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Chapter
1 - Introduction Annex
A - List of respondents SummaryS.1 In September 2001, Oftel decided to promote competition for directory enquiry (DQ) services by introducing new access codes for DQ services starting with ‘118’, and to make unavailable (after a period of parallel running) the existing DQ numbers such as ‘192’. At the same time, Oftel decided that the ‘195’ DQ service for customers unable to use a conventional paper directory will remain available. S.2 In December 2002, DQ services using the new 118 numbers were launched on the UK network. The existing DQ numbers such as 192 also continued to be available. S.3 In March 2003, Oftel published a consultation document entitled The Future Use of Legacy Directory Enquiry Numbers (www.oftel.gov.uk/publications/consumer/2003/dqs0303.htm) (the Consultation Document). In the Consultation Document, Oftel sought views on the timing of the end of the parallel running period between the new 118 numbers and the legacy numbers. Oftel also set out five different options for the handling of the legacy DQ numbers after the end of the parallel running period, and the consequential changes to the General Conditions of Entitlement and (where necessary) the National Telephone Numbering Plan required to support each option. The five options focussed on different choices for the format and content of recorded announcements played to consumers who continue to dial the legacy DQ numbers when those numbers are no longer available for DQ services. Oftel sought views on these five options, the set of criteria that Oftel had proposed for assessing the options and Oftel’s initial view as to how each option performed against the proposed criteria. This Statement should be read in conjunction with the Consultation Document. S.4 During the consultation period, Oftel received 30 responses from consumers, consumer representatives, network operators, DQ service providers and other regulators. This Statement summarises those responses and sets out Oftel’s consideration of the key points raised. This Statement also includes information about the experience of similar changes in other countries in Europe, the results of Oftel’s market research into awareness of the changes amongst consumers in the UK and the outcome of Oftel’s assessment of the economic efficiency of the way the costs of the five options proposed would be recovered. S.5 In the light of responses to the Consultation Document, the other information collected, and Oftel’s own analysis, Oftel has come to the following conclusions:
S.6 Option B(iii) means that consumers continuing to dial the legacy DQ numbers will receive a free network message (provided and paid for by the network operator in the event that the operator adopts the legacy DQ numbers). This message will advise that DQ numbers have changed to 6-digit numbers starting with 118 and provide a freephone number for consumers to call to obtain a 118 number. This freephone service will be open to all 118 DQ service providers and will provide at least one appropriate 118 number to callers on a fair and impartial basis. S.7 This Statement concludes with some guidance for network operators and DQ service providers as to the next steps to be taken to put into practice Oftel’s decision.
Introduction Background 1.1 On 10 December 2002, directory enquiry (DQ) services using new 6-digit telephone numbers starting with ‘118’ were made available on the UK telephone network for the first time. Consumers are currently still able to dial the existing DQ numbers such as 192. This is known as the ‘parallel running’ period, and is intended to ensure a smooth transition to the new arrangements and to allow consumers to become aware of the 118 DQ numbers. 1.2 On 10 March 2003, Oftel published a consultation document entitled The future use of legacy directory enquiry numbers www.oftel.gov.uk/publications/consumer/2003/dqs0303.htm ("the Consultation Document"). In the Consultation Document, Oftel sought the views of stakeholders on a number of options for the treatment of the existing directory enquiry (DQ) numbers 192 and 153 at the end of the parallel running period. 