The Cost of Calling Non-Geographic Numbers

How much should we pay for calling an 0845 number? Or an 0871 number? Or an 0800 number?  How many of us know what we are paying now?  Ofcom believe that customer confusion and low price awareness are damaging the market for Non-Geographic Call Services (“NGCS”), so they have been consulting on what can be done to remedy the problem.

 Let’s take 0845 as an example –designed to be a “local rate” call.  BT will charge you either nothing (if within your call allowance) or 2 pence per minute (ppm) for an 0845 call.  Mobile providers charge between 20 and 40ppm.  The designation in Ofcom’s National Telephone Numbering Plan that the number be charged at BT’s local call retail price has come to be meaningless, like many such designations, because it can only be enforced against BT.   Similar problems with the 0870 range led to the “Say No to 0870″ campaign.

 Ofcom has suggested that the way to solve the problem is to break the cost of the call into two elements – the Access Charge, which is the amount retained by the customer’s service provider, and the Service Charge, which is the amount paid to the operator that terminates the call and effectively provides the service.  The idea is that breaking it down like this so that the calling customer can see who gets what will keep the respective parties honest and competitive constraints will apply. 

 However, there are flaws to this theory.  The customer is no more likely to know and recall their provider’s Access Charge than they are to know the price of calling NGCS now.  Telecoms service providers do not compete on the cost of NGCS.  Instead, it’s all about the bundle, the inclusive call package, and such numbers tend not to be included in the package.

 Ofcom is likely to come under pressure to agree to more than one Access Charge per provider so that, for example, the originating providers can earn more on a premium rate (09) call than on an 0871 call, and an 0844 call.  So the customer may have to remember three Access Charges for his fixed line provider and three for his mobile provider, making a total of six.  To which he would then have to add the Service Charge (assuming it were advertised adequately) to obtain the cost of the call.  How does this level of complication and sophistication alleviate confusion and improve consumer price awareness?

 Most of the time, the terminating service providers do not compete on their Service Charges.  They sometimes do on the price point for services such as chat lines, which could be advertised side by side.  But numbers used for television talent shows or for calling utilities and banks are not subject to competitive pressures because the customer is effectively “locked in” and has no choice but to call that number if they want to use the service (which, in the case of utilities etc, they have already purchased).

 Arguably, non-geographic numbers, by their very nature, require a firmer regulatory hand than services which are subject to more obvious competitive pressures at the retail level.  Some have argued that Ofcom should take a more interventionist approach and prescribe maximum prices for calls to NGCS.  The new EU Framework, due to be transposed into UK law by May 25^th, allows them to do this.  This could lead to us paying, say, 5 or 6 pence per minute for a call to an 0844 number, rather than the up to 76ppm which one mobile provider charges now.

 Ofcom are proposing just that for freephone numbers.  Ofcom believe that free should mean free for calls to 0800.  This would mean a reduction in price from anything up to 40ppm now to zero.

 If Ofcom applied maximum prices to all the 08 and 09 number ranges, they estimate that it would take up to £0.5 Billion in revenue away from the big mobile phone companies.  As a result, they would doubtless spend the next three years in court as their decisions were appealed.  So it is somewhat of a political hot potato. 

 Ofcom may decide to take what they see as a pragmatic position in an attempt to keep as many telcos as possible happy. But this is unlikely to improve the situation for the consumer or rejuvenate this failing market.  What they arguably should do is have the courage of their convictions and stop the over-charging of consumers by capping retail charges.

Duct Access – The Devil is in the Detail

The Coalition Government professes to understand the benefits of superfast broadband to businesses and the economy.  Their Broadband Strategy, which was launched in December 2010, explained that:

 “The benefits of superfast broadband have an impact across the whole economy – whether this is through greater scope for tele-working and home-working, which reduces the pressure on the transport network and lowers carbon emissions, or better delivery of public services – such as remote education services.  …  It will reduce costs for consumers and enhance the capability of businesses to communicate and exchange information with their customers and suppliers. This is fundamental to our future prosperity.  …   It is important that the vision of broadband is not limited to domestic users only – the effect on businesses can be just as dramatic.”

