EDM 2035 (Premium Rate Telephone Nunbers)

I quote below the text of a message sent to:

•    Proposers and Signatories of EDM 2035 (Premium Rate Telephone Nunbers)

•    Members of the Public Administration, Health, Treasury and Work & Pensions Committees

I offer members a briefing on the relevant issues and express my concerns about the way in which the EDM is presented.

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Many of you will be aware of my campaigning efforts on this issue. I am focussed primarily on the NHS, however the other issues raised in EDM 2035 are well within the scope of my campaigning efforts. I have been deeply engaged with HMRC and done a lot of work with the DWP agencies.

I offer a further briefing and comment on the EDM.

Summary

It is most unfortunate that EDM 2035 fails to mention 03 numbers. These not only have a proper place in the considerations, but provide the basis for the most effective resolution of this matter (see My Proposal below).

There is no reference to other "Business Rate" numbers i.e. 0844/3, 0871-3. These are also (improperly) used in the delivery of public services.

I have published a large amount of relevant material which provides further briefing.

The following items may be of particular interest, as they contain specific information that may be used in support of the EDM:

♦	... public service providers must cease using 0845 telephone numbers .... This offers a statistical basis to support the arguments and objectives declared in the EDM.
♦	Ofcom's proposed call cost advice. This shows the effect of proposed new call charge declaration regulations.
♦	My table of typical call costs. This shows the scope and the extent of additional charges incurred when calling 084 numbers.

Non-geographic telephone numbers

There are many advantages to use of non-geographic telephone numbers. They all provide an absence of association with a particular locality as well as technical benefits that are not so readily available with geographic numbers.

The point at issue here is the cost of calling, where they fall into five groups:

♦	080 - the recipient pays towards the caller's costs, at a level sufficient to make calls free for callers from landlines and payphones. Under present regulation, mobile companies can and generally do raise charges for 080 calls as their costs are not met by the recipient. There are some specific cases where exemption from call charges is granted, by arrangement.
♦	0870 - no longer subject to revenue sharing, but still commonly charged at a premium. This range is currently in a complete mess, it is however now only rarely used.
♦	084 (0843, 0844, 0845) - the caller generally subsidises the recipient's costs. This is rarely extended to a cashback arrangement with the recipient's telephone service provider however the subsidy is always present. Certain perversities with BT, as a result of legacy regulation that will shortly be withdrawn, can cause the effect on the caller to be concealed.
♦	0871-3 / 070 / 09 - classified as for use for "Premium Rate Services". The recipient draws income, as well as subsidy at the expense of the caller. Regulation by PhonePay Plus demands some (inadequate) declaration of call cost.
♦	03 - cost neutral. Calls to all 03 numbers are (by regulation, and as seen in practice) charged on the same basis as calls to geographic numbers. The recipient receives no subsidy towards the cost of the features deployed. The 030 block of numbers is reserved for use by public bodies and charities; the 034 and 037 blocks are reserved for migration from the equivalent 084 and 087 numbers.

IT IS PERFECTLY ACCEPTABLE TO USE 03 NUMBERS -
where there is some clear benefit to using a non-geographic number.

Following an earlier wide-ranging consultation, Ofcom will shortly be presenting firm proposals to address many aspects of the use of non-geographic numbers.

Application of a premium charge

Presenting the issue of additional cost as though it only relates to those with certain types of telephone service contracts totally misses the point. It is inevitable that where the telephone company originating the call incurs the extra cost of revenue sharing, this cost will be passed on to the caller. The present perversity with BT should not be allowed to distort the general point, especially as this will shortly come to an end.

I personally have no issue with a private business raising charges on customers, so long as this is done openly and honestly. The Ofcom proposals will address the fact that the level of the "Service Charge" is presently totally concealed with 084 numbers and inadequately presented with PRS numbers.

I believe that this forthcoming requirement for proper declaration of a charge will address the impropriety of the recipient levying a supplementary charge for sales and customer service calls, on top of the call cost imposed by the caller's provider to its own benefit. If the charge is declared, consumers and relevant regulators will be able to determine whether or not it is appropriate in a particular context.

The Land Registry is a self-funded public body which meets some of its costs through premium charges levied on users of some of its services provided by telephone. I can see no argument for it to be prohibited from raising charges for use of its telephone services whilst that use is taking place, given that the charge is properly declared. The proposed Ofcom regime would provide a ready opportunity for this to be done with full propriety.

