Summary

• During 1998 Oftel issued two consultations on the UK Numbering Scheme – Developing Numbering Administration and Freephone Numbers: Options for the Future. This Statement is part of an ongoing process of consultation and progress reports to consumers and the industry on these two issues. It summarises the responses to the initial consultations, reports the comments of the recent Trade and Industry Select Committee’s inquiry into numbering, explains Oftel’s initial conclusions and sets out Oftel’s proposed way forward on the various issues.
• In the Developing Numbering Administration consultative document Oftel asked for comments on proposals to improve the efficiency of use of the Numbering Scheme by introducing charging for numbers. It also asked for views on proposals for a new body to be appointed to allocate individual freephone, local, national and premium rate numbers directly to customers. Finally, the document considered an option to contract out the numbering administration function currently carried out by Oftel.
• In their responses, consumers strongly supported Oftel’s proposals for number charging and individual number allocation. Operators however were concerned about the potential costs of the proposals and in particular the technical changes to networks that might be required to implement them. Respondents were essentially neutral on the proposal to contract out numbering administration, pointing to the need to demonstrate that it would result in gains in efficiency and effectiveness.
• A report by the House of Commons’ Select Committee on Trade and Industry, published in February 1999, supported Oftel’s proposals to improve the efficiency of the Numbering Scheme through the introduction of number charges and direct allocations of numbers to customers. The Committee said Oftel should not be unduly swayed from putting customers interests first by operators' claims that improving the efficiency of number use poses them with significant technological problems.
• On the basis of responses to the consultation and the comments of the Select Committee, Oftel has concluded that number charging and direct allocations should be introduced, with a target implementation date of 2002. However, taking account of concerns raised in the consultation, Oftel is to set up Working Groups comprising consumers and operators to consider detailed implementation issues. The output of these Groups will then form the basis of further Statements and full public consultations during the course of next year. In addition, the question of contracting out Oftel’s existing number administration work will be kept under review.
• In the Freephone Numbers: Options for the Future consultative document Oftel sought comments on proposals to bring all freephone numbers into the 080 10–digit numbering range, whilst making unused freephone numbers available to all operators and their customers. The document requested views on the seven options identified for achieving this objective, whilst welcoming alternative suggestions.
• Responses to the consultation fell generally into two groups; those who supported the consultation document’s option 2 and those who argued for the retention of 9–digit numbers. Operators and Telecommunications Advisory Committees strongly supported a move from 9–digit 0800 freephone numbers to 10–digit 0800 numbers by the insertion of a prescribed digit between the 0800 code and the number (option 2). The Freephone User Group (FUG) and the Direct Marketing Association (DMA) considered that action on freephone should be delayed until the numbering administration proposals were put into place, allowing individual number allocation to release the unused freephone numbers. The FUG and the DMA both argued that a change to freephone numbers had not been sufficiently justified by Oftel and demanded that 9–digit numbers be retained because of their value as marketing brands. The FUG urged that if the move to 10–digit numbers was justified, the customer should be able to choose the additional digit. The DMA requested examination of an alternative option that would allow 9–digit numbers to remain, whilst making available unused freephone capacity in the10–digit format.
• The report by the House of Commons’ Select Committee on Trade and Industry considered that Oftel had not adequately recognised the importance of freephone numbers to firms and organisations and that customers’ interests should be considered further. The Committee concluded that Oftel should take account of the outcome of its inquiry, as well as the responses received to the freephone consultation, before reaching a conclusion. Oftel has acted on the Committee’s recommendations.
• On the basis of responses to the consultation and the comments of the Select Committee Oftel is continuing with the consultation on the future of freephone numbers. Oftel has requested that the Network Interoperability Consultative Committee investigate technical options which would release unused freephone capacity whilst permitting retention of existing 9–digit numbers. An invitation to tender has been issued, inviting consultants to conduct a cost–benefit analysis for changes to numbering. A late summer workshop will provide an opportunity for interested parties to be involved in the next stages of the formation of freephone numbering policy. The workshop will be followed by a further consultation on freephone numbering, with a final statement expected in early 2000.

Chapter 1

Introduction

1.1 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: they are the means by which operators and service providers offer telecommunications services to their customers and are used by networks to initiate, route and charge for calls.

