: the consultation period for this document has been extended. The initial consultation period will now run until Monday 16 November 1998. The period during which comments are invited on any submission made to Oftel during the initial period has been extended to 10th December 1998.
1 Summary
2 Introduction
3 The need for change
4 Block allocations
5 Individual number allocations
Annexes
A List of numbering policy activities
B Using Long Run Incremental Costs (LRIC) to calculate number charges
C Members of the Numbering Advisory Group
1.1 The UK Numbering Scheme is a national resource. Oftel has managed the Scheme since
1994 when it took over responsibility from BT. The resource is finite: the maximum length
of numbers is limited by international standards, by the technical capabilities of
networks and by customer preference for shorter numbers. Increasing demand for numbers can
lead to particular areas of scarcity and ultimately to the exhaustion of the entire Scheme
at which stage major changes to customer numbers are needed to provide more capacity.
1.2 Oftel currently allocates blocks of numbers to operators free of charge. With no value
placed on the numbering resource, there is little incentive for operators to be efficient
in their use of numbers and number hoarding may take place. This precipitates number
shortages and increases the likelihood of number changes. The position in the UK differs
from that in most EU countries, where number charges are made for all or part of numbering
schemes.
1.3 The workload involved in numbering administration for Oftel is set to change
significantly over the next 23 years. To meet the requirements of European Directives,
more companies will become eligible for direct allocations of blocks of numbers from
Oftel. In addition, for non-geographic ranges such as freephone and premium rate, it is
Oftel's intention to move away from the allocation of numbers in blocks and introduce
allocations of individual numbers. This would give customers increased choice and more
rights in numbers. It would also avoid distortions of competition; operators allocated
blocks containing significant amounts of commercially valuable numbers are at a
competitive advantage over operators with less attractive number blocks.
1.4 Oftel has therefore been reviewing ways in which the introduction of charging for
numbers can promote greater efficiency and increased stability in the numbering scheme.
Oftel has also been exploring ways in which the numbering administration function might be
contracted out to the private sector, leaving Oftel to focus on core regulatory tasks.
1.5 This consultative document considers a possible future regime of charging for number
blocks encompassing both auctions and administrative pricing. Changes to existing
arrangements would be driven primarily by numbering management requirements designed to
enhance numbering efficiency and minimise the need for disruptive code changes for
customers. The document seeks views on the principle of number charging, as well as the
level and method of setting the charges. Initial estimates of administrative charges, up
to around 10p a number per year, would be a small proportion of turnover or total
operating costs of operators. Any new arrangements would need to include safeguards
against anti-competitive behaviour and aim to ensure that all reasonable demands for
numbers can be met in order to support effective competition.
1.6 Oftel is also seeking views on possible changes to the administration arrangements for
numbering where administration tasks would be carried out by the private sector with
policy functions remaining with the regulator. In its policy role, Oftel would retain
responsibility for ensuring that the management of the Numbering Scheme fits within the
broader objectives of telecommunications regulation. Oftel would therefore continue to
plan developments to the Scheme and publish and amend the Numbering Conventions, a set of
rules and procedures for the allocation of numbers. However, partnerships with private
sector bodies number allocation organisations (NAOs) would be developed to carry out
new administration functions for the allocation of individual numbers, including the
auctioning of numbers to end users; the collection of fees; the development of databases;
and the provision of front office facilities. An option is also considered for the
contracting out to an NAO of the administration function currently carried out by Oftel
the allocation of blocks to operators.
1.7 In carrying out this review Oftel has also taken account of European legislation on
telecommunications. Directives allow National Regulatory Authorities (NRAs) to charge
operators in order promote efficiency where scarce resources are being used and require
NRAs to control national numbering plans to guarantee independence from operators and
service providers.
Consultation
1.8 Oftel is seeking comments on the proposed new charging and administration
arrangements. : the consultation
period for this document has been extended. The initial consultation period will now run
until Monday 16 November 1998. There will then be a further period to Thursday
3 December 1998 during which comments are invited on any submission made to Oftel
during the initial period. Responses should be sent to:
Alan Pridmore
Oftel
50 Ludgate Hill
London EC4M 7JJ
or to the email address: numbers.oftel@gtnet.gov.uk
1.9 Written comments will be made publicly available in Oftel's Research and Intelligence
(R&I) Unit unless confidential. Respondents are therefore asked to separate out any
confidential material into a clearly marked annex. Appointments to view written comments
in the R & I Unit must be made in advance (tel: 0171 634 8764/8765; fax: 0171 634
8946).
Alternative formats
1.11 Oftel documents are also available in alternative formats. A large print version of
the summary section of this document is available. Copies of this document are also
available on disk. Braille and tape formats of the summary can also be provided on
request. Please contact the Oftel Research and Intelligence Unit on 0171 634 8764/8765 or
e-mail infocent.oftel@gtnet.gov.uk, or
call textphone 0171 634 8769 for more information.
E-mail notification mailing list
1.12 Oftel has an free e-mail based mailing list to help people stay informed
about the work that Oftel is doing. Each time an Oftel document is published
and placed on Oftel's web site subscribers to the list receive an e-mail informing
them about the document. If you would like to join then please click here to add yourself
to the list. There is a also a link to the form from the What’s new section of the site.
2.1 The UK telecommunications Numbering Scheme is a national resource. The design and management of the Scheme affects the national interest. Fair and equitable access to numbers is a key ingredient to the development of competition: numbers provide the means to route electronic communications across telecoms networks, to identify and reach customers and to provide telecoms services over the networks.
2.2 The Scheme must be managed in a way which meets the current demand for
telecommunications services and copes with the rapidly changing telecoms market place. It
needs sufficient flexibility to meet the demand for new and as yet unknown services and to
provide contingency for the growth of existing services. It must support effective
competition. Companies with rights to numbers should receive fair and non-discriminatory
treatment with respect to access to numbers and allocation policy. The management of the
Scheme must meet customers' needs for a sufficient supply of numbers whilst ensuring
minimum disruption, cost and inconvenience through changes.