1.3 This Statement should be read in conjunction with the Consultation Document. The Consultation Document set out the background to the liberalisation of the UK DQ market and the legal framework that Oftel would use for changing the use of the legacy DQ numbers. It also explained that Oftel had already made a decision in Oftel’s September 2001 Statement Access codes for directory enquiry services ("the September 2001 Statement") to make the existing 192 and 153 DQ numbers that tie consumers to one DQ service provider unavailable for DQ services after a period of parallel running. This change is necessary to achieve ‘numbering parity’ between all DQ service providers. 1.4 The Consultation Document proposed timescales for the end of parallel running and for the duration of any network message on the legacy DQ numbers. It also set out five possible options for the treatment of the legacy DQ numbers and proposed a set of criteria by which those options could be assessed. The consequential changes to the General Conditions of Entitlement and (where necessary) the National Telephone Numbering Plan ("the Plan") required to support each option were provided. Oftel’s initial view as to the preferred option was given. Stakeholders’ views were sought on all these options, along with any suggestions for other options that Oftel should consider. 1.5 Oftel received 30 responses to the Consultation Document during the six-week consultation period from network operators, DQ service providers, consumers, consumer representatives and other regulators. Non-confidential responses are available on the Oftel web site at www.oftel.gov.uk/publications/responses/2003/tfutuse0403/index.htm. A list of respondents is set out at Annex A. Respondents have been classified as network operators or DQ service providers according to the perspective they have adopted in providing the majority of their comments to Oftel, although it is acknowledged that in several cases, respondents are both network operators and DQ service providers. The classification as network operator or DQ service provider is merely for the purposes of dealing with responses in a coherent manner. 1.6 During this period, Oftel has also requested and received information about the treatment of legacy DQ numbers from other European countries that have liberalised the DQ market and made the legacy DQ numbers unavailable for DQ services, or that are in the process of doing so. A summary of this information is set out at Annex C. 1.7 In addition to the criteria alluded to in paragraph 1.4, Oftel has carried out an assessment of the options presented in the Consultation Document against Oftel’s six principles of cost recovery, and the results are set out at Annex E. 1.8 The information collected from other European countries and the assessment of the options against Oftel’s six cost recovery principles helped inform Oftel’s decision making process as part of Oftel’s consideration of the options against the criteria set out in the Consultation Document. 1.9 The purpose of this Statement is to document Oftel’s consideration and analysis of stakeholders’ responses, and to set out Oftel’s final decision as to the future use of the legacy DQ numbers at the end of the parallel running period. 1.10 Chapter 2 of this Statement summarises the responses Oftel received during the consultation period, and sets out an analysis of the points made and Oftel’s conclusions. Chapter 3 explains Oftel’s final decision on the issues raised in the Consultation Document, including the timescales for the network message on the legacy DQ numbers, and the required content of that message. As noted above, a list of respondents to Oftel’s consultation is provided at Annex A. Annex B contains the modified text of the Annex to the General Conditions of Entitlement required to support Oftel’s decision. Annex C summarises the evidence Oftel has obtained of the impact of various different approaches to legacy DQ numbers in other European countries. Annex D contains a summary of the results of Oftel’s market research into consumer awareness of the changes to DQ services in the UK. Annex E presents an assessment of the five options in the Consultation Document against Oftel’s six principles of cost recovery. A glossary appears at the end of the document. Scope 1.11 This Statement covers the future arrangements for the 192 access code (used for national DQ services) and 153 (used for international DQ services) once these numbers are no longer available for such services. The 195 code for DQ services for consumers unable to use a conventional paper directory will remain in use and is not affected by this Statement. All references to ‘legacy DQ codes’ or ‘legacy DQ numbers’ or the number ‘192’ or ‘153’ should be taken to include both 192 and 153 (unless the context makes it clear otherwise).
