23|04|09

New Ofcom rules announced today should soon make it cheaper to call 0870 numbers.

The measures - which will come into effect on 1 August 2009 - will also give consumers a much clearer idea of how much it costs to call these numbers.

0870 numbers are used by many businesses and organisations to provide a wide range of information and advice including many customer service lines.

But consumers are often charged more for calling these numbers than they would if they called a ‘geographic rate’ (01, 02 or 03) number.

Revenue sharing

And because they cost more, businesses and organisations are also able to take a cut of the call charges - a practice known as revenue sharing.

However, the new rules will encourage communication providers to stop charging higher prices for calls to 0870 numbers from fixed lines and mobiles than calls to ‘geographic rate’ numbers.

They will also be encouraged to include 0870 calls in call packages on the same basis as geographic calls.

Communications providers that want to continue charging for 0870 calls at rates above those for geographic numbers will be bound by strict rules about how prices are publicised on websites and in promotional material at point of sale.

Enforcement action

They will also be responsible for making sure their customers know how much they will be charged for calling an 0870 number.

Communications providers will not be allowed to advertise 0870 numbers as ‘national rate’ unless they are charging at geographic rates.

If they do not comply with these rules, they could be subject to enforcement action including possible fines.

Ofcom’s new rules should also effectively end revenue sharing on 0870 numbers.

Ofcom welcomes steps that some fixed line companies have already taken to include calls to 0870 numbers in call packages and reduce their prices.

http://www.ofcom.org.uk/media/features/0870rules

5 February 2009

PHONEPAYPLUS ENSURES SMOOTH TRANSITION TO PREMIUM RATE REGULATION OF 0871 NUMBER RANGE WITH SIX MONTH IMPLEMENTATION PLAN

Ofcom has today announced that PhonepayPlus will take over day-to-day regulation of 0871 numbers on 1 August 2009, when numbers beginning 087 - with the exception of 0870 - will formally be recognised as Premium Rate Services (PRS), putting them under the remit of PhonepayPlus’ Code of Practice.

PhonepayPlus’ implementation plan

Ofcom has also announced a six month transition period, during which providers of 0871 services - which include technical helplines, ticket bookings, road traffic advice lines - must ensure they comply with the PhonepayPlus Code of Practice.

PhonepayPlus has responded with the announcement of an implementation plan which will ensure all stakeholders are fully aware of the changes; any responsibilities they may have under PhonepayPlus’ Code of Practice; actions they may need to take in order to become compliant; and which parts of the Code apply to them.

For consumers, the plan will provide greater clarity regarding the cost of calls placed to 0871 numbers, and their options should they have concerns about the promotion or operation of 0871 services.

PhonepayPlus’ implementation plan will include:

• Communication with  0871 Network Operators and Service Providers formally advising them of their responsibilities under the Code of Practice and actions they may need to take to become compliant;
• industry workshops to introduce 0871 Network Operators and Service Providers to the PhonepayPlus Code of Practice, its meaning and their responsibilities within it;
• media and marketing campaigns to educate consumers and industry about what the new regulatory regime means for them;
• online information and registration tools as a resource for industry and consumers to help them understand the changes and what they mean;
• publication of supporting materials including Helpnotes, FAQs, and a Statement of Expectation; and
• liaison with consumer protection groups to ensure they are fully briefed and able to direct concerned consumers as necessary.

Application, consultation, regulation - background to handover

Ofcom has today announced the outcome of a Review of the 0871 number range, which contained a package of measures to improve consumer protection and pricing transparency. Ofcom has decided to make 0871 numbers subject to premium rate regulation which is defined by the PhonepayPlus’ Code of Practice. The Code will also now extend to 09 numbers that are charged at more than five pence per minute (PPM) and less than 10 PPM.

On 13 November 2007, PhonepayPlus published a Statement of Application for the regulation of 0871 numbers, which explained how it proposed to apply the existing requirements of its Code of Practice to services offered on the number range.

Commenting on the change in regulation Paul Whiteing, Acting CEO of PhonepayPlus, said: “Services offered via 0871 numbers are generally very useful and highly convenient, but the cost to call them can vary widely, especially from a mobile phone. Our experience regulating other premium rate services will ensure the necessary safeguards are in place to protect consumers, especially around price transparency,”

“We expect this regulation to be a boon to industry and not a burden, by boosting consumer confidence in these services.”