2.3 Oftel took over responsibility for the management of the Numbering Scheme from BT in
1994. Since that time, Oftel's Numbering Unit has been making allocations and reservations
of blocks of numbers from the Scheme to licensed operators. The operators then
sub-allocate individual numbers to customers. Blocks are the basic 'currency unit' used by
operators and service providers for routing and charging purposes within their networks.
The size of the blocks at present is 10 000 or 100 000 numbers, depending on the type of
service to be provided.
2.4 The Scheme from which Oftel makes block allocations was set out in Oftel's
Statement on the National
Numbering Scheme in January 1997:
01 Geographic Services
02 Geographic Services (from 2000)
03 Reserved for Geographic Services
04 Spare for future services or expansion
05 Reserved for Corporate Numbering
06 Spare for future services or expansion
07 Mobile, Personal Numbering and Paging Services
08 Specially Tariffed Services (up to national rate)
09 Premium Rate and Reserved for Multimedia Services
2.5 Oftel also manages other parts of the Scheme including:
2.6 The administration process for the allocation and reservation of blocks and short
codes includes the maintenance of several databases, monthly publication of changes to the
Scheme and dealing with enquiries on administration issues from operators and service
providers and the public. A list of Oftel's policy work related to numbering is set out in
Annex A.
2.7 Oftel does not make a direct charge for number allocations. The cost of running the
number administration unit in Oftel is met from the general licence fee charged to
individually licensed public telecommunications operators to meet the costs of regulating
the telecommunications industry under the Telecommunications Act and operators' licences.
2.8 This differs from the situation in other European countries: regulators in Belgium,
Denmark, Finland, France, Germany, Ireland, Luxembourg, Netherlands, Norway and Spain
charge, or propose to charge, for numbers. In most cases the charges are
designed to promote efficient use of the Numbering Schemes, or part of their Schemes.
Current work: approximate volume of applications in 1997
| Number range | Type of service | Size of normal block allocation |
No. of blocks allocated during 1997 | No. of blocks in the range | % of blocks spare in the range |
| 01 02 |
Geographic Numbers | 10 000 block | 606 allocated 7 reserved |
01 50 000 02 80 000 |
01 1070%1 02 100% |
| 03 | Reserved for Geographic Numbers |
range not open | 100% | ||
| 04 | Spare | range not open | 100% | ||
| 05 | Corporate Numbers | range not open but 10 000 1M | 0 | up to 100 000 |
100% |
| 06 | Spare | range not open | 100% | ||
| 07 | Mobile, Paging Personal | 100 000 block | 29 alloc 13 reserved |
10 000 | 85% |
| 08 | Special Service (free, local-national- rate) |
10 000 block | 189 alloc2 41 reserved2 |
080 + 084 +087 30 000 |
95% |
| 09 | 090 Premium Rate | 10 000 block | 02 | 090 10 000 091 90 000 |
090 091-9 100% |
| access codes |
service and indirect access | single 1XXX codes | 70 alloc 3 reserved |
1 000 | 40% |
| portability prefix codes | internal network routing codes | individual number allocation | 25 | 91 900 | 86% |
| targeted transit codes | internal network routing codes | individual number allocation | 2 | 995 | 99% |
| signalling point codes | internal network routing codes | not currently allocated by Oftel | 0 | 20 000 | not available |
| data network codes | data service codes | individual number allocation | 16 | 39 | 50% |
1 % varies between area codes; there are over 600 codes in the 01
range
2 09 PRS numbers included in 08 count as 09 range were not available in 1997
Legal framework
2.9 The Director General's powers under the Telecommunications Act 1984 relate to
licensees. He does not have powers to allocate numbers directly to end users. The Act
allows licences to include conditions requiring payments by licensees of
"such amount or amounts as may be determined by or under the licence". These
amounts are not limited by the Act to administrative costs. However, to date the only
relevant condition resulting from this section of the Act relates to the general licence
fee so that the costs of numbering administration are included within the general running
costs of Oftel.
2.10 The Director General's powers with regard to numbers are based on the numbering
condition in operators' and service providers' licences. The condition requires, amongst
other things, the Director General to determine a Specified Numbering Scheme and to make
allocations from the Scheme to licensees in accordance with Numbering Conventions, a set
of rules and procedures for the management of the Scheme. The Conventions were first
published in 1994.
2.11 Oftel also has to operate within the framework set out by European legislation.
European Directives also place requirements on member states' arrangements for numbering
administration and set parameters on the extent to which the UK can change the current
arrangements. In particular:
2.12 In relation to charging:
Numbers for Guernsey, Jersey and the Isle of Man
2.13 The three islands use numbers from UK numbering space (ie international country code 44). They have separate 01 area codes for their islands, one mobile code each and blocks from the special services ranges (08 and 09). They are not subject to the Telecommunications Act. Oftel recognises that arrangements will need to be put in place for these islands possibly through a Memorandum of Understanding to ensure the continuing provision of numbers to the islands under any new arrangements.
Oftel's objectives
2.14 In this document Oftel sets out its view that reliance solely on regulatory measures to manage the Numbering Scheme and allocation to operators in blocks are no longer sustainable approaches to maintain the efficiency of the Numbering Scheme or to meet the needs of customers. The following chapters look at the pressures for change and considers options for the development of numbering administration to meet these pressures. In doing so Oftel's objectives are:
Numbering capacity in the National Numbering Scheme
3.1 As a result of the National Code Change ("PhONEday") in 1995, the capacity of the UK's National Numbering Scheme increased nine-fold. New capacity is now available in particular for non-geographic numbers and considerable parts of the Scheme are kept free for future use. However PhONEday did not address directly shortages of numbers within 01 area codes. Capacity within these ranges remained unchanged by the addition of a 1 to the code. Instead, the National Code Change provided the framework by which area capacity shortages could be addressed in future using the 02 range for future code changes.
3.2 In 1996 Coopers and Lybrand carried out a study for Oftel on the likely demand for numbers over the next 15 years. Coopers and Lybrand's study suggested that over 30 area codes in the 01 range may exhaust by the year 2010. In its January 1997 Statement Oftel announced that, to address capacity shortages in future, some 01 areas would adopt an 02 code with an eight digit local number. In this way, for example, London will change from 0171 and 0181 to 020 and Cardiff from 01222 to 029 in the year 2000.