Apart from this, and perhaps some other cases of self-funded public bodies, there can be no justification for taxation-funded public bodies using 084 or Premium Rate Service numbers. The imposition of a "Service Charge" on the service user (as it will shortly be known) cannot be sustained. The level of subsidy obtained is but a tiny fraction of the cost of handling telephone enquiries, whereas the cost to the caller is both improper and often significant.

The EDM

The failure of the EDM to make reference to 03 numbers seriously undermines its value. This enables (non-financial) arguments in favour of use of non-geographic numbers to be set against it. If, as is suggested, the only issue is about the cost of calling, there is no need to invite discussion about the (undoubted) merits of non-geographic numbers as against geographic numbers.

There are many issues raised by the idea of offering geographic numbers as alternatives. These would commonly not provide the same service, unless significant additional costs were to be incurred. The present complexity of telephone tariffs would make it extremely difficult to advise callers which number to choose (many would be unaware of which was best). The cost of updating publications and then carrying two telephone numbers, not to mention the resulting confusion, provides a strong argument for not following this approach.

The geographic vs. non-geographic argument is pointless and draws in wholly irrelevant considerations.

(The first amendment fails to note the very special arrangement made by DWP to fund calls to its 0800 numbers from mobiles. Some other 080 numbers used by public bodies are exempted from charge by the mobile companies.)

My proposal

I HAVE LONG BEEN PROPOSING THAT THE EQUIVALENT 034 NUMBERS BE IMMEDIATELY OFFERED AS ALTERNATIVES BY ALL PUBLIC BODIES USING 084.

I see this as a practical, low-cost interim solution, as part of a general move to 03 numbers. The advantage of the "equivalence" approach is that it need only be declared as a general rule - existing references to 084 numbers can remain for the time being.

Once swapping the second digit "8" for a "3" were to become generally recognised as a proper principle, those who failed to follow it would immediately come under direct and simple pressure to fall in line.

(If a body does not need a non-geographic number - it must simply be abandoned immediately!)

This proposal is specifically relevant to NHS Direct, where the cost and confusion of a complete number change would not be appropriate, given that 0845 4647 may have less than 2 years of operations remaining. As 0345 4647 has already been configured and stands ready for use (currently in test mode), there is no reason why it cannot be switched on immediately. It is a disgrace that the NHS Direct NHS Trust was granted total exemption from Directions which apply to other NHS bodies, as this “approved” example of use of a 0845 number makes compliance very difficult to achieve.

Conclusion

I much urge your support for my proposal. There is no good reason why the Cabinet Office could not be persuaded to adopt it as recommended or mandated policy very swiftly. I was able to make some progress in instigating publication of a Clarification Statement in 2009, however this work was never carried through.

If the government is seen to be dragging its feet when the Ofcom proposals are published later this year it will be highly embarrassing for the government. Furthermore, I am concerned that this threat of embarrassment may be used to put pressure on Ofcom to hold back from much needed action that will affect other sectors and issues.

Do please contact me for further information and briefing on this matter.

Ofcom's proposed call cost advice

The following illustration is from Ofcom's consultation - Simplifying Non-Geographic Numbers.

This shows the type of call cost advice which Ofcom proposes to be applied as a mandatory requirement for ALL references to Premium Rate (09 and 087) and Business Rate (084) numbers.

I will leave it to readers to imagine the illustrations that would accompany other examples, but the text (using current cases and rates) would be as follows:

To enquire about your Tax Credits, CALL: 0845 300 3900
This call costs 2p per minute plus your phone company's access charge.

To book an appointment at the surgery, CALL: 0844 477 1799
This call costs 5p per minute plus your phone company's access charge.

It must be noted that this is doing nothing more than making the present situation transparent. The present "access charges" (which are not applied on calls to geographic numbers) extend to around 40p per minute.

Some may be content to pay a premium to perhaps further the career of a singer. It is wholly unacceptable for citizens to suffer a "Service Charge" when contacting HMRC or DWP, or accessing NHS services.

The additional "Access Charge" which telephone companies (other than BT, which is prohibited from doing so) feel entitled to add on calls to these types of numbers makes use of these numbers by public bodies even worse. Not only are they receiving financial subsidy from callers, they are also helping telephone companies to boost their revenue.