Questions or comments

Those with questions or comments regarding PhonepayPlus’ 0871 regulation, or requiring more information on the implementation plan, should contact PhonepayPlus on compliance@phonepayplus.org.uk.

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• 0870 charges should be reduced

Ofcom today set out proposals to provide clarity about the price of calls to 0870 numbers and strengthen consumer protection on calls to 0871 numbers. 0870 numbers are used by many businesses and organisations for a wide range of services including road traffic advice, customer services and financial services. This consultation is part of Ofcom’s wider review of so-called “non-geographic” telephone numbers (those not assigned by location) following consumer concerns over the lack of transparency about the cost of calls. Today’s consultation proposes that all calls to 0870 numbers should normally cost no more than calls to geographic numbers (01 or 02 numbers) and that 0870 calls should be included in communications providers’ call packages price plans on the same basis as geographic calls. This may significantly reduce the cost of calling these numbers. Currently 0870 calls are priced at levels that enable businesses and organisations to share the revenue generated by per-minute call charges. Ofcom’s proposals would effectively end revenue sharing on 0870 numbers when combined with other proposed changes to non-geographic call regulation. Communications providers that want to charge 0870 calls at rates above those for geographic numbers would be bound by strict rules about how prices are publicised and would be responsible for ensuring their customers know what 0870 calls cost. If communications providers do not comply with these rules, they could be subject to penalties including possible fines. Ofcom aims to have the proposed changes in place by the autumn.

Extension of Premium Rate Services Regulation to other 087 numbers

Separately, Ofcom also published a consultation setting out proposals to improve consumer protection for calls to the most expensive 08 numbers (0871 numbers) by bringing these within the remit of the premium rate services regulator PhonepayPlus (formerly called ICSTIS). Under PhonepayPlus rules, businesses would be required to publish the price of calls in their advertising and promotional materials and PhonepayPlus would also investigate complaints about excessively long call queuing times only after the complaint has first been referred to the service provider. PhonepayPlus also has a range of powers that enable it to address scams quickly when they arise. Ofcom is now seeking views on the rules that PhonepayPlus will apply to 0871 numbers. Ofcom aims to publish a decision in summer 2008 and PhonepayPlus will start to regulate these numbers by the end of the year. The consultation on 0870 numbers can be found at: http://www.ofcom.org.uk/consult/condocs/0870calls/ The consultation on 0871 numbers can be found at: http://www.ofcom.org.uk/consult/condocs/087prs/ Ends. NOTES FOR EDITORS 1. Advice for consumers on 0870 numbers can be found at: http://www.ofcom.org.uk/consumeradvice/landline/costofcalls/08faq/ 2. In April 2006, Ofcom’s proposed that communications providers that want to charge more than the rate for calls to national rate geographic numbers would be required to provide a pre-announcement informing them of the cost of the call. However concerns were raised about disruption that this could cause to alarm services which use 0870 numbers and this proposal has not been taken forward.

Protecting consumers from mis-selling of mobile telecommunications services

Summary

1.1 Inappropriate and misleading sales and marketing behaviour can undermine consumer confidence in markets and cause individuals harm. Complaints to Ofcom about the mis-selling of mobile communications services have risen sharply since 2006. Problems experienced by consumers include being given false or misleading information when purchasing services and ‘slamming’ where consumers have found themselves with a new contract without their knowledge and consent.

1.2 An additional feature of mis-selling around certain ‘cashback’ schemes, being sold by independent retailers of mobile service providers’ services, became an increased cause for concern during 2007. Cashback is a commonly available offer, where an independent retailer undertakes to pay an amount of money to the customer when they take out a mobile phone contract from a mobile service provider. Problems have arisen where the consumer has been unable to obtain the cashback, typically either because the terms for claiming are too onerous or because the independent retailer has gone out of business.

1.3 Consumers who are mis-sold services can suffer significant anxiety, distress and inconvenience. Financial harm can also occur if consumers find themselves on inappropriate price or service packages. Where the consumer is unable to redeem the cashback deal, significant financial loss can occur, particularly if the consumer is still bound by the separate monthly contract for the mobile service.