3.3 For non-geographic ranges mobile and specially tariffed services such as freephone and premium rate the new Numbering Scheme provides significant amounts of new capacity. Nevertheless, there will continue to be new future demands on the Scheme, in particular from new broadband multimedia services, or as a result of European harmonisation measures. As with geographic number shortages, there are mechanisms within the Scheme to provide additional capacity. By keeping two ranges, 04 and 06, spare there is the ability to utilise that capacity for new services. In addition, 04 or 06 could be added to the front of existing ranges to extend number length from 11 to 12 or more dialled digits, just as 01 was kept free to expand the Scheme in 1995.
3.4 Access codes the short codes beginning with '1' used by all customers to access services such as Directory Enquiries 192 and by BT customers choosing to route calls on other operators' networks ("carrier selection codes") such as 132 for Cable and Wireless are also a scarce resource. Because these codes always begin with '1' and are usually three or four digits long, the number of codes are very limited at three digits long, only 100; at four digits 1000. There is a particularly strong demand for carrier selection codes and almost 50% of available capacity has already been utilised.
3.5 In principle therefore the UK now has a flexible numbering framework to meet future demands for capacity. However, this resource will remain scarce at particular times and for particular ranges because its flexibility is based on the need to make code and number changes: on-going local geographic changes, extending the length of access codes and ultimately an expansion of the whole Scheme. Such changes are disruptive to customers and costly to businesses and to the UK economy as a whole. Any change to the Scheme gives rise to costs from changes to stationery, signage, customers' telephone equipment etc and causes inconvenience resulting from a change to dialling habits. Regular expansion or alterations to the Numbering Scheme should therefore not be the sole means of managing the numbering resource. Oftel believes that changes, with the consequential disruption and inconvenience for customers, should only be made where necessary and that the existing codes and ranges should be used as efficiently as possible.
3.6 Another form of scarcity is that relating to individual preferences for so called 'golden' numbers. Within the blocks currently allocated by Oftel, in particular from ranges such as freephone (0800) and local-rate (0845), some numbers are memorable or commercially desirable. Each of these so called "golden numbers" is unique and therefore intrinsically scarce. Under current arrangements, where operators make sub-allocations to end-users, operators are allowed by their licences to charge for "coveted numbers", even though they are receiving the allocation of blocks on a first-come-first-served basis from Oftel without payment. The charges made by operators are sometimes in excess of £1000 for each number each year.
3.7 To maximise operators' numbering efficiency, Oftel has been using regulatory measures, for example by applying rules in the Numbering Conventions before making new allocations. In the case of geographic areas the 01 code range with less than 25 free blocks, classified as "number conservation areas", operators are expected to adopt increased number efficiency measures under rules agreed by the industry and Oftel. Number conservation and other regulatory measures taken by Oftel have increased utilisation. However, even allowing for these measures, operators are only achieving about 40% 45% utilisation rates at the time when a local code change is necessary. The demand study carried out by Coopers and Lybrand for Oftel suggests that a small increase in average utilisation to 50 % could reduce the number of codes exhausting by around one third.
3.8 One of the reasons for the current ceiling on efficiency is the use of 10 000 blocks as the minimum block size used by operators for routing calls in their networks. It means that an operator will need a 10 000 number block even if they have only a few customers in the code area. To achieve significantly higher utilisation rates, changes to networks and to operators' internal practices would be necessary. For example changes to network infrastructure would allow networks to route on 1000 number blocks which would improve numbering efficiency. It would be technically possible for operators to introduce routing on smaller block sizes by increasing processing power in exchanges; however, there is currently little economic incentive for them to do so. In addition, operators frequently reserve significant amounts of numbering capacity for the expansion of existing customers' numbering ranges. With no price attached to numbers, there is no economic incentive for operators to review reservations regularly to determine whether an actual demand has materialised.
3.9 Moreover, within the current regime, operators are starting to use the free supply of numbers as a competitive tool offering customers multiple numbers per line to allow for distinctive ringing, sometimes irrespective of whether the customer actually requires such a service or numbers. Both examples lead to further inefficiencies and accelerate the need for code changes in many cities.
3.10 It is Oftel's view that attempting to deal with these issues by means of increased regulation would be burdensome and intrusive and would require substantial additional resources. Such regulation would be inherently inflexible and could reduce choice. It would not allow those affected the freedom to make their own decisions based on individual circumstances and needs. Operators would have to meet the regulatory requirements whether or not this is economically desirable.
3.11 A pricing mechanism would send a clearer signal to operators and give greater incentives to utilise number stocks more efficiently. For example, if an operator had to pay an annual charge for the use of a number block then it would have an incentive to return the block should it no longer be required or to increase the utilisation efficiency of its allocated numbers. In addition, charges could in due course help incentivise operators to use smaller block sizes, for example 1000 number blocks, which would promote more efficient use.
3.12 An example of the possible impact of number charging in the UK already exists. Operators are sharing the cost of the publicity budget for the year 2000 number changes on the basis of the amount of number blocks allocated. This process has caused operators to review their allocations; over 500 blocks have been returned to Oftel by operators who have discovered that the blocks are no longer in use.
3.13 It is important that any new pricing mechanism should send the correct signals. Number charging should encourage the efficient use of numbering resources and ensure that numbers are allocated to those who place the highest value upon them. Charges should therefore, be calculated using an appropriate cost base (where possible) and not simply be used as a means of extracting revenue.
3.14 A new charging regime would also need to ensure that customers, and the UK economy as a whole, continue to benefit from competition and access to new services. The price of numbers must therefore be set at a level which does not restrict the development of innovative and competitive services but which at the same time makes operators' use of numbers more efficient and responsive to customer demand.
Question 1 Do you agree that a pricing incentive would encourage the
optimal use of the numbering scheme?
The move towards individual number allocations
3.15 In the consultative document published in August 1996 and the Statement of January 1997 on the National Numbering Scheme, Oftel set out its intention to move from block allocations to operators and introduce the direct allocation of individual numbers to customers where this is practical and desirable. Allocation in blocks reduces the efficiency of the Numbering Scheme (for example, an operator will need a block of 10 000 geographic numbers even if it has only one customer in an area or for a particular service). It reduces customer choice and is potentially anti-competitive, especially in non-geographic ranges where the customer places a significant value on the memorability of a number. If, for example, a customer wanted a number in a block allocated to another operator, the customer would have to either enter into a contract with an operator who is not their first choice or accept an alternative number. It also allows the operator to retain an inappropriate degree of leverage over customers, for example by withdrawing a number if insufficient revenue was being generated.