Ofcom is expected to come forward with a response to the consultation and proposals for implementation in the Autumn of 2011.

Angry people wanted to talk about "Rip-Off Britain"

The BBC is looking for contributors to the 3rd series of "Rip-Off Britain".

It will be returning to the issue of expensive telephone numbers,
especially those wrongly used for public services, e.g. ...
•    NHS GPs, Hospitals and other services
•    HMRC for income tax and tax credit queries
•    DWP agency enquiries such as JobCentre Plus, the Pensions Service, etc....

The particular request is for those who have incurred a large telephone bill
(or PAYG charge) for calling one of these services and are prepared to
talk about their experience.

You can approach the producers directly using this form or
contact me by email to have a chat.

Excerpts from the piece on this from the first series can be viewed at this link.

Ofcom consultation: Simplifying Non-Geographic Numbers

Somewhat belatedly perhaps - I have published some simple notes reflecting a personal view on responding to the Ofcom consultation on Simplifying Non-Geographic telephone numbers.

We must end this confusion - or is it a deliberate rip-off!

It is a simple matter of fact that all "Business Rate" (084 and 087) telephone numbers are generally more expensive to call than "Geographic Rate" numbers - see Telephone call costs.

Why is this?

The reason is because the call originating telephone company (OCP) has to pass on a "Service Charge" to the company that terminates the call (TCP). For these number ranges it can be up to 10p per minute (including VAT). It is naturally right and fair for the OCP to reflect this cost in the call charge incurred by those who call these numbers. This is a "premium", even though the service delivered is not formally classified by Ofcom as a "Premium Rate Service".

It makes no difference whether the TCP uses the money received to reduce its charges to the user of the number or passes it on as a "revenue share". A "revenue share" may be used to subsidise the cost of running a call centre or to cover other expenses. If the cost of handling incoming calls is rated at less than the (up to 10p per minute) benefit then it could provide net income from handling incoming calls. It is normal to regard any reduction in costs to a business as contributing towards "profit", even if there is no associated increase in revenue.

The net effect is that callers are (generally) incurring a cost and recipients (invariably) receiving a financial benefit. Where it is improper for this to occur, the features of non-geographic telephone numbers are available through use of 03 numbers, which are non-geographic but, by regulation charged at "Geographic Rate" with "revenue sharing" prohibited.

What about the exceptions

"Business rate" (084/087) numbers are more expensive to call than "Geographic Rate" (01/02/03) numbers. This is perfectly fair as a general statement, however there are some perverse exceptions.

The simple cases

The statement is universally true for Public Payphones.

The statement is universally true for mobile PAYG tariffs.

The "99.99%" case - Contract ("Pay Monthly") Mobiles

The statement is almost universally true for mobile contract tariffs. Mobile contracts are based on packages of calls of whatever type the caller makes. Those who use their mobile to call landlines will generally benefit from an unlimited allowance of calls to Geographic Rate numbers. Where the number is limited, a fair valuation will invariably show the cost to be less than that for calls to Business Rate numbers, which are invariably excluded from packages.

I have seen evidence of some odd cases where the penalty charge for calling a "Geographic Rate" number outside the terms of a package is greater than the rate charged for some "Business Rate" numbers.

I have attempted to get information from the main mobile service providers about the proportion of their contract customers who make calls to Geographic Rate numbers outside the terms of packages. They have offered no figures, advising that the number is insignificant. I am happy to consider any evidence that shows this assertion to be untrue.

On the basis of this information I am happy to assert, in general terms, that the marginal cost of calling a Geographic Rate number is not only less than that of calling a Business Rate number, but that it is zero.

The potential for confusion arises with landline tariffs.

Landline tariffs are now based on the assumption that calls to Geographic Rate numbers are included in a package that covers the times when the subscriber makes calls. Those who do not use their landline during weekday daytimes can benefit from a cheaper package.

If, having taken the cheaper option, they then make weekday daytime calls to Geographic Rate numbers it is natural that they will incur a "penalty charge".

It is false and misleading to confuse this "penalty charge" with the "standard rate" for calling Geographic Rate numbers, which is zero.