1.4 Following an enquiry into sales and marketing practices, Ofcom worked with five of the mobile service providers (3, O2, Orange, T-Mobile and Vodafone) to develop and introduce in July 2007 an industry code of practice aimed at tackling misleading sales and marketing practices (‘the code’) including the fairness of the terms of cashback deals being offered. At the time of its introduction, Ofcom made clear that unless the code resulted in a significant and rapid reduction in consumer complaints we would consider the case for formal regulatory intervention.

1.5 By October 2007 there had been no significant change in the level of complaints to Ofcom and we began a review of sales and marketing practices in the mobile retail market to consider the case for further action.

Our review

1.6 The evidence we have collected indicates the introduction of the code has brought about some positive changes in practices by mobile service providers and retailers. However, these have not been uniformly applied and have not brought about an adequate reduction in consumer complaints or consumer harm.

1.7 Mobile service providers have reviewed their sales and marketing procedures, and those of the independent retailers, including the terms of cashback offers. The code appears to have been disseminated widely through the retail chain.

1.8 Some mobile service providers have ceased selling their services through certain independent retailers following compliance reviews. In addition, some retailers have ceased trading following the application of new rules under the code requiring the cashback terms to be fair.

1.9 However, we have found that the extent of monitoring and compliance activity varies between mobile service providers. And where monitoring and compliance activity has taken place, its main focus appears to have been to address cashback and slamming problems rather than more general mis-selling.

1.10 Complaints to Ofcom have continued at broadly the same high level as at the introduction of the code. The number of complaints in both January and February 2008 exceeded those in July 2007.

1.11 We have carried out research into consumers’ experience of cashback. This shows that in most cases cashback deals work well, stimulating competition and providing benefits to consumers. Around 80% of cashback customers are happy with their offers and have found the process for claiming them relatively easy. However, a significant minority of customers have experienced problems with certain deals where making claims is complex or where the retailer has ceased trading. In many of these cases, the amount the customer has not been able to redeem has been large resulting in a significant level of overall harm.

Proposals

1.12 In light of the continuing high levels of complaints, the varying levels of monitoring and enforcement of the code by the mobile service providersand the extent of consumer harm involved, we are concerned that reliance on the ‘voluntary’ code does not appear to provide adequate protection for consumers.

1.13 We are therefore proposing to introduce a new General Condition on sales and marketing practices that will apply to all mobile service providers.

1.14 Amongst other things, the proposed condition requires mobile service providers:

• not to engage in dishonest, misleading or deceptive conduct and to ensure that those selling their products and services do not mis-sell;
• to make sure the customer is authorised to, and intends to, enter into a contract;
• to make sure customers get the information they need when they buy the product;
• to ensure that the terms and conditions of all sales incentives offered by their retailers are not unreasonable; and
• to carry out due diligence and a number of checks in respect of their retailers to ensure the soundness of the company and its directors.

1.15 While this proposal is an important intervention to protect consumers, we consider it is proportionate and should not create significant additional costs for those mobile service providers and independent retailers who are already complying with the code. It will, however, ensure that Ofcom can formally investigate the extent to which the rules are being followed and ultimately impose sanctions for breaches of the regulations. We will also be able to make sure that the rules are being applied consistently by all mobile service providers.

1.16 We consider that by requiring cashback offers to be provided on reasonable terms, independent retailers’ businesses should be more commercially sustainable and instances of insolvencies due to unsustainable cashback offers and the consequent harm to consumers should be reduced over time.

1.17 We have considered more interventionist options, including banning cashbacks or making mobile service providers responsible when independent retailers do not pay customers under a cashback scheme. However, we believe these options risk restricting consumer choice by affecting not just problematic cashback offers but also those (the majority) that work well. More intrusive interventions may result in mobile service providers reducing the number of retail outlets they use.

1.18 We are inviting comments on our proposals and on the other options we have considered by 29 April 2008.

Ofcom today announced proposals to curb unfair additional charges levied by communications providers on consumers’ bills.

The proposals are designed to ensure that extra charges are fair and that landline, broadband, mobile and pay-TV providers clearly market the true cost of their services.

Increasing competition has driven down headline prices and offered consumers more choice. However, falling headline prices are not the whole picture.

Consumers may also pay additional charges as part of complicated contract terms. Some providers make a range of additional charges, for example, when consumers choose to pay by cash or cheque rather than by Direct Debit; cancel a contract before the minimum period has finished; or make a late payment.