3.16 Some of these issues have already arisen as the industry begins to use blocks from common service codes such as 0845 and 0870 and to introduce number portability. As a result, operators are currently examining the means by which a customer of one operator can select an unused number from a block belonging to another operator. However, this will involve a series of complex technical and commercial arrangements which will not be subject to the numbering licence condition. Moreover, Oftel has concerns that the arrangements may not be transparent and may not involve all operators and service providers on an equal basis. Oftel will be monitoring industry discussions to ensure these concerns are met. Similarly, the porting of customers numbers for a second and subsequent times under current portability arrangements raises complex technical and commercial issues which the industry are beginning to address.
3.17 Individual number allocations would address these problems and ensure that arrangements for the 08 and 09 ranges comply with the European Interconnection Directive without the need for additional regulation through licence conditions. The Directive requires that "procedures for allocating individual numbers and/or number blocks are transparent, equitable and timely, and that allocation is carried out in an objective, transparent and non-discriminatory manner".
3.18 Individual number allocation would also be compatible with the requirements of the Numbering Directive. The Directive, which is to become effective on 1 January 2000, necessitates changes to the portability framework currently in operation in the UK. The present arrangements are based on reciprocal agreements between operators. An operator can ask another operator to provide portability if it is willing to reciprocate; subscribers can port their number only if there is a portability agreement between the operators concerned. The Directive however requires portability to be based on user request; all operators must be able to "port" a customer's number if requested by the customer to do so. Individual number allocation would facilitate full portability at the user's request.
3.19 The introduction of individual number allocation for the 08 and 09 ranges is not intended to mandate the use of Intelligent Network (IN) technology for call routing, as proposed in industry discussions of Phase 3 of Non-Geographic Number Portability in 1996. Oftel would wish to leave the method and details of implementation to the industry. Nevertheless the optimum implementation solution should be sufficiently flexible to allow operators to choose the most efficient method for their networks. These technical and interconnect issues are considered further in Chapter 5.
3.20 The introduction of central number allocation to other ranges is likely to require a significant investment in network development for all operators and service providers. No feasibility work has taken place by Oftel or the industry as a whole but its wide scale introduction for ranges other than 08 and 09 is thought to be unlikely to be practical for some years. Indeed it is questionable whether there is a strong consumer demand for such facility in ranges where the nature of the numbers used is of much less commercial significance than for 08 and 09 numbers. However opportunities might arise sooner in the 070 personal numbering range, where IN functionality is already employed and where a "value" appears to attached by customers and operators on memorable numbers.
Growth in workload
3.21 The policy objective of direct allocations of individual 08 and 09 numbers to end users could require a team of up to 100 staff to administer the allocations process. In addition, areas of Oftel's current work are also set to expand. Coopers and Lybrand's study for Oftel estimated a base case (broadly the status quo) annual demand of 1.5 million new geographic numbers per year increasing under a peak case scenario to 6 million a year. For mobile telephony, Coopers and Lybrand predicted a base case demand of 1 million new numbers a year rising to 5 million under the peak case. It was estimated that demand for special service numbers could reach 500 000 per year by 2010 (500 000 is the total current amount of 08 and 09 numbers in use).
3.22 Multimedia and broadband services are also likely to require significant new numbering capacity. An Oftel/industry working group is currently considering an industry proposal to use the 06 range for "broadband" services, requiring up to 50 million numbers. In addition, the 05 numbering range has been reserved for corporate numbering. The business community has expressed a strong interest in having direct allocations from this range by Oftel. Each customer would have control over the way in which numbers were used and routed within their private network. They would also have the power to negotiate with different suppliers for incoming and outgoing service for different parts of their network. If various practical issues were to be resolved by the industry and 05 became established Oftel would need to provide resources to meet the resulting increased workload.
3.23 A further factor which impacts on workload stems from European legislation. From mid-1998 number allocations made directly by Oftel will cease to be restricted to individually licensed operators. Service providers operating under class licences will become eligible for direct allocations under the provisions of the Licensing Directive. This will increase the numbering administration workload, in particular for 07 personal numbers, 08 special service numbers and access codes. An increase in applications for access codes may also arise as a result of the requirement in the Numbering Directive on Member States to introduce carrier pre-selection.
3.24 Oftel wishes to review whether number block administration should continue to be carried out by Oftel or whether alternative arrangements might be more efficient and effective. There is no absolute reason why the public sector, in the form of the telecoms regulator, needs to allocate numbers although Community law requires that Member States must ensure that allocation is competitively neutral and independent of operators. Instead, core policy work could continue to be the responsibility of the regulator with the administrative functions being carried out in the private sector to secure the full benefits of innovation and efficiency to agreed policy rules set by the regulator. Chapters 4 and 5 set out the issues in more detail. Separate questions may be raised about which functions should remain with Government (which includes Oftel) such as the choice of the means of fee determination.
Question 2 Do you agree with Oftel's analysis of the increasing workload that can be expected for numbering administration?
4.1 As explained in Chapter 2, all numbering capacity currently allocated by Oftel is in number blocks or in the form of short codes representing large potential capacity. This type of allocation is likely to continue for the foreseeable future in respect of the following numbering ranges:
4.2 05 Corporate numbers would be allocated in blocks but since allocations would be made directly to end users they are treated for the purposes of this document as being individual number allocations. As explained below, block allocations for the ranges 08 and 09 are also expected to continue until 2000.
Charging arrangements
4.3 Oftel believes that the introduction of number charges for blocks and codes where scarcity occurs will promote the optimal use of the Numbering Scheme. Regular auctions could take place to allocate capacity in parts of the Scheme where scarcity exists. As an alternative, or operating alongside auctions, charges could be set using centrally determined prices.