But that vision doesn’t seem to have filtered down to Ofcom.  Ofcom have always found it hard to take an interest in anything outside of mass market consumer services.  It doesn’t fit with their economic theories or make an impact on public opinion.  Big brands, bundling and broadcasting are where it’s at, as far as they’re concerned.

When imposing a requirement on BT to open up its ducts to investors in superfast broadband networks (known as “Passive Infrastructure Access”), they nailed their colours to the mast.  In their review of the Wholesale Local Access Market they decided that:

“BT will be obliged to provide PIA services for the purposes of deploying of NGA networks to support services such as broadband, telephony and cable TV, but not, at this stage, leased lines. Further consideration will be given to extending the scope of the remedy to include leased lines in the next business connectivity market review, which is due for completion in 2012.”

 “Leased Lines” is Ofcom jargon for high bandwidth symmetric data services which are BT’s cash cow.  Of course BT doesn’t want to cannibalise this revenue.  Ofcom’s economists put it like this:

 “The use of PIA for arbitrage of BCMR remedies [i.e. leased lines] in this way could then mean that BT was unable to recover its common costs.”

 Which, translated, means:  “We do not wish investors in fibre networks to offer high bandwidth services at affordable prices to small businesses because of the impact it would have on BT’s revenue stream.”

 BT have now published their draft contract for duct access and its terms duly prohibit the use of the duct “for leased line or fixed or mobile backhaul services or for the provision of uncontended service between two business end user premises [or] for any other purpose than for its own Next Generation Access Services”.

Messrs Vaizey and Hunt should be reminded that the Devil is in the detail.

Infrastructure – Share and Share Alike

DCMS recently hosted a workshop on infrastructure sharing which was attended by a broad range of interested parties, including water and electricity companies, fibre network owners and service providers, landowners, regulators and policy makers.

Speakers from the electricity industry explained how allowing fibre to be laid over on their networks is easier on low voltage local poles than on high voltage trunk routes between pylons.   There is already sharing on 60% of low voltage lines, but much less on high voltage lines.  There are a multitude of operational and safety issues to be considered, all of which can probably be overcome.  However, some query whether such networks would remain economically viable given the costs associated with resolving these issues. 

It remains more difficult and more expensive to obtain a wayleave from a private landowner to permit the installation of telecoms network than to deploy electricity pylons.  Wayleaves are a bit of a dark art and can significantly inhibit investment in broadband networks.  So it is hoped by many that the Government will encourage and facilitate dialogue and co-operation between those investors and the landowners.

Many representatives from water companies were present at the event, some of whom were eager to offer access to their pipes on a commercial basis, but all of whom were keen to stress that most sewerage pipes are unsuitable for housing fibre optic cables, principally because they are not wide enough.  Only those within the larger conurbations tend to be suitable, so this might not be helpful for “final third” projects.  Moreover, sewers do not seem to be available on trunk routes, but only on a local network basis.

BT were at pains to insist that their PIA (Passive Infrastructure Access) product, by which they offer access to their ducts and poles, is available on an Open Access basis.  Moreover, they are adamant that other infrastructure owners (by which they mean other telcos) should make their ducts available on a reciprocal basis.  This is somewhat disingenuous.  Firstly, BT are only offering access to their network because Ofcom have found them to have Significant Market Power in the access network and have imposed a regulatory obligation on them (and them alone). 

Secondly, many other networks will be made available on an Open Access basis, either as a condition of receiving State Aid, or because that is their commercial model. But alternative networks should not have to make their networks available as a quid pro quo to BT who is subject to an SMP obligation, which is asymmetric by definition.

Thirdly, BT draws a distinction between local or “access” infrastructure and backhaul or trunk routes.  It refuses to allow access to its network beyond the local exchange because it has not yet been required to do so by Ofcom.  The Government’s ideological position is:  Where you can share, you should. But BT will only do when regulation forces it.