Ofcom is proposing to introduce new guidance for communications providers. This will spell out Ofcom’s view of the law and what communications providers have to do to meet their obligations under the Unfair Terms in Consumer Contract Regulations 1999 to ensure that additional charges are fair and transparent.

Once the guidance has been finalised, Ofcom is proposing to give communications providers three months to comply. Ofcom will then start an enforcement programme - where necessary through the courts.

The draft guidance has two main principles:

• providers need to be clear and up front with their consumers and do more to make it easy for consumers to understand the charges; and
• for charges that are not part of the price of a main service under the contract, these must be demonstrably fair.

The draft guidance covers a number of specific areas including:

Charges for paying bills by cash or cheque rather than by Direct Debit

• When providers advertise prices, they must make clear what any extra charges for paying by cash or cheque will be.
• If a provider does not make the extra charges prominent and transparent enough that consumers see them as part of the main price under the contract, then the charges must reflect direct costs only. They should only include the provider’s extra costs of collecting normal payments and not an opportunity to collect further revenue.
• However, where the extra charges are prominent and transparent enough, normal competition – and not regulation – will provide price discipline on behalf of consumers. Customers will then have all the information that they need to know which provider to choose.

Protection for low income households

From mid-2008, BT will offer a new service – BT Basic – which offers a low cost home phone service to those on low incomes and pensioners that are in receipt of certain government benefits. BT Basic will not include an extra charge for consumers who do not pay by Direct Debit and, in contrast to previous social telephony products, will be available to consumers who have pre-pay mobile phones and/or broadband services.

Charges for late payments and failed payments

• Providers should make consumers much more aware of these charges.
• A charge should only be made after consumers have had a fair chance to pay their bills.
• The charges should reflect only the direct costs providers incur, like the true extra cost of collecting the money.

Minimum contract periods and charges for canceling contracts

• Providers must make the length of contracts clear, as well as the costs involved if a consumer chooses to break a deal.
• Subsequent contract periods should not be imposed unless there is a clear benefit to the consumer and cost to the provider.
• A consumer who ends a contract early should never have to pay more than the payments left under the contract period - in fact they should often pay less than this, to reflect costs providers save because the contract ends early and their ability to recoup sums by selling services to other consumers.

Ofcom is seeking views on the draft guidance. The consultation is published at http://www.ofcom.org.uk/consult/condocs/addcharges and the closing date for responses is 8 May 2008. Ofcom expects to publish the final guidance in autumn 2008.

Ofcom Chief Executive Ed Richards said: “Consumers are benefiting from greater competition and lower prices. But for consumers to get an all round fair deal they need to know the full costs of the services they are buying. Our proposals will encourage companies to be open and straightforward about additional charges where they feel it is necessary to include them. In addition, our proposals mean that, in some cases, additional charges will be subject to clear limits which would provide direct protection for consumers”

Ends.

For further details please see Related Items.

27|02|08

Ofcom proposes action against O2 to meet 3G rollout obligation

Ofcom today issued O2 with a deadline for meeting its 3G rollout obligation and what steps it proposes to take should the mobile phone operator still not be in compliance.

The obligation requires each of the five holders of a 3G licence to rollout their networks to enable the provision of 3G services to at least 80 per cent of the population from 31 December 2007.

Ofcom has now completed its assessment of compliance with the obligation. Four of the five licensees have complied, but O2 only covered 75.69 percent of the population. This is a shortfall equivalent to approximately 2.5 million people.

Ofcom has now issued O2 with a notice under the procedure in the Wireless Telegraphy Act for licence breaches. This proposes that if O2 has not met the rollout obligation by the end of June 2008, Ofcom will shorten the term of its 3G licence by four months.

Sometime in summer 2008 the cost of calling a 0870 number will plummet (the original date was January 31st but this has been pushed forward due to bad planning by Ofcom). Currently charged at 7.91p per minute peak (including VAT), when the changeover occurs this will fall to around 2p per minute, a massive price drop of almost 75%. This is great news for the consumer, but potentially devastating to the business that has invested heavily in advertising its 0870 number(s) not only in the short term but also in ‘longer term’ media such as the Yellow Pages and various other directories. Many companies have built their businesses around a memorable 0870 number and have invested heavily in advertising it - so future strategy must be carefully thought through in order to minimise the impact.

