Will consumers be better off under NGCS?

We’ve given the background to Ofcom’s NGCS changes in previous posts but now the full information is available we’ve begun our work of digesting the changes. Our views on the scheme should be clear from previous posts so we’ll resist temptation and let the figures speak for themselves. In the interests of balance however we’ve included Ofcom’s helpful video below so their thinking is clear.

As a point of clarification before we proceed, Service Charges are not set by the company you’re calling as the video claims. Service Charges are assigned to blocks of (usually 10,000) numbers operated by telcos and assigned to those companies. A company selecting a new number could of course select from a menu of Service Charges, ergo, a choice of number ranges, but they do not specify the Service Charge applicable to any given number. That therefore means the entire universe of numbers already in service will see their call cost change and the only thing the company you’re calling can do about it is change their phone number. That is a very long way from “is set by the organisation or service you’re calling” as the video states. It is therefore important to understand how consumers are going to be affected calling the numbers already in issue that they may have used for years.

This is an analysis based on the changes in our wholesale cost base for existing 08 and 09 number ranges. It remains to be seen how these pan out at retail but given that these rates are mostly regulated, and heavily represent the main transit provider, they will be broadly the same for other operators. These are cost figures though so exclude VAT and the additional Access Charges added by retail providers, but other things being equal, give an indication of the change that will occur at retail on July 1st.

It should also be borne in mind this is across a universe of 17,813 number ranges, assuming all are equal with no weighting for actual usage. Being a wholesale provider our usage data would not be relevant and it would require a major retail operator, or regulator to overlay usage figures.

Highlights

- In per minute terms 81% of rates have changed, 60% have increased
- The worst offenders in per minute terms have increased 42,900%
- The mean increase in per minute rates is 271%

- 84% of connection charges have changed, 74% have increased
- The worst offenders in connection charge terms have increased 6,344%
- The mean increase in connection charge is 37%

- Well known ranges such as 0845/0870 now have many rates with high mean increases
- Rogue ranges show mixed patterns suggesting scammers may be scattering to other ranges

Per minute changes

Let us first exclude numbers that have no positive per minute cost which reduces our universe to 13,288 in new terms.

Of those:

7,997 have an increased per minute charge
2,788 have a decreased per minute charge
1,274 have a per minute charge the same as before

The top 497 worst offenders have increased more than 1000%, the top 40 by more than 20,000% and the worst by 42,900%. The majority of worst offenders are 08xx but they break down as follows:

Mean increase Increase in mean rate Maximum increase
08xx 342% 26.8% 42,900%
09xx 248% 23.1% 22,907%

Looking by old charge-band the worst offenders are the old fixed fee ranges which have on average traded connection charge for per minute charge, followed by mmX ranges. 0870 ranges, formerly “national rate”, more recently price-capped, and in our experience well understood by consumers, show a 521% mean increase (max 1835%, 478% increase in mean rate) and now have an average small connection charge. Another well known range – 0845, previously “local rate” – shows a 116% mean increase (max 622%, 101% increase in mean rate) in per minute terms but a 48% reduction in the mean connection charge.

Connection charge changes

Considering only number ranges that now have a connection charge gives us a universe of 4,843 in new rate terms.

3,588 have an increased connection charge
755 show no change to the connection charge
500 have a decreased connection charge

The top 5 show percentage increases in excess of 5,000%, the top 73 in excess of 1000% and the worst 6,344%. They are mostly 09xx ranges. Well known ranges such as 0845 show an average reduction in connection charge but some within that have increased 187%.

Ranges we consider to be rogue such as what was formerly ff28 and g24 exhibit interesting behaviour. These are innocent looking 08xx numbers masquerading a connection charge but at a low enough level to be outside PhonePayPlus regulation and heavily used in missed-call scams. Some have traded the connection charge for a per minute rate as described above, others show huge (20k%) per minute increases coupled with low increases in connection charge. It is unclear from pricing alone whether it is the rogue usage or legitimate usage of such ranges that has scattered elsewhere but we fear the former.

Missing prefixes

144 number ranges have vanished. It could simply be that operators have taken opportunity to have a tidy up of unused ranges. We will not be routing to these number ranges until they have a contracted rate and it would be a brave (or reckless) operator that does.

Of more concern, 2,284 prefixes which are within scope of NGCS have no new rate. These would appear to be ranges where the new NGCS rates have not been contracted and the old, pre-NGCS rate and billing methods will continue. We will continue routing to these but operators will need to be mindful that if Ofcom chooses to enforce its own rules, these will change to potentially very different charge-bands at indeterminate times.

Concerns

Whilst we acknowledge the problem this review was seeking to address, we remain of the view that it does not. The fundamental problem remains and any vague familiarity there was with call costs has been removed. Previously a customer of any CP might not know what the cost to call, say, an 0845 number was with their CP but once they found out they could be confident all 0845 numbers would likely be the same. Now they not only need to know their CP’s Access Charge but need to identify which Service Charge applies to that particular block of 0845. It can now be one of 20 ranging from free overall to 5ppm and a 5p connection charge (including VAT). Another familiar range – 0870 – now ranges from free to 10ppm with a 10p connection charge.

Most operators appear to have taken this as an opportunity to increase rates and the average picture hides some wild extremes. We’re concerned at some of the variety of cost now within previously familiar ranges and the scope for consumer confusion and harm. Taking the view of these purely as “Service Numbers” where callers are only responding to an advert which advises that charge it seems fair enough, but years after the introduction of 03 these number ranges are still emblazoned on signs, packaging and vehicles across the country and consumers now have no idea what they’ll cost to call. Yes, we know they shouldn’t be but many were put there 10 or 20 years ago, pre-meddling, when they were the primary non-geographic ranges. As Ofcom say in their own video “You might be surprised how often you call Service Numbers”!

Whilst legitimate advertised services will make Service Charges clear, one consequence of this review is that familiar looking number ranges can have very different cost structures to before. We fear that consumer abuse such as missed-call scams, which previously exploited specific charge-bands, will now scatter to many different basic number prefixes. This affords opportunity to exploit any consumer familiarity to ill-gain. Those operators such as ourselves who have large databases of fraudulent numbers, used to block calls and protect end-users from harm, essentially need to start again and rebuild those databases based on observation of new scams.

Finally, we remain concerned at the missing and non-updated codes and the scope for arbitrage within these number ranges as updated rates trickle through. We advise all CPs to be vigilant and to make use of the features we provide to prevent surprises, e.g. the max-call-cost SIP headers.

The way forward

We hope the current scheme will be altered in the future. It would be tricky from this newly created position but we really think any future review needs to tighten up the bands available for specific number ranges at least for previously familiar ranges, which is the opposite of what has been done. Moreover we’d scrap the Access Charge on consumers and have it settled operator side as it is with Freephone etc., i.e. it costs the Service Charge only to make a call from any operator. Coupled with appropriate bundling requirements as was sensibly done with the 03 number range this would reduce consumer harm and increase clarity. They can get it right, they just haven’t here and we hope consumer harm from this experiment will be minimal.