4.4 Auctions are a useful method of determining the market value of a block and of
ensuring that those who value the number most will be allocated the number. The auction
could be used to set a one-off allocation fee or an annual rental charge or both. However
any use of auctions would need to take account of the obligation on the UK to ensure that
all justified demands for numbering capacity can be met in a fair and equitable way at all
times. In addition, for geographic number blocks, auctions would be likely to result in
regional disparities in prices for number blocks, with prices for blocks in shortage areas
perhaps as a consequence of high levels of competition being significantly higher
than those in parts of the country with little or no competition. There would also need to
be a means of ensuring that auctions did not encourage anti-competitive behaviour by
operators, for example, through a particular bidder acquiring a considerable proportion of
the available resources, and did not create any barrier to entry through the cost of
blocks in shortage areas becoming excessively high for new operators.
4.5 Given the potential difficulties that would have to be resolved with the use of
auctions as the sole method of block charging, it may be that the allocation of numbering
resources in blocks is better suited to the principle of block prices determined by the
Numbering Administrator. If the prices are calculated using an appropriate cost base and
in accordance with a mechanism determined and supported by Oftel, the allocation by the
Numbering Administrator should approximate the allocation by a market mechanism. Centrally
determined charges could be used in conjunction with auctions, in particular auctions of
"golden" number blocks. For instance when a new numbering level such as
"020 2" for London numbers or 072 for personal numbering are made available it
might be appropriate to auction initial blocks to identify those of higher value such as
020 200. There may also be circumstances where auctions could be the method of allocating
access codes, for example, when a new series of codes becomes available.
4.6 To determine the likely level of number charges, Oftel has carried out an initial study which estimates the approximated costs of expanding the stock of available numbers including costs to users, operators and the Numbering Administrator. More details on the basis of the study are given in Annex B. Taking into account the amount of numbers currently available, the likely growth in demand and the amount of capacity likely to be created through a change, a annual charge of around 10p per number allocated is estimated for 01 and 02 geographic blocks where, for the reasons set out above, scarcity currently exists. Oftel believes that a uniform charge across all 01 and 02 geographic areas would be appropriate, rather than fees varying according to levels of scarcity in particular areas at particular times. As explained in Chapter 3 all geographic areas face demands and levels of utilisation which if unaddressed could lead to continuing exhaustion. A uniform charge would give operators certainty for planning and investment decisions. In addition, as with auctions, varying levels of charges could lead to geographic disparities in terms of the cost of telephone services and potentially to distortions of competition in parts of the country.
4.7 Where there are ranges with a greater supply of available capacity, a lower charge based on administrative costs of around 1p2p a number may be appropriate in particular for 07 and, if appropriate in advance of individual allocations, 08 and 09. For access codes, which is also a scarce resource, a charge of £2000 per code is proposed.
4.8 These estimates would seem a reasonable basis for charging and should not place an undue burden on operators. Pricing would be for new and existing blocks. Adjustments may need to be made for customers who have "ported" their numbers from the operator allocated the block to another operator. Similar arrangements with annual charges per code would be introduced for access, portability prefix, point and data codes.
4.9 Oftel envisages that charges would involve a one-off allocation fee and, to ensure continuing optimal use of blocks with unused capacity being returned to the administrator, an annual rental. For blocks where the price is determined by the administrator, the charge of 10p or 1/2p a number would apply to the annual rental, with an allocation fee to reflect the one-off processing of the application. In order to ensure that charges are non-discriminatory and to ensure the efficient use of existing as well as future capacity, annual rental charges would apply to all numbering capacity, ie to existing as well as to new allocations.
4.10 The charges envisaged are generally in the middle of the range of charges used by other European regulators:
| Number Category | Suggested UK charge | European Charge Range |
| geographic number blocks | 10p per number | 1-25p per number |
| non-geographic number blocks | 1-2p per number | 1-25p per number |
| access codes | £2000 per code | £300-£60 000 |
4.11 Oftel proposes that the basis for, and the precise level of, the charges should be
set by Oftel after annual consultation with the Numbering Advisory Group (NAG). NAG would
also be consulted on rules for any auctions and on the areas of the scheme which are to be
defined as "scarce" for the purposes of number charging.
4.12 Oftel would wish to ensure that the arrangements for the operation of NAG are appropriate for this new advisory role. It is important that the appointment and advisory processes are transparent and independent. It may be appropriate for NAG to have an independent chairman (it is currently chaired by Oftel's Technical Director) or for the fee setting role to be carried out by an independent, separate group or sub-group. The membership should also be reviewed to ensure that it is fully representative of the industry operators and service providers and of user groups. The current membership is listed at Annex C. Oftel is particularly concerned that users and service providers should be well represented in the Group.
4.13 It may also be appropriate for some of the revenues obtained from charging to be used to contribute to the publicity campaign arrangements for code changes. As explained in Chapter 3, joint industry funding arrangements are in place for the year 2000 changes. However, agreement between operators on the funding mechanism has been difficult to achieve. Independent funding arrangements for future joint publicity activities would avoid these difficulties and ensure that operators focus on other key implementation issues. Joint publicity activities would include media advertisements but would not be intended to replace or fund the essential direct customer contacts by operators.
Question 3 Views are invited on:
a the use of auctions for block allocations;
b the use of centrally determined block charges ;
c the calculation of charges using long term incremental costs;
d the general level of the charges resulting from Oftel's initial study;
e the use of an allocation and annual charge;
f whether administrative charges should be the same rate across all 01 and 02 code areas;
g the use of NAG as the means by which industry and user comment on the setting of administrative charges and to the identification of the areas of scarcity is obtained;
h the changes to the structure and operation of NAG that might be appropriate to provide transparency and ensure that the views of all interested parties are represented;i the use of revenues from number charges to fund joint publicity activities.
Administrative arrangements
4.14 Currently the administration of the ranges listed at 4.1 above is carried out by Oftel's Numbering Unit. Oftel has considered whether this should remain the case indefinitely, given the expected increase in workload and other changes in Oftel's role as the UK's telecoms market becomes fully competitive. Oftel's view is that core numbering policy functions should remain with the regulator because they raise key competition and consumer issues. This position is consistent with European Directives which require the National Regulatory Authorities to control national numbering plans.