1.2 The resource is finite: the maximum length of numbers is limited by international standards, the technical capabilities of networks and 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. Any change to the Scheme gives rise to costs from changes to stationery, signage, telephone equipment etc and causes inconvenience because of the change to dialling habits.

1.3 Oftel has managed the Scheme since 1994 when it took over responsibility from BT. 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 their customers. For example, the number block 0171 634 has been allocated to BT for use on an exchange in London. Numbers from this block have been allocated by BT to its customers – 0171 634 8800 is Oftel’s switchboard number. Blocks are the basic currency unit used by operators and service providers for routing and charging purposes within their networks. There are different sizes of the blocks depending on the type of service to be provided: at present they are of 10 000, 100 000 and 1 000 000 numbers. For example when a customer dials a number from the 1 million number block 07000, the customer’s operator recognises that the 07000 block has been allocated to Vodafone, delivers the call to Vodafone and charges the customer its standard charge for calls to the 07000 block.

1.4 Because of the way geographic numbers are managed by operators and the way numbers are routed within networks (by the number blocks), operators are only achieving about 40% – 45% utilisation rates at the time when a local area code change is necessary. A demand study carried out in 1997 for Oftel suggested that a small increase in average utilisation to 50 % could reduce the number of area codes exhausting by around one third.

1.5 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 Special Services (up to national rate)

09 Premium Rate and reserved for Multimedia Services

1.6 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.

1.7 In July 1998 Oftel published its consultative document Developing Numbering Administration seeking comments on proposals for:

• the introduction of charges for number blocks to promote the efficient use of the Numbering Scheme by operators; and
• the allocation of individual numbers for freephone, local and national rate and other specially tariffed services, to increase customer choice and ensure public benefit from revenues resulting from the sale of this national resource; and
• the separation of Oftel’s current numbering functions between policy and administration, allowing the allocation function to be carried out by a body other than Oftel.

1.8 The consultation ended in December 1998. 49 responses were received: 25 from associations representing consumers, 12 directly from consumers, 7 from operators, 2 from bodies representing operators and 3 others. In addition, following the consultation, the House of Commons’ Select Committee on Trade and Industry held an inquiry into telephone numbering. Its report published in February 1999 included comments and recommendations on number charging and individual number allocations.

2.1 In the consultative document Oftel proposed that in future operators should be charged for each number block, comprising a one–off allocation fee and an annual rental. The document argued that charges would encourage operators to use numbers more efficiently and thereby delay the need for future code changes. Oftel proposed that the level of charges should be based on the Long Run Incremental Costs (LRIC) of increasing the number supply. The LRIC approach resulted in charges of around £1000 per 10,000 number block, more than the level that would apply if charges were aimed solely at recovering the cost of numbering administration. Alongside centrally determined charges, Oftel sought views on the use of auctions as means of allocating number blocks in certain circumstances.

2.2 In their responses, consumers’ views on charging were generally supportive of Oftel’s proposals; a large majority supported the principle of using pricing to encourage optimal use. There were some concerns about the effect charges might have on the market and on customers. Auctions of blocks were rejected by the majority, fearing distortions of competition and their impact on prices for customers.

2.3 However all operators rejected the idea of number charges set at a level above administrative cost. They argued that Oftel’s existing powers – through the annual audit and in processing applications – would be sufficient to ensure that numbers are being used efficiently. Their view was that, with the policy of 02 code changes now established, 01 codes should be changed to provide additional capacity rather than conserving existing numbers which would prove increasingly costly and burdensome. There was concern that possible distortions to competition might take place if charges were set at a high level in order to influence significant changes in behaviour, for example routing geographic numbers on the basis of 1000 blocks instead of 10,000. In particular there was a concern that charges might have less impact on large, cash–rich established operators than on new–entrants. Auctions of number blocks were rejected by all as impractical, because Oftel has a requirement to provide number blocks to meet all reasonable demand, and as potentially anti–competitive, because they may favour larger operators.