At present, BT is regulated in the rates that it charges for calls to Business Rate numbers. In effect, it is prohibited from making any money on placing these calls. This means that in some cases, the cost of calling a Business Rate number may be less than the penalty charge for calling a Geographic Rate number outside the terms of the applicable package.

Because BT is the largest provider of residential calls from landlines (originating around 40%) other providers reflect its tariffs, although only to some extent as they are not covered by the regulations. Virgin Media, the second largest, has a Geographic Rate penalty charge that is less than the rate for calling all but the cheapest Business Rate numbers.

The misrepresentation and the "Rip-off"

It is sadly common for those who benefit from the subsidy provided by use of Business Rate numbers to seek to pretend that this is done at no additional cost to callers. In some cases it is claimed that this is a benefit to callers.

The perverse effect of Business Rate calls being cheaper only arises when callers are going beyond the terms of their telephone service agreement and thereby incurring Penalty Charges. I have seen no evidence to show that this effect could tilt the balance of interest for callers as a whole in any case. Even if this could be demonstrated, I would question the validity of imposing premium rates on callers, without openly declaring this as being a "Service Charge".

The fact that the Service Charge is less than the Penalty Charge incurred by some who go beyond the terms of their selected arrangement should not be a major issue of consideration. Where someone who benefits from use of a Business Rate number presents such cases as the primary, or sole, example it is hard for them to defend themselves against accusations of a "rip-off".

In truth, it may be that those who make these misleading assertions have themselves been misled, and have simply failed to understand the issues. That may be a less serious fault; it depends if one would rather be seen as a fool or a knave.

I do not wish for public bodies to be either foolish or knavish. I will continue to assist them with education or moral correction, whichever is needed.

Telephone call costs

I am often asked to give examples of the relative cost of telephone calls to Geographic Rate and Business Rate numbers.

The following table covers the cost of weekday daytime calls of exactly 5 minutes, reflecting prices published as at 27 February 2011.

All landline and mobile providers offer inclusive calls to Geographic Rate numbers as part of the standard tariff for those who normally use their phones for such calls at the relevant time. Those who do not normally make (daytime) calls to Geographic Rate numbers would pay (outside contract) penalty charges. These penalty (or infrequent use) charges, are NOT reflected here for landline and contract mobile services.

In some cases, there are various rates for calls to 0844 and 0871 numbers. Those selected - g6, g7 and g10 - are those most commonly used, e.g. by GPs, airlines and those who seek to pretend that Business Rate calls are not more expensive, respectively.

Service		5 minute weekday daytime call cost
		Geographic Rate	Business Rate
		01/02/03	0845	0844 (g10)	0844 (g6)	0871 (g7)
Landline
	BT	inclusive	inclusive	£ 0.27	£ 0.38	£ 0.63
	Virgin	inclusive	£ 0.63	£ 0.48	£ 0.65	£ 0.74
	Talk Talk	inclusive	inclusive	£ 0.37	£ 0.37	£ 0.63
	Sky Talk	inclusive	£ 0.41	£ 0.26	£ 0.36	£ 0.62
Contract
	Vodafone	inclusive	£ 1.05	£ 1.05	£ 1.05	£ 1.80
	Orange	inclusive	£ 1.02	£ 0.62	£ 0.62	£ 1.79
	O2	inclusive	£ 1.02	£ 1.02	£ 1.02	£ 1.79
	T-Mobile	inclusive	£ 2.05	£ 2.05	£ 2.05	£ 2.05
	Three	inclusive	£ 1.75	£ 1.75	£ 1.75	£ 1.75
PAYG
	Vodafone	£ 1.05	£ 1.25	£ 1.25	£ 1.25	£ 1.25
	Orange	£ 1.00	£ 2.00	£ 2.00	£ 2.00	£ 2.00
	O2	£ 0.75	£ 1.25	£ 1.25	£ 1.25	£ 1.75
	T-Mobile	£ 1.50	£ 2.00	£ 2.00	£ 2.00	£ 2.00
	Three	£ 1.30	£ 1.75	£ 1.75	£ 1.75	£ 1.75
Public Payphone		£ 0.60	£ 1.40	£ 1.40	£ 1.40	£ 5.40

I would be most grateful if anyone who sees any error in this information would alert me by email using this link.

Posting updated on Sunday, February 27, 2011