charge", but here the "network charge" is a small amount (perhaps 10 to 12 pence) compared to the main payment amount. For phone calls to 084 and 087 numbers it's the other way round: the benefit to who you are calling is only about 1 to 5 pence per minute for a total call price of up to 41 pence per minute.

As well as the consumer being ripped off, the companies employing 084 and 087 numbers for their customers to contact them have themselves been ripped off by the telecoms companies adding the huge access charges on top of the service charge while using terms like "lo-call" rate to try to hide that fact from all parties. I do hope the new way that call prices will have to be publicised pushes those call prices down once it becomes clear to the paying public who is making what out of these types of calls. Most people would assume that the called-party are the ones taking the major share of the money, when in fact that is not the case when calling from a mobile phone.

Including in packages calls to numbers that carry a premium (or benefit) to the user is not the answer. This simply means that all subscribers to the provider in question cover the cost of the premiums run up by some customers. It also gives users of these numbers an excuse to make out that they don't benefit by citing the exceptions such as Santander. This is a practice which really annoys me as they are actively trying to cover up the fact that they benefit rather than being open about it, which is the point of the Unbundled Tariff.

The following comments and answers are based on the latest declared Ofcom position.

The forthcoming statement, expected in January, will represent the final position on many points.

catj wrote on Dec 15^th, 2012 at 10:05pm:

PhonePayPlus only regulates services provided on numbers that are classified as being for the provision of "Premium Rate Services". This includes 0871/2/3. It is assumed that 0870 will readopt a similar level of Service Charge and therefore (re-)join this group.

It would make little sense for 084 numbers (with the present level of use) to be regulated by PhonepayPlus. This is not what is proposed.

My personal view is that the 084 range will have to be re-assessed after we have seen the actual effect of the requirement for Service Charge declaration. It is my belief that the vast majority of 084 users could not sustain this use with the Service Charge declared. (I can see only very few situations where a Service Charge of less than 10p per minute could be justified, given the true cost of handling a voice telephone call.) Ofcom does not share this view, however it is adamant that the Service Charge declaration must be effectively enforced.

catj wrote on Dec 15^th, 2012 at 10:05pm:

Ofcom is determined that this information be given on bills. It may be that the relevant rate of Access Charge will be shown separately, with the calls to which it applies being marked, although showing only the total call cost.

My view is that the emphasis needs to be on the Service Charge and Access Charge being clearly known by the caller BEFORE they decide to make a particular call. So long as the relevant elements can be checked and extracted from the information given on a bill, I am content.

(N.B. Ofcom is strongly opposed to the use of a connection fee and a rate per minute together. It sees a flat connection fee as only being applicable as an Access Charge alongside a fixed fee Service Charge. Where the charge is per minute, Ofcom is prepared to tolerate a minimum duration as the only means of covering the costs incurred in connecting the call.)

catj wrote on Dec 15^th, 2012 at 10:05pm:

The Service Charge will be set for all calls to the number, within limits for each group of numbers, e.g. 0845, 0844/3, 087.

The Access Charge will be set for all calls under the terms of a particular tariff.

The problem with "caps" on prices that are otherwise set in a market is that they readily become the fixed charge. If a cap were to be set on the level of the Access Charge, so as not to restrict the potential for a new mobile provider to enter the market, then this could swiftly become the level charged by everybody. Service Providers would refer to the Access Charge as being up to xx pence per minute, setting an expectation which anyone wishing to charge less would find hard to overcome.

Ofcom has now clearly stepped away from caps as a preference. I think it likely, and right, that the option to apply caps be held back until one sees how they may perhaps need to be applied to cover specific aspects of the market position that develops.

catj wrote on Dec 15^th, 2012 at 10:05pm:

Ofcom is determined that there be only a single Access Charge, although I believe that it may permit a dual system, with a higher rate of Access Charge for the higher rated PRS numbers.

The present absurdly high rates of Access Charge for lower rated ranges on mobiles are a feature of the bundled tariff and a desire to have only a small number of charge bands. Given that retail providers will only have to worry about setting their Access Charges, and there will be no more than two of them, this particular issue will go away. I believe that Access Charges will be sufficiently visible to ensure that they are set at reasonable levels.

(continued …)

Wow.
Having innocently started this thread in order to understand the situation, I now feel I have intruded on a private conversation.
Anyhow, fascinating reading and very informative. Thank you again.
As it it obvious to me that my knowledge level is "Conference" and most of you guys are "Premier League" then allow me to make a few points, perhaps on behalf of the silent majority.
I always believed that premium rate numbers were introduced to allow service based companies to carry on their businesses over the telephone or via a broadband connection.
These were 0870 numbers.
However, the new breed of manager now running UK companies decided that their companies could become more efficient by centralising their telecommunications functions, adopting the call centre concept and providing their customers with an 0845 number, which had somehow been accepted by most people as making a "local call" from anywhere in the country.
If this was in fact true, then fine.
However, the premium rate number providers then discovered that they could "sell" the "local call" concept to many diverse organisations, such as doctors surgeries, dentists, government departments et al.
The selling proposition seems to have been call revenue sharing or "free telecoms equipment".
It then seems that call providers decided they would like to "eat at the trough" and 0845 numbers quickly premium rate numbers but with the attraction of being able to be "sold" to the public as "lo-cost" or even worse "local calls".
Why does it always seem that the UK has become "rip-off" capitol of the world. Why do I have to phone a premium rate number to talk to my local library.
Why, when I buy into the concept of on-line banking, do I now find that I an forced to phone the equivalent of premium rate numbers if I have a problem.
Reading the posts it seems to me that an acceptance of the situation is developing. A bit like the drip feed techniques used by government departments.
Please don't get me wrong, I am not criticising the previous posts or the contributers.
It is just that apparently, I naively believed that this website and forum was about getting rid of premium rate numbers.
Perhaps it is and I just don't understand.
All I want to do is to be able to make telephone calls and pay a fair and correct rate to my selected call provider.