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Statement on 0845 and 0870 retail pricing

S1 This statement sets out the decision of the Office of Communications ('Ofcom') in relation to retail pricing arrangements for calls from the BT network to 0845 and 0870 'number translation services' (NTS) numbers. Ofcom is publishing this statement as a result of Oftel's public consultation on this issue, which was launched in September 2003. Oftel's consultation document was published in response to two different sets of concerns. Firstly, Oftel was aware of growing consumer concerns about prices for these calls being uncertain and possibly misleading, particularly when advertised as being 'local rate' or 'national rate' calls. Secondly, there were also industry concerns that the current BT retail pricing arrangements for these calls (in particular the link between 0845/0870 calls and BT's standard retail price for geographic local and national calls) resulted in revenue uncertainty for Communications Providers that terminate these calls.

S2 The consultation document examined five different options for retail pricing arrangements for 0845 and 0870 numbers, based either on retaining or removing the existing link on the BT network between the retail price for 0845 and 0870 calls and standard retail price for geographic local and national calls respectively. The consultation document sought views on these options and also invited stakeholders to propose any other additional options that might be appropriate. The consultation document set out the framework for a regulatory option appraisal, and expressed an intention to undertake a cost-benefit analysis of the various options if sufficient data were obtained during the consultation process to enable a meaningful cost-benefit analysis to be carried out.

S3 42 responses to the consultation were received from a wide range of stakeholders and are available on Ofcom's web site. During the consultation period, Oftel also proactively sought to make presentations on the key issues to the NTS Focus Group, Oftel's Internet Service Provider Forum and the Advertising Standards Authority. Shortly after the consultation closed Ofcom also met the Communications Managers Association (CMA) to discuss the issues. The formal responses and other input received from stakeholders during the consultation period are summarised in this statement, and Ofcom's comments on the key issues raised are set out.

S4 Ofcom is aware that, since Oftel's consultation at the end of 2003, there have been (and continue to be) significant industry developments in relation to NTS. These developments, their impact on the various options put forward for 0845/0870 retail pricing and the relationship between 0845/0870 retail pricing and Ofcom's other work related to NTS, are described in this statement.

S5 In particular, the impact of recent NTS-related developments has been noted by Ofcom in arriving at the decision set out in this statement. However, Ofcom considers that full analysis of these issues would have unreasonably delayed the production of this statement, and that this full analysis needs to be carried out in the context of Ofcom's future wider-ranging re-examination of the NTS framework. In this statement, it is Ofcom's intention to set out as plainly as possible (and in a timely manner) an up-to-date policy position in relation to 0845/0870 retail pricing, before undertaking the wider-ranging re-examination. Ofcom considers that this should have the benefit of giving some clarity in the short term to both industry and consumer stakeholders prior to (and whilst taking care not to pre-empt the outcome of) that re-examination. Clearly there will also need to be careful co-ordination between future Ofcom work on NTS and Ofcom's Telecommunications Strategic Review.

S6 Following consideration of the consultation responses and detailed economic, legal and technical analysis, and mindful of recent industry developments, Ofcom has decided to implement a slightly modified version of the option known as Option 1(b) in the consultation document. This includes the following measures:

• The current link on the BT network between BT's retail price for 0845 and 0870 calls and BT's standard (pre-discount and call package) retail price for geographic local and national calls respectively will remain in place;
• Calls to numbers in the 0844 non-geographic range (which are not linked to BT's standard local rate) will continue to be subject to a price cap of 'up to 5p per minute or per call' on the BT network. However, pricing arrangements for calls to these numbers will be made more flexible within this price cap to give Communications Providers more control over their revenues if they choose to use this range; and
• Ofcom will work with the industry to produce guidance to NTS Service Providers using 084 and 087 numbers on how these numbers (and in particular, pricing indications for calls to services on these numbers) can be advertised so that they are not misleading to consumers.

Further statutory consultation

S.7Ofcom is also carrying out a further statutory consultation on a proposed change to the way that 084 and 087 number ranges are designated in the National Telephone Numbering Plan to make it clearer to the industry the basis on which these numbers are allocated. Ofcom is also carrying out a statutory consultation on the changes required to the telephone numbering application form for 08 numbers, should the proposed changes to the National Telephone Numbering Plan be implemented. Responses to both these consultations are required by 31 May 2004

• Calls to 0845 and 0870 numbers: review of retail price and numbering arrangements [pdf]
• Responses to consultation: A statement and further consultation on 0845/0870 retail pricing
• Modifications to the National Telephone Numbering Plan and Application Form for 08 Telephone Numbers to reflect retail price and numbering arrangements for calls to 0845 and 0870 numbers [pdf]
  Final Statement

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