2.4 The use of LRIC as the basis for charging led some respondents to suggest that they would in effect be charged twice for changes – once for the number block and again when the code change, albeit delayed, took place. They argued that LRIC–based approach should involve a reimbursement of fees paid at the time of a change. There was a general view that revenues in excess of cost should be used for the benefit of the telecoms industry.

2.5 In the consultative document, Oftel proposed that numbers in the 08 and 09 ranges (primarily freephone, local, national and premium rate services) should be allocated individually directly to customers or their agents rather than in blocks to operators. Oftel proposed that a Number Allocation Organisation (or Organisations, NAO) be appointed to allocate the numbers. Customers holding 08 and 09 numbers would be charged an annual rental, with an additional allocation charge for "golden numbers" (numbers that are particularly memorable or commercially desirable). Oftel suggested that auctions could be used to identify golden numbers and to determine the market value for the number. In making these proposals, Oftel’s primary objectives were to:

• maximise the efficiency of the Numbering Scheme by making all numbers available for allocation;
• extend customer choice of numbers;
• ensure an appropriate charge is made for golden numbers to promote optimal use of a scarce resource;
• allow revenues from these charges to go to the public purse rather to operators or individuals; and
• put in place arrangements which allow operators to introduce more efficient routing at a time of their choosing.

2.6 All consumers responding supported the principle of direct allocations for the 08 and 09 ranges; some argued that a feasibility study should be carried out to determine when the principle could be extended to other ranges. On charging, the majority agreed with the introduction of annual rental charges based on the cost of administration along with the use of auctions to identify and allocate golden numbers, though there was concern about the practicalities of the auction approach. There was concern from public sector bodies and charities that the use of auctions may prevent them obtaining golden numbers in future. Most agreed that number trading should be allowed, although there should be regulation to protect against hoarding and speculative use.

2.7 Some responses identified potential synergy between the proposals for individual number allocation and the consultation on freephone migration. One of the solutions to freephone capacity shortage considered in the consultation was the continuation of 9–digit 0800 numbers operating alongside 10–digit numbers. BT currently holds all 9–digit number blocks in the 0800 range, although under Oftel rules – to prevent competitive imbalance – no new numbers can be allocated from these blocks. Respondents argued that if 9–digit numbers continued to be allocated, given that generally they are commercially more attractive than 10–digit numbers, the case for a transparent and non–discriminatory means of allocation would be strengthened. In addition, holders of 0800 numbers were concerned that a mixed 9– and 10– digit number range would lead to misdialling and brand confusion – for instance the use of 0800 0 12 12 12 might lead to unwanted calls to 0800 12 12 12 or cause the public to assume both were held by the same company. Respondents argued that Oftel should allow customers to reserve confusingly similar 10–digit 0800 numbers. This, they argued, would only be practical if there were a central administration providing access to all 0800 numbers and operating under a common set of rules.

2.8 Operators were either opposed to, or doubtful about the benefits of, allocations directly to customers. A principle concern was that the introduction of INA would require significant technical changes to networks, in particular the early introduction of routing based on individual numbers rather than blocks (using "Intelligent Network" or IN technology, all digits in a number are analysed to identify the operator prior to routing, rather than the first 6 digits under block routing). All operators argued that a cost–benefit analysis should be carried out before Oftel proceeds with the proposals. Most operators commenting argued that number trading should be allowed in a regulated form.

2.9 In the consultative document Oftel asked for views on the division of its numbering work between policy and administration, allowing the possibility of contracting out the administrative work at some future date.

2.10 Respondents were essentially neutral on the proposal, with most expressing cautious support for splitting policy and administration provided that efficiency gains could be demonstrated. There was a concern that Oftel control over policy issues should not be reduced under any new arrangements and that, in particular, its skill levels should not be undermined by a lack of day–to–day involvement in number administration issues.

2.11 All operators commenting opposed an extension the role of the existing main consultative group – the Numbering Advisory Group (NAG) – arguing that charging and INA issues should be taken forward in operator fora such as the Operators Policy Forum and its Working Groups. All operators favoured a single, rather than multiple, NAO.