So what with all the limitations on the use of electricity, water and BT networks, we are looking at a big problem in the backhaul network and difficulty in connecting communities with the internet backbone.  Let’s hope that Ofcom does something to address this when it launches its review of the “Business Connectivity” market later this year.  It’s a shame economic regulators have to work in “silos” and can’t be a little more joined up.

The vexed issue of business rates on fibre optic networks was actually the elephant in the room which was barely mentioned.  However, alternative infrastructure sharing does pose a couple of questions:  Firstly, if deploying fibre network on shared infrastructure is cheaper than digging a new trench, what impact would or should this have on the rateable value?  Secondly, different infrastructure sharing commercial models could have different consequences for rates liability.  An infrastructure owner who allows a broadband network operator to deploy fibre on their property would not, one would think, incur a rates bill – the fibre network operator would instead.  But if they prefer, instead to offer a managed product to telcos, then they would be responsible for the rates bill – he who lights the fibre, pays the rates.

Unfortunately, the Coalition ministers have come up against the Sir Humphreys who are desperate not to disturb the fragile house of cards that is the ratings system.  Plus ça change…

“You might say that, Minister…”

In the wake of the Vince Cable debacle before Christmas, which led to him being stripped of responsibility for the proposed acquisition by Rupert Murdoch’s News Corporation of the remaining shares in BSkyB, the Government has now issued a written statement detailing all of the responsibilities which have been transferred from BIS to DCMS.  As well as losing merger and competition cases in the media and telecoms sectors, BIS has also lost telecoms policy (including implementation of EU telecoms policy), broadband policy (including BDUK) and internet policy. 

Telecoms is an important policy area which has rested with the department of trade (as BIS then was) since competition was introduced in the 1980s.  Some might question whether it is sensible to charge the department of Culture, Media and Sport with looking after an area of such crucial importance to the UK economy.  Stephen Timms, MP, who had ministerial responsibility for telecoms in the Labour government, has described it as a “disaster” and DCMS as a “lightweight department”.  And yet the trend for involving DCMS in telecoms policy began under the Labour government. 

The author of the Digital Britain report in 2009, the Communications Minister Stephen Carter (a.k.a. Lord Carter of Barnes), reported to both Peter Mandelson at BIS and Ben Bradshaw at DCMS.  The Digital Economy Act was also a joint effort.  You can even trace this back to the Communications Act of 2003 which established Ofcom, a merger of Oftel with the various broadcasting authorities. ”Media” begat “new media” and the telecoms industry grew up to become the “communications sector”.   Just as the IT, telecoms, media and content industries have converged, so have government departments.  

Moreover, the civil servants at BIS, who have been working on telecoms policy under both Labour and the Coalition, will no doubt transfer across to DCMS or “work closely” with DCMS to continue their work.  Ed Vaizey and Jeremy Hunt were, and still are, the ministers in charge of Digital Britain.

Lord Carter appeared to understand the importance of the country’s communications infrastructure to the UK economy as a whole:

“Like energy and transport, the demands upon the infrastructure are constantly growing and the challenge of coping with these demands will move from complex to critical if we fail to take the necessary action.  … Next generation fixed fibre and cable networks offer not just conventional high-definition video enternatinment and games, but potentially more revolutionary benefits for our economy and society – telepresence, e-healthcare in the home and, for small and medium sized businesses, access to cloud computing…”

So it’s vital that DCMS gets it right.  Through the BDUK tender process, the Coalition Government now has the chance to introduce competition and innovation in the provision of superfast (by which I mean at least 40 Mbps, symmetric) broadband to all those currently struggling with connectivity.  A mark of the success of the policy team will be the exent to which a broad range of ventures and enterprises are able successfully to bid to deliver these projects.  A country carpeted with BT’s “up to” 40 Mbps fibre-to-the-cabinet would, some might say, represent a policy failure.

