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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.

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