3.1 Earlier this year the House of Commons’ Select Committee on Trade and Industry held an inquiry into telephone numbering and in particular Oftel’s proposals for changes to freephone numbers. The Committee heard oral evidence on 12 January from Oftel, the Freephone User Group and Consumer Communications for England. The Committee also received written contributions from operators, consumers and others. The Committee’s report – published on 10 February 1999 – set out the Committee’s analysis and conclusions. Although the report concentrated on freephone changes and the other changes to the Numbering Scheme which form the

'Big Number' campaign, the report also commented directly on the proposals in the Developing Numbering Administration consultative document.

3.2 The report’s analysis and conclusions were in general supportive of the principles and proposals set out in Oftel’s consultative document. On number efficiency, the Committee stated that:

• "if numbers were properly recognised as a scarce, national resource — and they should be — the telephone operators would be on a charge of grossly negligent husbandry" (para 24);
• "if the efficiency of number use is improved, however, even by a small percentage, then there may be less need for Oftel to propose changes to geographic and freephone customers. We are concerned that Oftel has not pursued improvements by operators of the efficiency with which they allocate telephone numbers to end users as vigorously as they have inconvenient and costly changes to customers' numbers" (para 24);
• "we think it vital that the efficiency with which the nation’s resource of telephone numbers is used is increased and believe that economic incentives are more likely to achieve this aim than regulatory diktat. While acknowledging the costs associated with implementing individual number allocations, especially those falling on operators, we believe that progress in this direction will be of benefit to consumers" (para 52).

3.3 Furthermore, on number ownership and charging, the Committee said:

• "telephone numbers are a national resource; income derived from them should be returned to the public purse" (para 49);
• "plans to generate public funds from the allocation of telephone numbers, particularly freephone numbers, are over–due but should not be implemented at the expense of existing customers. The inefficient use of the nation's numbering resource cannot be allowed to continue" (para 53);
• "it is surprising that the ownership of numbers should be undefined" (para 49); "most importantly, legislation to clarify the ownership of telephone numbers is over–due" (para 52).

3.4 The Select Committee expressed concern that Oftel seemed to have rejected policies simply because operators claim they would be technically difficult:

" Oftel must not be unduly swayed from putting customers' interests first by operators' claims that improving the efficiency of number use poses them with significant technological problems" (para 24).

3.5 In its conclusions, the Select Committee recommended:

"that Oftel, working with Ministers, bring forward legislative proposals to clarify the ownership of telephone numbers and to permit number charging and individual number allocations, once the costs and benefits of these proposals, and the objections raised to them, have been carefully assessed" (recommendation O in the TISC report).

Oftel's conclusions

Number Block Charges

4.1 The responses of consumers to the consultation and the comments of the Select Committee have confirmed Oftel’s view that number charges for blocks and codes should be introduced to promote the optimal use of the National Numbering Scheme. Whilst the provision of numbering capacity remains free, operators have no direct incentive to ensure that capacity is used efficiently.

4.2 Oftel does not accept the argument made by operators that the costs of a change alone provide a sufficient incentive to use numbers efficiently. First, the costs of changes to operators are not necessary in the same proportion as the level of efficiency achieved in their use of numbers. Second, the overwhelming proportion of costs associated with a number change is borne by customers and Oftel has a duty to protect their interests.

4.3 The only alternative to charging is increasingly intrusive regulation by Oftel. This would entail Oftel becoming more involved in operators’ internal number management procedures, seeking detailed information about numbers allocated and new orders. Oftel believes that this would be overly burdensome and contrary to Oftel’s overall deregulatory approach where market mechanisms are appropriate.

4.4 However, Oftel accepts that the method and level of charging proposed in the consultative document may not be the optimum approach. The charges required to bring about significant delays to, or even the avoidance of, code changes would be at a prohibitively high level which might affect competition and inhibit the introduction of new services. Oftel therefore believes that the objectives of charging should be limited to improving operators’ internal management procedures for numbering rather than bringing about significant changes to operators’ networks, such as through routing by the analysis of smaller number blocks (eg 1000 numbers instead of 10 000). If such fundamental changes are required, Oftel believes that they should come about in a structured way through the normal regulatory process rather than evolving through charges.

4.5 In addition, Oftel recognises that the use of LRIC as the basis for charging has raised legitimate concerns from operators and consumers about having to face two sets of charges – one to delay change and another when the change takes place. Oftel does not consider that pay–back arrangements at the time of a code change, which could address these concerns, would be practical.