Rural Broadband Pilots

In the Comprehensive Spending Review on October 20th, the government announced that the four pilot projects to be run by Broadband Delivery UK will be in the Highlands and Islands, North Yorkshire, Cumbria and Herefordshire.  The funding for this is essentially being redirected away from the BBC.  £230m is left over from the budget allocated to the Digital Switchover in previous years.  The BBC will be required to contribute a further £150m in each of 2013-14 and 2014-15, bringing the total to £530m.  This could be increased to £830m if the BBC is required to contribute the same amount in 2015-16 and 2016-17 (which is when this current settlement with the BBC expires).

The project to provide superfast broadband to Cornwall is costing £132m, so on the face of it £230m in the next two to three years would not go far when spread across the four pilot areas.  However, we have been given to understand by BDUK that these pilots are going to be subsidised for initial capex, rather than funded entirely, perhaps to the tune of £5-10m each.  It is also expected that they will be able to utilise existing public sector networks in those areas for the middle mile element. 

We expect the relevant bodies to go out to tender for the work as early as this Winter.  It will be fascinating to watch it play out.

Parliament & Internet

Yesterday I attended the annual Parliament & the Internet conference, which is organised by the All Party Parliamentary Communications Group and Political Intelligence.  It brings together policy makers and those active in the broadband industry in the UK.  It’s always an illuminating event, though it would be encouraging to see a greater level of attendance from BIS, Ofcom and MPs. 

Martha Lane Fox of Race Online seeks to address the fact that 9 million UK adults have never used the Internet and that a high proportion of those who are not online are over 60.  One of the ways in which Internet access could benefit this age group in particular is digital healthcare.  Patients should be able to receive test results and other communications from their doctors and consultants by email.  Why are emails still unheard of in the NHS? Over reliance on faxes, secretaries and the postal system leads to costly inefficiencies.   The advent of high speed broadband means that patients can use video links for remote consultations and to aid diagnosis.  It can enable home-based patients to take their own readings and tests and report the results to the doctor over the Internet.

However, whilst email is possible with a relatively modest speed of connection, two way video links require greater bandwidth.  To avoid the digital exclusion of those that live in the third of the country that is currently unable to get broadband we need to think seriously about how to provide connectivity, preferably high speed connectivity, to those rural areas.  This is where INCA comes in.  The CEO of INCA, Malcolm Corbett, presented a map of Great Britain by constituency, illustrating graphically which constituencies are unlikely to receive broadband from the private sector alone.  INCA advocates that the most effective way to deliver high speed broadband to these under-served communities is in the form of joint public sector/ private sector/ community initiatives, which can also be supported by gap funding to help serve the most hard to reach premises.

This chimes nicely with the Coalition Government’s notion of a Big Society – redistributing power from the central state to local communities who take responsibility for their own outcomes.  Ed Vaizey, Minister for Culture, Communications and the Creative Industries, gave a speech to the conference in which he advocated bespoke solutions for rural communities and endorsed INCA’s approach.  This Government believes that strategic interventions in rural areas, utilising local knowledge of how and where services should be delivered, is preferable to a top-down approach.

Having undertaken a theoretical exercise to study NGA deployment solutions for the final third, the Government will announce in a few weeks’ time the three pilot areas BDUK has identified for NGA investment.  It is hoped that these will help the Government understand its role in coordinating the specification and the funding for rural networks.

Given that only limited funds are available from the public purse, Ed Vaizey recognises the importance of helping by simply removing barriers to investment.  Whilst it is a step forward that Ofcom have finally decided to force BT to open up its ducts and poles to competitors (after resisting for at least 10 years) investment in superfast broadband will continue to be stifled for as long as the VOA presides over a regime which imposes inequitable business rates on fibre in the last mile.  It is understandable that the Treasury cannot afford to reduce the income it receives from this form of taxation but, since local loop fibre will presumably result in incremental income for the Government, selective exemptions could and should be applied to projects in the final third.

The ITSPA workshop on number porting in an IP world highlighted the fact that the UK’s telecoms network is creaking under the very 20^th Century system of routing calls to a ported number via the original range holder’s network.  Not only does the absence of a next generation call routing database lead to inefficient call routing (which benefits no-one but BT, over whose network the calls transit) but it also exacerbates the strain on numbering resources.  Ofcom still allocates numbers in blocks of 10,000 (sometimes 1,000) for each area code, so that communications providers are left hoarding thousands of unused numbers.  As a result, the UK is fast running out of numbers.  A numbering database would solve these problems and bring the UK into the 21^st Century and in line with France, Spain, Portugal, Greece, the Netherlands, and many more.  The Government should be encouraging this.