Chapter 2Responses to Oftel’s public consultationGeneral Responses about ICSTIS requirements when promoting DQ services 2.1 The Independent Committee for the Supervision of Standards of Telephone Information Services (ICSTIS) is the industry-funded regulatory body for all premium rate charged telecommunications services including DQ services. ICSTIS regulates the content and promotion of such services via its Code of Practice. 2.2 Many respondents including ICSTIS itself pointed out that any mention of a specific 118 number on the network message on the legacy DQ numbers (or on a freephone service) would constitute a promotion for the purposes of the ICSTIS Code of Practice. The relevant requirements in the ICSTIS Code of Practice for pricing information, service provider identity and contact details to be provided would therefore apply. 2.3 Oftel agrees with this view, and considers that the provisions of the ICSTIS Code of Practice will make a very effective contribution to minimising consumer confusion and potential consumer harm, whilst also enhancing the prospect that consumers will benefit from competition. Oftel understands that the absence of such information on the network message on the legacy DQ numbers in Norway did generate complaints from consumers. 2.4 Oftel notes that implementing the requirements of the ICSTIS Code of Practice in full will lengthen any network message which will increase costs. Oftel considers that the provision of pricing information and service provider identity is nevertheless essential. Following discussion with ICSTIS, Oftel notes that there may be some scope for dialogue between ICSTIS and the Industry to arrive at an acceptable mechanism for the provision of DQ service provider contact details in a way which reduces the burden of doing so. Network operator responses 2.5 One network operator noted that historic Oftel research shows that more than 75% of consumers dial DQ less than once a month, with about 60% stating that it was more important to keep 192 than have a wider choice. This network operator therefore felt that some form of announcement must be used, not Option A. A message that rotated through alternative 118 numbers was felt to cause particular customer confusion problems. The appropriateness of any 118 number provided was considered to be particularly important ie it must be possible for the consumer to be able to access that 118 number from the network and line type that they are using to make the call. 2.6 Another network operator agreed with Oftel that competition in DQ services would not develop unless the legacy numbers no longer provided a DQ service. 2.7 A group of network operators did not see a need for Oftel’s proposed changes. This group considered that the Annex to the Conditions of Entitlement should remain as drafted and consulted on by DTI. This group was concerned that the proposed changes covered by the Consultation Document were only very briefly mentioned within the DTI’s consultation on the General Conditions of Entitlement. The group’s response implied that this might mean that Oftel was either not able to make the changes to the DQ legacy numbers as envisaged in the Consultation Document, or that in doing so, there might be a detrimental impact on the implementation of the General Conditions. The group was of the view that other UK number changes and DQ liberalisation were not directly comparable; noting that change in the DQ market was commercially driven while most other numbering changes were due to the need to increase numbering capacity. 2.8 One network operator was concerned that Oftel’s consultation would pre-empt the outcome of negotiations between it and 118 DQ service providers about the opening of 118 numbers on its network, including the content and format of network messages. This operator believed that the option chosen by Oftel might be appropriate for BT as the dominant operator but perhaps should not be mandated on a universal basis, and that to do so might be outside Oftel’s powers under the current and new regimes. 2.9 Another network operator considered that Oftel had not done a cost-benefit analysis or a regulatory impact on each option. DQ service provider responses 2.10 One DQ service provider noted that in Spain, the regulator had determined that a network message available to all DQ service providers was essential to promote competition, and that the incumbent had only taken three weeks to implement the regulator’s decision. This DQ service provider noted that in its experience of operating DQ services in other European countries, calls to new DQ services were distributed in proportion to the share of announcements on the legacy number. 2.11 Another DQ service provider noted that it would not have entered the UK market unless the decision had been taken to make the legacy DQ numbers unavailable for DQ services. This respondent argued that allowing network operators to announce their own 118 numbers would replace one default dial string with another, and that network operators should not be able to leverage existing dominance in DQ services into the newly liberalised DQ market. This respondent considered that the network messages on the legacy DQ numbers were the last opportunity for Oftel to encourage non-dominant network operators to open their networks to competitive DQ services. This respondent suggested that Oftel choose an option that forbids a network operator promoting its own 118 number unless competing 118 services are also promoted (provided such services were in compliance with the ICSTIS Code of Practice). In addition, the respondent suggested that Oftel only allow network announcements on networks where more than one 118 DQ service provider is available – otherwise network operators would be able to promote only their own services. Such network operators could be required to announce non-118 DQ services (if such services were available and were in compliance with the ICSTIS Code of Practice). 