4.6 Oftel therefore intends to put forward proposals for alternative charging methodologies for consideration by consumers and industry. These will be aimed at addressing specific inefficient behaviour by operators. The charges should also find ways of rewarding efficient operators and recognising that number allocation is an essential entry requirement for new operators. Details of the further consultation are given in Chapter 5.

4.7 The responses from consumers to the consultation and the comments by the Select Committee have confirmed Oftel’s view that Individual Number Allocation (INA) is required to meet the key regulatory objectives set out in para 2.6. On the basis of the information currently available, Oftel believes that these arrangements could be in place by 2002 for the 08 and 09 ranges. INA for other ranges will remain under review.

4.8 Oftel does not consider that the introduction by operators of Pre–Allocation Porting (PAP), where operators can request the porting of unallocated numbers from other operators’ blocks in response to a customer order, is an adequate long–term alternative to INA. Oftel has fundamental concerns about the transparency of such arrangements – how to ensure that holders of blocks with significant amounts of golden numbers do not use those numbers to obtain commercial advantage and prevent others from obtaining them by retaining a reservation on the numbers. Furthermore PAP does not appear to address Oftel’s objectives to:

• provide proper control of a scarce resource through the separation of the pricing mechanism for golden numbers from service provision;
• realise public benefit from the sale of the national resource;
• provide common rules on rights of use.

4.9 Nevertheless, Oftel recognises that, in principle, PAP provides benefits to consumers in extending choice and reducing the discriminatory effects associated with block allocations in the 08 and 09 range. Oftel encourages industry to continue its work in developing PAP as an interim arrangement between block allocations and INA and to ensure that it is implemented in a way that is fully transparent and non–discriminatory. Oftel will contribute to industry’s work on PAP to ensure that the regulatory objectives are met and to provide coherence with plans for INA as they develop.

4.10 As explained in the consultative document, Oftel is essentially neutral on the question of which technologies should be used by operators to implement INA 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. Whilst a comprehensive individual number database is a prerequisite for the ability to provide IN routing, the use of a database and INA does not mandate IN routing. INA can be implemented while routing continues be done on the present ‘block routing’ system as an extension of the current portability arrangements where the ‘number block holder’ routes numbers to their final destination. The block holder often acts as a transit operator between the originating operator and the terminating ‘service providing’ operator.

4.11 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 customer benefit. In this context Oftel notes that it appears already that the existing interconnect payments for Number Translation Services (NTS) may be resulting in a net loss of revenue for some transit and terminating operators for ported calls.

4.12 Nevertheless Oftel recognises that the method adopted for the implementation of INA may impact on the technical solution operators adopt. For example, INA could be implemented in the following ways:

• individual allocations made by the NAO with block routing by operators;
• individual allocations made by the NAO with individual number routing (IN–based);
• all allocations made by an NAO directly to customers;
• allocations by the NAO directly to customers or via agents (including operators);
• all allocations by the NAO via agents (including operators).

4.13 Oftel will therefore obtain information on costs and benefits to assist in the assessment of these various approaches. This will be obtained as part of a wider study of the costs and benefits of proposed changes to freephone and access codes and will take account of technical developments within networks and timing issues. More details on this study are given at paragraph 9.1.

4.14 Furthermore, the consultation and the Select Committee’s comments have reinforced Oftel’s belief that golden numbers should attract a charge that reflects their market value and that revenue from these charges should go to the public purse. In addition there should be an annual rental charge, based on the costs of administration by the NAO, to encourage holders of 08 and 09 numbers to return them to the NAO when they are no longer required. Oftel believes further study is required on the details of charging and allocation methods. Oftel recognises the benefits that auctions will provide in determining the market value of numbers in a transparent way. However, Oftel wishes to work with consumers and the industry in assessing if and how auctions can operate alongside the customer’s requirement for the near–immediate availability of numbers. Oftel is also mindful of the need to ensure access to numbers by charities and public bodies at a reasonable cost. It may be that a combination of cost–based pricing, above–cost charging based on centrally determined charges and occasional use of auctions would be the most effective way forward.