The new European Framework Directive (amending the Universal Service Directive) seeks to ensure that telephone numbers can be ported within 24 hours of a subscriber contracting with a new service provider.  So keen is the Government to implement EU directives to the minimum extent possible, avoiding any “gold plating”, that it is failing to appreciate that, whilst it may seem on paper that the UK’s migration and porting processes enable consumers to switch service providers relatively quickly, in reality the system is completely broken.  Many consumers who are with non-BT service providers are unable to switch away from those service providers at all or without a great deal of delay.  The Government should remove its blinkers and consider complying with the spirit of European regulations (which are put in place to protect consumers) rather than the letter.

Finally, it would be helpful and somewhat appropriate if mobile/ wifi connectivity could be available in the conference rooms at Portcullis House in time for next year’s conference.

Broadband Delivery UK

BDUK has been created within BIS as a delivery vehicle for the 2 Mbit/s Universal Service Commitment (USC) and for increasing access to super-fast broadband.  On July 15th, BDUK hosted an Industry Day which was potentially of great significance to the development of super-fast broadband in the UK.  The press disappointingly focussed on Jeremy Hunt’s announcement that fulfillment of the 2 Mbit/s Universal Service Commitment will be pushed back from 2012 to 2015.  But this missed the bigger picture, which is much more interesting.  This government has rejected a top-down approach to filling the gaps in next generation access.  Instead, they will encourage and enable local initiatives by removing barriers to investment.  For example, they are considering utilising the networks of telecoms providers and other utilities for the installation of fibre networks; exploring the re-use of public sector networks (such as those of local authorities and the national education network); reforming the process for granting wayleaves; and obtaining clarity from the EU on State Aid rules.

Only the “irreducible core” of the hardest to reach 160,00 or so premises will be served by the minimum 2 Mbit/s USC.  The remainder of the “final third” of the country will, it is intended, be served by superfast broadband.  This will be done with the oversight of BDUK, but with regional and local involvement. 

In order to understand potential commercial models in detail, BDUK are undertaking a “USC Theoretical Exercise”.  Suppliers will be invited to propose complete solutions for three real rural locations (one in the Highlands of Scotland, one near Lancaster and one in South Wales) and they will be provided with details of existing infrastructure and assets to assist them.  From this work, BDUK will develop preferred commercial models by the end of 2010, from which they will begin a procurement process to fulfill the  Universal Service Commitment, using 2 Mbit/s as a minimum but by no means maximum.

In terms of superfast broadband deployment, BDUK are, with the help of local authorities, Regional Development Agencies and the Devolved Assemblies, creating a short list of three locations where BDUK will initiate real superfast broadband pilots in rural and/or hard to reach areas.  (The Government are clear that superfast means symmetric speeds of at least 20 Mbit/s today, probably at least 50 Mbit/s by 2015 and up to 200 Mbit/s after that.)  These pilot projects will be subsidised to the tune of £5m to £10 m each, for initial capital expenditure, not for ongoing operational expenses.  Additional funds, such as from the EU, will also be utilised.  Importantly, the Government intend these projects to really test the boundaries of consumer demand, to be future-proof and to provide a lasting legacy for those local communities.   It is expected that the Government will go out to tender for the chosen locations this winter and that the pilot projects will be delivered in the second half of 2011. 

Once the lessons have been learned from the pilot projects, it is envisaged that further funding will be in the form of public sector investment as part of commercially viable schemes.  It is good to see that the Government is thinking outside the box, and not expecting all the answers to come from BT and Virgin Media.  By seeking community and public sector involvement and by encouraging partnerships and cooperation, we are likely to see networks which cost less to deploy and which deliver more of what consumers want and need. 