When the changeover occurs, for those companies that received it, there will no longer be revenue share on 0870 numbers. So whether it’s 1p, 2p or 3p minute a company was getting, this will all end by summer 2008. Obviously, for the many organisations not receiving revenue share this is of little consequence.

The real blow however is that companies wishing to retain their 0870 numbers will have to pay up to 3.5p minute to receive calls. So not only will there be no revenue share but organisations seeking to retain 0870 number(s) will have the added cost of paying for incoming calls. BT has stated that it will be charging its customers 3.5p per minute (+ VAT) for a standard 0870 number or 4.5p per minute (+ VAT) for a 0870 number that is routed to different destinations.

For a company receiving say 50,000 minutes of incoming calls per month, instead of getting a revenue share of £1,000 (at 2p per minute) it will now have to pay £1,750 - £2,250 per month for the same calls which, on an annualised basis comes to £21,000 - £27,000. Obviously many companies generate far fewer minutes in which case the impact won’t be anywhere near as great but there are major corporates for whom 1 million minutes or more per month is not uncommon. The impact on these companies will be considerable and most are now planning for the changeover - if indeed they have not already switched.

It is the smaller business that has by and large failed to plan for these upcoming changes. This article should serve as a wake-up call if they are not to be caught by surprise on changeover date.

How the Changes Came About

Most businesses are aware of these changes and the reasons for them. They have been written about extensively elsewhere. For this reason I won’t repeat the details other than to say that the changes were brought about by a media driven consumer campaign protesting the price differential between calling a non-geographic 0870 number and a standard long distance geographic number (calls to which originally cost the same as calling 0870, but which is no longer the position). The case was strengthened by anecdotal evidence that some companies appeared to be keeping callers on hold for lengthy periods simply as a way of making money. In the end Ofcom was forced to respond. They held ‘consultations’ and then published their ‘findings’. Many would argue that they went over the top without considering all the ramifications, but the impact on organisations using 0870 numbers is going to be considerable.

For more information on these changes you might like to consult the following pages:

OFCOM http://www.ofcom.org.uk/media/news/2006/04/nr_20060419
http://www.ofcom.org.uk/media/mofaq/telecoms/nts/

Your Options if your business uses 0870 numbers

You have five options and these are:

1. Carry on as usual. Keep your existing 0870 number and receive calls as you do at the moment. You need to be something of a financial masochist to favour this approach but it is an option if, and here is the caveat, your carrier will allow you. It is also an option if your call volumes are very low so that your monthly charges may not be all that great. However, many carriers and resellers do not have the expensive billing software that will enable them to give you a computer generated monthly bill and for this reason may no longer support 0870 numbers. It is important that you check with your carrier as soon as possible.

2. Divert to a new non-geographic number after first terminating your 0870 number at a carrier-provided voice mailbox (using a recorded message to announce your new non-geographic number). Some carriers can provide this service. Others don’t. BT has announced that “due to the enormous volume of 0870 number changeovers, a Changed Number Announcement is unlikely to be available for everyone”. Your new non-geographic number options would be 0844 / 0845 or 0871 numbers. By following this course you retain the ‘goodwill’ built up in your 0870 numbers. Numbers beginning 03 are also a possible option but bear in mind that it will COST around 3p minute to receive 03 calls. Also, there is very little public awareness of them and I don’t know of any plans to mount a publicity campaign whether by Ofcom or any other organisation. So the public may be distrustful of an unfamiliar range. While some carriers are looking at these, many are not.

3. Divert to a new non-geographic number after first terminating your 0870 number at a voice mail box which you set up. Here you would get a new phone line with BT and connect to Call Minder or a cheap non-message taking Answering Machine. You then get your carrier to divert your 0870 number(s) to this line. The recorded message would then tell people to ring your new number which would be given in the recorded message. The disadvantage of this is that you will have the BT line rental of £41.15 per quarter, the Call Minder charge (£2.50 month) plus the cost of calls to the mailbox which should each be less than 1 minute. You should allow 3p-4p per call. The big advantage is that you lose none of the goodwill built up in your 0870 number.