4.15 Oftel recognises respondents' concerns over duplication and co–ordination in relation to the use of more than one NAO. It is also recognised that there are a range of possibilities for the constitution of the NAO ranging from a body formed by the industry specifically for this task (similar to Nominet for Internet domain names) to an existing company operating under contract to Oftel or the industry. Oftel therefore proposes to draw up with consumers and the industry rules for the structure, operation and appointment of a single NAO.

4.16 The consultation and the Select Committee’s comments have confirmed Oftel’s view that customers’ rights and obligations in respect of numbers should be clarified. As part of these rights, Oftel is persuaded that number trading should be permitted for 08 and 09 numbers but with safeguards to reduce hoarding and speculative use because they act against efficiency. This conclusion results partly from recognition that number trading already takes place, despite being largely prohibited under operators’ contracts, and that prevention would be impractical, even if were considered desirable. In addition, Oftel believes that if customers have invested in establishing public recognition of a number it is entirely reasonable for them to recoup some of that investment through its resale. Oftel believes that many of the feared abuses associated with trading will be reduced or even removed if trading can take place in a transparent and regulated forum. In this way Oftel believes that the NAO has a role to play in establishing a market and 'trading floor' for numbers.

4.17 Oftel intends to take the issue of rights and obligations forward in consultation with consumers and the industry. These discussions will include consideration of rights and obligations in relation to all number ranges.

4.18 Respondents to the consultation were essentially neutral on the separation of numbering policy and administration work. Oftel intends to keep this issue under review while continuing its policy of transferring enforcement issues within Oftel to the Compliance Directorate with policy issues remaining as part of the Regulatory Policy Directorate.

4.19 Oftel has taken account of the views of respondents and the Select Committee on the consultation process for numbering. Oftel is to replace the Numbering Advisory Group with a broader Numbering Forum comprising all those expressing an interest in numbering issues. To encourage wide attendance, notice of the Forum’s meetings and documents for discussion will be available through Oftel’s website (http://www.oftel.gov.uk). The activities of the Forum may be supplemented on detailed issues by a Numbering Experts Panel and ad hoc Working Groups.

5.1 On the basis of responses to the consultation and the comments of the Select Committee, Oftel is confirming as its settled policy objectives:

• the introduction of number charging for blocks and code allocations;
• the introduction of individual number allocation, with the costs of administration by a Number Allocation Organisation paid for through annual rental charges and additional market–based charges for golden numbers; and
• the development of Rights and Obligations of Use for numbers.

5.2 However Oftel recognises that more work is needed, in consultation with consumers and the industry, on the details and timing of implementation. Oftel is therefore proposing to set up Working Groups to consider:

• the methodology and arrangements for number block charging;
• the structure and operation of an NAO for INA (to be assisted by the results of the cost/benefit study referred to in para 4.12);
• the charging methods for golden numbers under INA;
• the Rights and Obligations of Use for holders of number allocations.

5.3 The Groups will begin work in June1999 and will contribute to Oftel’s evolving policy on these issues. Oftel intends to issue further public consultations and Statements reporting back on progress, with the next document to be issued early in the year 2000. The Working Groups will be open to all those expressing an interest and committing themselves to work actively on the issues. A broader means of contribution to the Groups’ work will also be available through the Numbering Forum and paper/electronic contributions. Details of the Groups’ meetings and working papers will be available through Oftel’s website.

5.4 Alongside the activities of the Groups Oftel will, in consultation with other government departments, establish the extent to which additional powers are needed to implement the policy and seek to obtain these powers as appropriate.

Chapter 6

Introduction

6.1 In July 1998 Oftel published the consultative document Freephone Numbers: Options for the Future. The consultation sought views on the most effective way of bringing all freephone numbers into the 080 range.

6.2 As part of the National Numbering Scheme established in 1997, the 080 number range was designated for freephone numbering. At the moment freephone numbers are generally spread across the 0500 and 080 number ranges with a mixture of number lengths in the 080 range. Freephone Numbers: Options for the Future suggested seven different options for ensuring all freephone numbers conformed to the new scheme and invited comments on those options whilst inviting alternative suggestions.