Also on July 15^th, BIS published a discussion paper which seeks to prompt a discussion about the merits of using existing infrastructure networks, including telecoms, electricity and the sewers, to facilitate deployment of next generation access networks.   Ofcom’s recent review of the wholesale local access market proposed that BT should be obliged to offer access to its ducts and poles where it has market power, i.e. in the access market.  But the new EU framework directive allows regulators to impose infrastructure sharing obligations on operators regardless of market power.  This could mean opening up Virgin’s network and also BT’s network outside of the access network, eg between main switching exchanges.  Such a suggestion is likely to prove controversial…

A Promising Start

The Secretary of State for Culture, Media and Sport, Jeremy Hunt, gave a speech on June 8th on the Government’s proposals to encourage the rapid roll-out of superfast broadband.  Much of the speech re-iterated policies that were originally set out in the Coalition Document in May.  But the tone of the speech was more ambitious than previous Tory positions on Next Generation Access, which have tended towards waiting to see how much the private sector would deliver before intervening. 

 There was a recognition that superfast broadband could create thousands of jobs and that the internet is a key “trading route” for digital content.  Interestingly, Mr Hunt casts aside the doubters by understanding that it’s not about doing things faster, but that it’s about doing “totally new things”, as well as about improving services such as education and healthcare.

The 2 Mbit/s Universal Service Commitment that followed from the previous Government’s Digital Britain report was described as “paltry” and “pitifully unambitious”.  This will now be supported as “the very minimum that should be available” and a proportion of the under-spend from the BBC licence fee will be used to fund this.

The Minister pledged to ensure that those in rural areas do not find themselves on the wrong side of a digital divide due to the fact that they are uneconomic to serve for private sector investors.  He announced three pilot projects for subsidised superfast broadband in rural areas which will help determine what kind of stimulus is required from the Government.  More details about these projects will be announced on July 15^th.

The Government is making available £250 million, which is not enough to roll out fibre optic cables to the “final third” of the country.  So it is crucial that that money is spent wisely and targeted appropriately.  One suggestion is that it could be allocated in the form of gap funding to support private sector, public sector and community partnerships. 

It remains to be seen how much financial investment will be provided by the Government, and how much it will rely on its proposals to require existing infrastructure owners to allow access to their networks to deliver high speed broadband.  Ofcom has already announced plans to regulate access to BT’s ducts and poles, and now Jeremy Hunt has stated that he will legislate, if necessary, to obtain access to the networks of other infrastructure providers.  This makes some sense as duplication of local access networks is a luxury we cannot afford.

Some might say that, by scrapping the Independently Funded News Consortia that were to be funded from the BBC licence fee surplus, Mr Hunt has chosen broadband over local news.  (The savings from the IFNC pilots will be used to support the market testing pilots in rural areas.)  But the Minister rightly sees a link between the provision of local news and the availability of high speed broadband.  This has been shown to be the case in other countries (such as with OnsNet in Nuenen, Holland). 

So the Government seems to have grasped the nettle with a bold (though arguably unrealistic) target of having the best superfast broadband network in Europe by 2015.  It remains to be seen how well they deliver.

A Digital Agenda for Europe

On May 20th the European Commission Vice-President Neelie Kroes presented her “Digital Agenda for Europe”.  She recognises that, without strong public intervention, there is a risk of a “sub-optimal outcome”, with fast broadband networks concentrated in a few high-density zones with significant entry costs and high prices.  She believes that the spill-over benefits created by such networks for the economy and society justify public policies guaranteeing universal broadband coverage with increasing speeds.

 The Commission proposes to adopt in 2010 a Broadband Communication that will:

 • Reinforce and rationalise the funding of high-speed broadband through EU instruments (e.g. ERDF, ERDP, EAFRD, TEN, CIP) by 2014 and explore how to attract capital for broadband investments through credit enhancement (backed by the EIB and EU funds).  National, EU and EIB funding instruments should be used for well targeted broadband investments in areas where the business case is currently weak and, therefore, only such focused intervention can render investments sustainable.