4.15 However, the administration of the Scheme the processing of applications for number allocations is an area where there may be scope for a new approach. Having one body dealing with policy and administration since 1994 has been essential to allow the management of changes to the Scheme to be linked closely with the allocation process. With key policy decisions on the new Scheme having been made and with most parts of the Scheme now entering a period of relative stability after the year 2000, it might be possible to separate these functions.
4.16 Oftel is therefore seeking views on whether the allocation function should be carried out by a body other than Oftel. This could be a through private sector body a Number Allocation Organisation (NAO) operating under contract to Oftel. The NAO would be independent of operators and service providers and selected by Oftel through competitive tender to allocate blocks of numbers for a specified period, possibly five years.
4.17 Under this approach Oftel would:
4.18 The NAO would be independent of telephone companies. It would
4.19 This would be similar to the arrangements in the United States where the Federal Communications Commission (FCC) is responsible for policy setting and the administration is carried out under contract for the FCC. The North American Numbering Council provides industry and user input to the policy making and administration process.
4.20 To ensure transparency and accountability of the NAO's activities, all allocations and reservations would (as now) be published regularly on the Internet and an annual report produced. The more formalised role for the Numbering Advisory Group, described earlier in the chapter, would ensure effective advice and comment for Oftel and the NAO on administration and policy issues. It may be desirable for the transfer of responsibility for number administration to be phased in by number range: the "stable" number ranges requiring little policy input, such as the 07 range, to take place ahead of more complex ranges where policy is evolving, such as access codes.
4.21 Oftel seeks views on whether such new arrangements could be workable and on the necessary controls that would be required in separating the policy and administration functions. Before proceeding with this approach Oftel would wish to establish that clear efficiency gains would be likely to result .
Question 4 Comments are invited on:
a the principle of separating the policy and administration function;
b the proposed division of tasks between Oftel and the NAO;
c the measures necessary to ensure accountability and transparency of the NAO;
d the scope for developing the role of the Numbering Advisory Group;
e the timescales for the implementation of any new arrangements.
5.1 Oftel's objective is to ensure that the allocation of individual numbers to end users is carried out:
5.2 Oftel's view is that the current arrangements with the allocation of blocks to operators gives a strong commercial advantage to operators with "attractive" number blocks and reduces customer choice. New industry arrangements due to be introduced by 1999 by operators for the porting unallocated numbers will address some of these issues but raise others such as transparency and non-discrimination.
5.3 Many operators currently raise a charge for golden numbers and the process of identifying such numbers is primarily determined by the 'market'. A simple market mechanism based on individual preferences determines which numbers are potentially golden or 'valuable'. Customers who request a particular number (a 'choice' number) are essentially signalling to the supplier that the number does hold some intrinsic value. A smaller volume of numbers are however, 'collectively' valuable such as those which are 'easy on the eye' or, memorable, eg, 07000 007 007.
5.4 In order to maximise customer choice and competition, Oftel proposes to introduce as soon as possible the central allocation of individual numbers to end users for:
Administration and charging arrangements for individual number allocations
5.5 The function involves:
5.6 This would be a new function for the regulator. It is outside Oftel's area of expertise and there is no requirement under European Directives for Oftel to carry out the function itself. Oftel's proposal is for the administration function to be carried out under contract to Oftel by an NAO or several NAOs, possibly one for each range. The appointment of more than one NAO would provide resilience to the arrangements and reduce the dangers of monopoly provision. A broader spread of experience and skills might allow a failing NAO more easily by another. (For the same reasons, it may be appropriate for the 08 and 09 NAOs to be different from the block NAO, should such a body be appointed). Oftel would select the NAOs through competitive tender for a fixed period, set rules, monitor performance and control the prices charged. The NAOs would charge users for allocation and it is possible that these charges would exceed cost. These proposals, in so far as they deal with how the NAOs might be renumerated is just one model. It is recognised that the mechanism by which the rules of the charging process are to be established, and by which money raised in excess of cost is to be accounted for, will ultimately be a matter for Ministers and Parliament. The operational rules would need to ensure that the risk of windfall gains by the NAO were minimised while encouraging the maximisation of efficiencies. Overall policy responsibility would remain with Oftel.
Number pricing
5.7 Given the limited supply of golden numbers in each of the number ranges, Oftel's proposal is for auctions to be the primary allocation method for identifying these numbers and for determining their appropriate market value. An auction closely approximates the allocation process of the market; the price is determined by consumer demand, ie people placing bids for particular numbers will eventually determine the price at which that number is allocated. As with block auctions, this process ensures that those who value the number most will be allocated the number; the allocation process itself is efficient and fair. In order to provide a suitable level of demand for numbers, it is proposed that these auctions should be held at most monthly possibly using bidding arrangements on the Internet.
5.8 However Oftel is keen to seek views on whether an additional allocation process based on administrative pricing is also required. Given that demand for such numbers is spread more or less evenly throughout the year with the customer frequently requiring a near-immediate allocation, an allocation mechanism based on centrally-determined administrative charges may be necessary to meet market demand. One possible arrangement would be for there to be three classes of individual number allocations:
5.9 Under these arrangements the next sequential standard numbers would be allocated to customers seeking immediate allocations. The charge would be based on administrative costs based on examples in other countries around £10–£20. If the customer required specific numbers, these could be obtained through regular auctions probably monthly of all available numbers. The reserve price could be the administrative charge. The golden numbers could either be included in this auction or held over for a separate auction, perhaps twice yearly.
5.10 An alternative arrangement might be to limit auctions to the pre-determined golden numbers with standard and choice numbers being allocated routinely. This would increase the amount of numbers available to customers seeking immediate allocation but would mean that the value of choice numbers would not be determined by the market.
5.11 The charging mechanism could be set using an annual rental, a single allocation fee or both. As with block allocations, Oftel favours using both an allocation fee and an annual charge if this is practical, in order to ensure that numbers are returned to the NAO when they are no longer required. However, under the auction mechanism, it may be difficult to determine the successful bid if two types of charges are involved. If this is the case then the use of annual charges may provide the most practical solution.
5.12 Users may be given rights in numbers indefinitely (subject to withdrawal for breach of conditions or for general national number changes) or for a limited period, for example, five years, at the end of this period numbers would return to the numbering administrator for re-allocation.