6.3 Owing to the interest generated by the document, the three–month consultation period was extended by a month to 13 November 1998. Oftel received submissions from 167 respondents during the formal consultation period and continues to receive comments from interested parties.

Chapter 7

Summary of responses

7.1 The majority of responses came from business users of freephone numbers. These particular responses fell into three groups: 65 supported the Freephone User Group’s (FUG) response, 26 supported the Direct Marketing Association’s (DMA) response, and there were 36 individual responses from businesses.

7.2 In its response, FUG stated that it was established to represent the interests of businesses that rely on freephone numbers as important marketing tools, and that its membership exceeded 100 businesses. It urged synergy between the freephone numbering needs and the Developing Number Administration proposals, and argued that action on freephone should be delayed until the numbering administration proposals could be put into place. FUG believed that the consultation was not wide enough, that the need for a change from 9– to 10–digit numbers had not been fully justified and that a cost–benefit analysis should have been commissioned. The FUG response demanded the retention of 9–digit freephone numbers, but, if the need for change to 10–digits was justified, it strongly supported customer choice in the addition of an extra digit. FUG also called for a fair scheme for allocating newly created freephone numbers that were similar to existing numbers, to ensure that other organisations could not capitalise on developed freephone brands.

7.3 The DMA has over 700 members and submissions from 26 businesses supported its response. The DMA also supported synergy with the Developing Number Administration consultation and offered an alternative solution for the future of freephone numbering. The DMA requested further investigation into the technical feasibility of allowing existing 9–digit numbers to remain, whilst extending unallocated 9–digit numbers to 10–digits in length. If that proved infeasible, the DMA argued for the retention of 9–digit numbers, with a new 080 range to be opened on exhaustion of the 0800 numbering capacity. The DMA felt that the marketing costs of promoting new numbers and the loss to businesses of losing established numbers had not been taken into account by the consultation.

7.4 The remaining submissions from business users of freephone numbers similarly expressed concern over proposed changes to freephone numbers. The submissions stressed the importance and value that businesses attach to freephone numbers and echoed the concerns expressed by FUG and the DMA.

7.5 Oftel received submissions from 9 telecommunications operators. The operators strongly supported a migration from 9–digit freephone numbers to 10–digit 0800 numbers by the insertion of a prescribed digit between the 0800 code and the number (option 2 in the consultative document).

7.6 BT’s response supported option 2 as the best approach to ensuring all freephone numbers comply with the UK Numbering Scheme, and for enabling a tenfold increase in capacity in the 0800 range. It stated that option 2 offered the best way to achieve competitive neutrality and equal availability of 0800 numbers to end–users. BT also argued that the standard number length and consistent migration path offered by option 2 would help reduce customer confusion and the risk of mis–dials. It considered that the other options in the consultative document did not meet the same level of objectives for the future of freephone numbers.

7.7 Cable and Wireless’ response stressed the importance of effective competition. Any change to freephone numbers, it argued, must be carried out on a fair and equitable basis that did not discriminate against the customers of any one operator. Cable and Wireless stated that the only acceptable change to 0800 and 0500 9–digit numbers would be a move to the 0800 10–digit format, as that was the only way to ensure competitive neutrality for customers and operators.

7.8 Responses were received from 21 Telecommunications Advisory Committees, the majority of which supported option 2. The Advisory Committees noted that this option met most of the requirements for the future of freephone numbers.

7.9 The remaining responses submitted by trade associations, consumer groups, consultants and residential users brought wide ranging comments both supporting and opposing the options proposed in the consultation document.

8.1 Oftel has met a range of groups including consumer representatives, telecommunications companies, the DMA and FUG to discuss their views in greater detail. The comments received on the Developing Number Administration consultative document are being examined alongside those received on the freephone consultation to consider any synergy.