4. Discontinue your 0870 number altogether and simply get a new 0844 / 0845 or 0871 number. This may be your only option if your carrier can’t provide you with a voice mailbox and you don’t want to set one up yourself. The obvious disadvantage is that you’ll lose the goodwill built up by your former use of the 0870 number and the cost of this could be significant. So, unless you feel there is no ‘goodwill’ in your 0870 number then treat this approach with care. Remember also that even if you think there is no value in your 0870 number, your competitors may think differently - and may very well seek to acquire your number should you decide to relinquish it.

5. Use a local geographic number such as 020; 01273. The big disadvantage here is that by giving up your 0870 number you will lose:

a. Any goodwill built around your number as well as future calls to that number unless you combine this approach with (3) above
b. The national identity that a 0870 number has given you
c. Portability, since the local number can only be moved within the area served by your local exchange. In major metropolitan areas this could mean a radius of no more than 1 or 2 miles from the exchange
d. Any special features that you may have enjoyed with your 0870 number such as call queuing, fax to email, IVR, etc.

http://www.0870ver.co.uk

We’re pleased to to announce the launch of our new 0870 web site www.0870ver.co.uk check it out!

The site provides a simple to follow process to help 0870 users to deal with the forth coming Ofcom changes.

Ofcom confirms changes to 0870 calls

Ofcom today confirmed measures to improve price transparency and strengthen consumer protection for calls to 0870 numbers. These changes are part of Ofcom’s final statement following its review of all chargeable 08 number ranges (known as Number Translation Services or NTS).

Ofcom’s approach is broadly in line with the proposals it published for public consultation in September 2005. Many of the 1,300 responses to this consultation highlighted the case for changes to 0870 and increased consumer protection.

In parallel with its work on NTS, Ofcom is currently consulting on a wider strategic review of UK telephone numbering. This proposes potentially important alternatives for organisations affected by changes to 0870 numbers. In particular Ofcom is proposing a new 03 number range as an alternative for country-wide non-geographic numbers, charged at the same rate as calling a geographic number.

Ofcom has decided that changes to 0870 calls will be introduced 18 months after the conclusion of the wider Numbering Review (due for publication in summer 2006). The 12 month timetable for 0870 changes proposed last September has been revised to ensure coordination with the outcome of the Ofcom’s Numbering Review and to allow sufficient time for industry to make the changes required.

0870 calls

As proposed in September 2005, Ofcom will require mobile and fixed-line providers (including payphones) to charge the same or less for 0870 calls as they do for national-rate calls to geographic numbers (starting 01 or 02). If providers wish to charge more for 0870 calls they will have to make a free-to-caller price pre-announcement at the start of the call.

This change is likely to significantly reduce the price of many calls to 0870 numbers. It will also mean that 0870 calls will generally be included in call packages. Currently daytime 0870 calls usually cost around 8 pence per minute from fixed-lines. Typical fixed-line call packages offer calls to geographic numbers at 3 pence per minute or less.

Organisations using 0870 currently have the opportunity to share the revenue generated by per minute call charges. In September 2005 Ofcom proposed changes to NTS call regulation which would effectively combine with lower call charges to end revenue sharing on 0870. Ofcom has decided to implement these proposals.

Role of ICSTIS

In line with the September 2005 proposals, Ofcom will extend the role of the premium rate regulator ICSTIS to include calls made to 0871 numbers. This will happen at the same time as changes on 0870 numbers. Ofcom will also extend ICSTIS’s remit to include all adult services regardless of price. Any adult services currently provided on 08 numbers will have to move to the designated 09 ranges.

Public bodies

Ofcom continues to recommend that public bodies should not use NTS numbers exclusively (ie: without giving equal prominence to a geographic alternative) especially when dealing with people on low incomes or other vulnerable groups.

The new 03 country-wide numbers, proposed as part of Ofcom’s Numbering Review, would be well suited to the needs of many public bodies currently using chargeable 08 numbers.

0845 and 0844 numbers

As proposed in September 2005, telephone providers will be required to provide customers with more comprehensive and accurate pricing information about all chargeable 08 numbers including 0845 and 0844. Ofcom does not intend to make other changes on 0845 or 0844 numbers at this stage.

However Ofcom will review 0845 numbers again within the next two years. Currently 0845 numbers are widely used to provide dial-up pay as you go internet access and Ofcom’s review will assess how much these services are being used in two years time.