5.13 Charges would apply to all new allocations from the start of the NAOs' operation. Oftel seeks views on whether the annual charges should also apply to existing allocations. These numbers will be transferred from sub-allocations of operators to direct allocations to end users. Although the discriminatory issues associated with existing block allocations will not apply to allocations to end users, Oftel considers that there is merit in placing an annual rental charge based on administrative costs on these numbers in order to ensure continuing efficient use of the range.
Question 5 Oftel seeks views on:
a the use of NAO(s) to carry out the administration function for individual numbers;
b whether a single or multiple NAOs is appropriate;
c the use and frequency of auctions;
d the need for numbers to be available for immediate allocation to customers;
e the division of the range into "golden", "choice" and "standard" numbers;
f alternative allocation methods;
g whether charges should apply to existing as well as new allocations;
h whether allocations should be for a indefinite period or time-limited.
Number trading
5.14 Oftel considers that there may be benefits in allowing numbers to be traded and transferred between users and operators. Because a users' valuation of some numbers may vary over time, trading would allow for the allocation of numbers to respond to such changes in demand. Bi-lateral trades users wishing to buy and sell would help to ensure the continuing efficiency of number allocation. It may also add some flexibility to the supply of numbers as users would be able to obtain numbers without approaching the NAO or bidding at auction.
5.15 Oftel does however recognise that there are potential concerns, not least the possibility of some users realising windfall gains from number trading. Whilst such windfall gains might be realised under normal market mechanisms for other goods and services, Oftel is concerned about the possible effects this might have on telecommunications customers and the use of numbering resources in general. Number trading may also increase the incidence of 'hoarding' whereby large volumes of numbers are held in anticipation of their future value. Oftel considers that if trading of numbers is to be allowed then appropriate measures must be put in place to ensure that numbers are allocated and used in the most efficient manner. Such measures could include a "use or lose it" rule where the holder of the number is required to bring the number into service with a set period, perhaps six months, or return it to the NAO for reallocation.
Question 6
a do you agree that number trading should be allowed?; and
b if so what measures are needed to ensure that hoarding and speculative use are minimised?
Number ownership
5.16 The introduction of number trading without an appropriate administrative and legal framework within which trading is to be allowed would possibly result in an inefficient outcome. One important element of this framework is of course related to the 'ownership' of numbers.
5.17 Given that numbers do possess some financial value, golden or memorable numbers particularly so, and that this value might be met through an allocation and rental fee, it is reasonable to assume that rights of use would accrue to the allocatee. Oftel considers that customers should be able to benefit from such rights, for example, by means of trading those rights of use or, perhaps as a means of insurance against service providers attempting to withdraw numbers/service or serving contract termination notices if the user requests to port their number.
5.18 Under the existing allocation and administration process the receipt of a number does not necessarily confer ownership and the use of the number is subject to the provisions of the service provider/customer contracts and more importantly, to the Conventions governing the use of the National Numbering Scheme. Any sub-allocated numbering capacity also remains part of the numbering resource and is subject to the same guidelines. Whilst all numbers will remain a national resource and their use will continue to be subject to specific guidelines, Oftel does recognise that recipients of numbers will require a degree of certainty as to the rights of use once a number has been allocated.
5.19 The new arrangements should therefore include clear guidelines regarding the 'ownership' of numbers and any associated rights of use. In order to encourage the efficient use of numbering capacity Oftel will also seek to ensure that those allocated numbers are in receipt of a telecommunications service and are still subject to so called 'use it or lose it' rules. This should help prevent the acquisition of numbers merely for speculative purposes.
Question 7 Views are invited on the rights of use that should be associated
with the allocation of a number.
Technical and interconnect issues
5.20 As explained in Chapter 3, Oftel is essentially neutral on the question of which technologies should be used by operators to implement central number allocation for 08 and 09 ranges. Oftel's proposals are not intended to impose on industry a particular technical implementation for call routing, such as the use of Intelligent Network technology as described in Phase 3 of Non-Geographic Number Portability. Whilst a comprehensive individual number database is a prerequisite for the ability to provide IN routing full digit analysis the reverse is not true. Individual number allocation can be implemented while routing continues be done on the present 'block routing' system where a 'number block owner' routes numbers to their final destination, often acting as a transit operator between the originating operator and the terminating, 'service providing' operator.
5.21 The development of appropriate technologies and routing methods is largely a matter for industry and the optimum solution should be sufficiently flexible to allow operators to choose the most efficient method for their own networks. However, Oftel does believe that efficiency in network routing should be promoted and encouraged; lower network costs are likely to result in lower retail prices and added consumer benefit. Oftel is keen therefore to ensure that appropriate incentives are placed on operators in order to encourage use of the most efficient technologies and the most cost effective means of routing. For example, once a central database is introduced it might be beneficial in the long run for the industry's interconnect arrangements to encourage the deployment of IN routing or at least not discourage it.
5.22 If a block routing system is introduced and the allocation and portability of individual numbers continues to grow, an increasing volume of calls will route via a transit operator the range holder. As transit routing becomes more common, more conveyance and transit costs are being incurred by the terminating operator; the operator to whom the number has been ported. Under this scenario and with the existing interconnect payments for Number Translation Services (NTS), the originating and transit operator continue to retain their costs but there is no incentive on the originating operator to seek the most efficient means of routing the call. There is also no means by which the terminating operator can influence the routing decisions of the originating operator.
5.23 The investment in IN technology is a commercial decision for operators and as such, Oftel will not seek to mandate such investments. Oftel believes the most appropriate means of addressing these potential problems is to review the commercial interconnect arrangements, for example the current flow of NTS payments. The forthcoming assessment of interconnect charges for NTS to be carried out by Oftel's Interconnect Policy Forum (IPF) will also address the question of routing efficiency. The industry may also wish to consider appropriate interconnect or other arrangements to deal with the recovery of per line set-up charges, currently payable under existing portability agreements. It is also important that the industry consider the migration to IN routing and what form of incentive would be required to ensure that operators moving to IN routing are not hindered in doing so or are not imposing unnecessary costs on other operators.