8.2 In January 1999 Oftel was requested to provide evidence on the UK National Numbering Scheme to the House of Commons’ Select Committee on Trade and Industry. The Committee’s report stated the following on the subject of freephone:

• "we expect Oftel to consider the conclusions we draw from this inquiry, as well as the responses it has received to its freephone consultation exercise, before proceeding further" (para 13);
• "we recommend that, before Oftel implement any changes to freephone numbers, a full cost–benefit analysis of the changes is prepared and published" (para 42);
• "we note the claim of the Director General that Oftel has a good record of consultation, but we believe, in this instance, that Oftel has failed to consult adequately" (para 43); "We recommend that, with the help of the operators and relevant business groups, Oftel consult individually with freephone customers in order to develop a numbering policy satisfactory to all" (para 45);
• "the shortage of numbers identified behind… the 0800 code, could be alleviated by the more efficient use of number blocks by operators" (para 40).

8.3 Oftel is taking full account of the Committee’s recommendations in considering further the future of freephone numbers.

9.1 Oftel is continuing to examine the wide range of comments received on the consultation. The Network Interoperability Consultative Committee has established a study group to investigate technical options which would release unused 0800 9–digit capacity for allocation to other operators in the 9– or 10–digit format, whilst permitting the retention of existing 9–digit numbers. Consultants are to be appointed to conduct a cost–benefit analysis for changes to freephone numbering. An invitation to tender for this work was issued on 23 April 1999. This work will culminate in a late summer workshop to consider the results of these two pieces of work and to develop the policy further. The workshop will be followed by a further consultation later in the year, with a final statement not expected until early 2000. Information on the workshop and further consultation will be posted on Oftel’s website (http://www.oftel.gov.uk).

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.

Allocation to end users – Telephone numbering capacity is currently allocated in blocks (eg of 10,000 numbers) to network operators. For certain types of numbers, including freephone numbers, Oftel intends to move away from this system in due course to one where numbers are allocated directly to the user by a central administration body. This means that, instead of approaching an operator for the number, the customer will obtain it from the central administration body. The customer would then approach the network operator of their choice in order to have service provided on that number.

(Number) block – a means of allocating numbers to network operators who then allocate individual numbers to their customers. The sizes of blocks for the different parts of the Specified Numbering Scheme are identified in the Numbering Conventions.

(Numbering) Code – The initial dialled digits of a telephone number, which identify the service.

Database ­ Information maintained in a computer storage system.

DMA – Direct Marketing Association.

Freephone Numbers – Telephone numbers that are used to gain access to Freephone Services.

Freephone Services – Telephone Services offered by network operators and service providers for which there is generally no charge to the caller.

FUG – Freephone User Group. Recently established group set up to represent the interests of businesses that rely on freephone numbers as marketing tools.

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.

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).

Migration – the movement of telephone numbers from one range (often a non–specified range) to another (specified) range.

Network Operator – An organisation entitled to obtain allocation of numbering capacity from Oftel. The relevant criteria are identified in the Numbering Conventions.

Non–geographic numbers – Telephone numbers that are designated in the Specified Numbering Scheme to be used for telephone services, which are not specific to a particular geographic area. Examples are Freephone, Local Rate and Premium Rate numbers.

Non–specified ranges – ranges of numbers which are used for purposes which do not comply with the use designated in the Specified Numbering Scheme (eg 0500 numbers used for freephone services when 080 is the designated range for freephone).

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.

Numbering Conventions – A set of rules and principles relating to the use and management of numbers from the National Numbering Scheme. The Numbering Conventions are published on Oftel’s Internet pages.

Number Portability – The means whereby a customer with a telephone number in a block allocated to one licensed operator may change to another licensed operator without changing their number. Information about number portability is published on Oftel’s Internet pages.

Parallel Running – The ability for old and new numbers to co–exist such that calls made to either are delivered to the same destination. In the UK this is normally provided at any number change for a period after which callers to the old number will receive, for a further period, an announcement indicating that they should re–dial using the new number.

PhONEday – 16^th April 1995. The date on which all geographic codes were changed by the insertion of a ‘1’ following the initial dialled ‘0’ (ie they became ‘01......’).

Specified Numbering Scheme (also termed The UK Numbering Scheme and The National Numbering Scheme) – A scheme for the allocation and re–allocation of numbers which is specified by the Director General and described in a list made available by him for public inspection. The list is published monthly on Oftel’s Internet pages – http://www.oftel.gov.uk

9–digit/ 10–digit scheme – The number of digits in the numbering scheme following the initial ‘0’.