• Propose a European Spectrum Policy Programme in 2010 to increase the efficiency of radio spectrum management;

• Issue a Recommendation in 2010 to encourage investment in competitive Next Generation Access networks through clear and effective regulatory measures (thas has been postponed from June until September, after incumbent operators voiced concerns).

 The Commission is encouraging Member States to do the following:

 • Develop national broadband plans by 2012 that meet the coverage and speed and take-up targets defined in Europe 2020 (see below), using public financing in line with EU competition and state aid rules;

• Take measures to facilitate broadband investment, such as making sure that civil engineering works systematically involve potential investors, clearing rights of way, mapping available passive infrastructure suitable for cabling and upgrading in-building wiring;

• Use the Structural and Rural Development Funds that are already earmarked for investment in ICT infrastructures and services;

• Implement both the European Spectrum Policy Programme (so as to ensure the allocation of the spectrum needed to meet the target of 100% coverage of 30mbps internet by 2020) and the NGA Recommendation.

 The Europe 2020 Strategy (published in March) underlined the importance of broadband deployment to promote social inclusion and competitiveness in the EU.  It stated the objective to bring basic broadband to all Europeans by 2013 and seeks to ensure that, by 2020, (i) all Europeans have access to much higher internet speeds of above 30 Mbps and (ii) 50% or more of European households subscribe to internet connections above 100 Mbps.

The full text of the Digital Agenda communication can be found here:

http://ec.europa.eu/information_society/digital-agenda/documents/digital-agenda-communication-en.pdf

Enforcing Porting Regulations

It is widely accepted that the routing of calls to ported numbers in the UK is based on an antiquated process.  Calls to ported numbers are required to route via the original Range Holder, and then onward to the current service provider (rather than being directly routed to the current SP).  To achieve this, the Range Holder and the new service provider must engage in drawn out negotiations to agree conveyance charges and routing plans.  These typically take six months to a year, but can take longer.

If I wish to change my service provider I will not want the move to be delayed by an inability to port my number.  But if I am to port my number to the service provider of my choice, I cannot do so unless my current service provider (and the original Range Holder if not the same) has porting arrangements already established with my new service provider.

In Ofcom’s General Conditions of Entitlement, GC 18 imposes two different obligations on communications providers.  The first is the obligation on CPs to provide “number portability” to their own subscribers (GC 18.1).  The second is to provide “Porting” on request to other communications providers “as soon as is reasonably practicable” (GC 18.2).  In order to be able to comply with GC 18.1, most CPs try and get in place as many porting contracts as they can, so that they are ready to port a customer’s number when requested.  If the relevant commercial arrangements are not in place, then the customer will either have to wait, or will tire of waiting and will go elsewhere.  Because of this, UK porting processes can act as a real barrier to competition.

It is therefore crucial that Ofcom is ready to enforce the requirements of GC18 against any CP who refuses to agree to a Porting request from another CP.  The problem is that there are now hundreds of CPs with their own number ranges and the work involved in setting up all the necessary commercial arrangements is adding a huge and disproportionate cost to doing business as a CP.  The sheer volume of porting agreements being negotiated also means that a growing number of complaints and disputes are being laid at Ofcom’s door. 

The work involved for Ofcom staff in investigating all these complaints is a strain on their resources, and so they are tending to abdicate responsibility. They will not enforce the obligation to agree to Porting unless there is evidence of an end user waiting to port.  But this makes a mockery of the obligation to offer timely number portability to end users.  If you wait until there is a customer request, the customer will have to wait about a year to move their service. 

The UK government is currently working on transposing the European Commission’s amended Universal Service Directive into UK law.  This new Directive requires that CPs port numbers within one working day.  With the current UK porting process, it will be impossible to comply with this law unless as many porting arrangements as possible are in place between CPs.

So Ofcom needs to make a choice:  either put the necessary resources into enforcing the obligation to offer Porting upon request, or (preferably) recognise that porting processes need a complete overhaul.  Ofcom should mandate the introduction of a central database which CPs can use to route calls efficiently to the correct terminating operator.  This would be an appropriate solution for the 21^st century.