Timing
5.24 Oftel will shortly be forwarding a question to the industry Network Interoperability Consultative Committee (NICC) asking for its views on the technical options available, including combining a central numbering database whilst continuing with the 'block routing' of calls. The change is urgent because without the new arrangements customer choice will continue to be restricted and alternative arrangements currently under consideration by the industry would be unlikely to meet fully the requirements of the Interconnection Directive for allocation to be "carried out in an objective, transparent and non-discriminatory manner".
Question 8 Comments are invited on:
a the proposed continued use of number blocks as the primary method of routing numbers under central allocation;
b the need not to discourage efficient routing; and
c the appropriate means for resolving the consequent interconnect issues.
6.1 Oftel believes that the introduction of number charges for parts of the numbering scheme which are scarce will promote efficient use and delay or avoid code changes. Oftel proposes that charges should be based on auctions where practical and on centrally determined charges. The charges would be set on the basis of the long run incremental cost of a number and following consultation with industry and users represented in a reformed Numbering Advisory Group.
6.2 Oftel believes that customer choice of, and access to, numbers would be improved through the introduction of single number allocation through a centralised independent body or bodies in ranges where it is technically feasible. Allocations would be made directly to end users. This would ensure that numbering arrangements for the 08 and 09 ranges in particular are non-discriminatory, transparent and meet the requirements of Numbering Directive.
6.3 Primary legislation will be required to allow:
In addition, the approach that is eventually adopted will have to comply with the relevant European legislation.
6.4 It is Oftel's wish for these changes to be introduced as soon as possible. The exact timing of this will depend not only on the outcome of this consultation, but also on the resolution of some legal issues, the views of Ministers and the availability of a suitable legislative vehicle. Given these constraints it is highly unlikely that any changes could begin to be introduced earlier than the year 2000.
Policy functions include:
There is a grey area where allocation work involves a close link to the development of policy. This includes:
The estimated charges are forward looking and seek to recover the long run incremental cost of a number. Oftel considers that the most appropriate method of determining a charge for numbers is to estimate the charges based on long run costs, in effect, the future costs of increasing the supply of numbers. A charge which reflects the LRIC of a number will incentivise operators and other users to utilise their numbers more efficiently. More efficient use of numbering resources will delay the need for changes or expansions to the numbering scheme.
It is also important that all operators face consistent charges. At present in the absence of proper incentives some operators are more inefficient than others in relation to number utilisation. To a certain extent it is as a result of the inefficiency of such operators that other operators who are able to use their numbering resources more efficiently are forced to comply with changes to the numbering scheme. A consistent charge per number will mean that the cost of holding large volumes of numbers will be directly proportionate to volume of numbers held.
The estimation of the LRIC of a number assumes that the numbering scheme will need to be expanded at some point in the future to increase the supply of numbers; it is the expected cost of this change which forms the basis of the calculation. The incremental element of the cost calculation is determined by the amount of useable numbers created by the expansion. In the simplest terms, the estimated total cost of changing the numbering scheme is averaged over the volume of useable numbers created, this yields an absolute cost per number. Given that any expansion to the numbering scheme will take place in the future the cost estimate has to be adjusted so as to obtain a value in present value terms. This cost is then expressed as an equivalent amount per annum for example over the number of years expected before an expansion.
Membership at July 1998
Consumer Groups
Michael Dixon, Telecommunications Managers Association
Richard Furey, Business Advisory Committee
Bill Mieran, Telecommunications Users Association
Operators
Lisa Correa, Cable &Wireless
Andrea Dworak, Energis
Mick Everett, Telewest
Tony Holmes, BT
Shaun Kennedy, Cellnet
Isobel Watt, Scottish Telecom
Manufacturers
Miriam Ogurcak, Federation of Electronic Industries
Martin Sadler, Hewlett Packard
Independent Numbering Experts
Richard Cox, Mandarin Technology
Alistair McLeod, Independent Consultant
Claire Milne, Antelope Consulting
Access Codes A short number beginning with the digit '1' from the Numbering Scheme which is allocated for 'access' to specific features and services offered by telecommunications operators, eg, 192 provides access to directory enquiries.
Data Network Identification Codes Codes allocated from the Numbering Scheme which allow for the routing of data services over telecommunications networks.
Database Information maintained in a computer storage system.
Geographic Number A number from the Numbering Scheme which is allocated for use at an exchange in a specific geographic area; the number is used to identify a particular geographic location.
IN Intelligent Network: an overlay computer system providing intelligence to enable the routing of telephone calls; intelligence which is additional to the normal processing and routing functions of a switch.
Number Block A series of numbers (usually sequential).
Long Run Incremental Costs (LRIC) Costs that arise in the long run as a result of providing a given 'increment', eg, an additional amount of numbers. Long run costs assume that the supply of numbers is variable (not fixed).
Non-Geographic Number These are numbers which are used to identify a type of service rather than a geographical location. These services are sometimes referred to as Specially Tariffed Services and include freephone , local rate, national rate and premium rate numbers. Mobile and Personal numbers are also non-geographic numbers.
NTS Number Translation Services: the process associated with the routing of a non-geographic number to a network termination point, eg, the number is translated from its non-geographic format into a geographic or mobile number to enable it to be routed to a geographic location or to a mobile phone.
Number Block Portability The facility which enables a customer to transfer from one operator to another and retain their number block or, a series of numbers from within a number block.
Number Portability Prefix Codes Codes allocated from the Numbering Scheme used for internal routing of ported numbers, ie, a prefix is attached to the dialled number which specifies the exchange (operator) to which a number has been ported.
Number Portability The facility which enables a customer to transfer from one operator to another and retain their number.
Numbering Conventions A set of rules and principles relating to the use and management of numbers from the Numbering Scheme.
Numbering Scheme A Scheme for the allocation and re-allocation of numbers, codes and prefixes. The Numbering Scheme specifies which number ranges are allocated for which type of telephony service which encompasses all public numbering capacity available behind the number ranges 01 to 09, including access and other codes and prefixes.
Porting, Ported Keeping the same number when transferring from one operator to another.
Signalling Point Codes Codes used by operators for internal routing purposes, ie, to enable telephone switches to identify one another when routing calls over telecommunications networks.