2.12 Another DQ service provider also stressed that new entrant DQ service providers must be given the same opportunities to compete as existing players in the market. This respondent agreed that the message must be free to consumers and suggested that DQ service providers and/or network operators cover the costs of the message. If this were not possible, then no 118 number should be given, only sources of further information (but the respondent noted that this would not be ideal for new entrants who have not yet set up well-established promotional channels). Consumer group and independent responses 2.13 Two consumer groups responded that DQ liberalisation had created much potential confusion for consumers, including costly follow-on services and loss of privacy (eg reverse searching, whereby callers give a telephone number and the service provider gives the address associated with that telephone number). Consumers will be particularly unhappy if put to additional inconvenience. Notices about DQ services in public payphones were considered important, and it was noted that calls to the new 118 numbers from public payphones appeared to be much more expensive than the existing 192 service. It was felt that the call box operator’s 118 number should be preferentially displayed to avoid lengthy confusing notices. If any service is free or significantly cheaper, this number should be prominent in any notices. There should be no charge for calling the 192 network message from a public payphone after the end of parallel running. Oftel analysis and conclusions 2.14 Oftel recognises the potential for consumer confusion at the end of the parallel running period between the legacy DQ numbers and the new 118 DQ numbers. Oftel acknowledges the fact that many stakeholders expressed concern about such potential confusion in their responses to the Consultation Document. All options for action have been assessed against the criterion of consumer interest, taking into account the potential for consumer confusion. 2.15 Oftel also remains of the view that making the legacy DQ numbers unavailable for DQ services is a vital pre-requisite for effective competition in the DQ market. The network message played on the legacy DQ numbers is a unique and unmatchable marketing channel and is therefore vital to ensure that all DQ service providers have an equal opportunity to compete in the liberalised market. Respondents’ experience of similar changes in other countries and Oftel’s own discussions with other National Regulatory Authorities (NRAs) in Europe support these conclusions. 2.16 The DTI consultation of 19 March 2003 on draft General Conditions of Entitlement (www.communicationsbill.gov.uk/Interim_Implementation_update.htm) notes the existence of this consultation process. It also notes that the text describing the legacy DQ numbers in the Annex to the General Conditions may be subject to change as a result. Oftel considers that this separate consultation has been the appropriate vehicle for making changes to the designation of the legacy DQ numbers given the detailed nature of the issues concerned, notwithstanding the fact that the DTI consultation on the implementation of the new regime through the General Conditions of Entitlement has been underway simultaneously. Oftel considers that stakeholders have been adequately informed of the possible changes to the designation of the legacy DQ numbers by means of Oftel’s consultation and the DTI’s consultation. 2.17 Oftel does not agree with the concerns expressed by one network operator that Oftel’s consultation would pre-empt the outcome of negotiation between it and 118 DQ service providers about the opening of 118 numbers on its network, including the content and format of network messages. All network operators will be subject to the General Conditions of Entitlement. The Annex to the General Conditions will set out designations of numbers that are available for adoption without specific allocation, and network operators must under the terms of the General Conditions (if they adopt these numbers) use them in a manner that is consistent with their designation in the Annex. It is not possible for Oftel to make the designation for the legacy DQ numbers different for dominant and non-dominant operators (or indeed for network operators that have opened their networks to competing 118 services and those that have not, as suggested by another respondent). Oftel disagrees with the view of this respondent (which was not particularised) that Oftel might be acting outside its powers in mandating the use to which the legacy DQ numbers can be put on a universal basis. Oftel considers that the legal framework for the proposed action was set out very clearly in the Consultation Document. 2.18 One respondent noted that Oftel had not carried out a cost-benefit analysis or a regulatory impact assessment on the options considered in the Consultation Document. It is Oftel’s policy (as set out in Oftel’s Regulatory Option Appraisal Guidelines at www.oftel.gov.uk/publications/about_oftel/2002/roa0602.htm) to carry out a regulatory option appraisal in policy making. The Consultation Document and this Statement represent the output of that regulatory option appraisal process in this case. One part of a regulatory option appraisal can be a cost-benefit analysis (although Oftel notes that there is no requirement in the Communications Bill to carry out a formal cost-benefit analysis before proposing a particular obligation). A cost-benefit analysis tends to be most useful where a monetary value can be relatively easily assigned to the benefits. This is not the case here were the costs and benefits to consumers are highly qualitative. 2.19 Oftel notes the issues raised by consumer representatives in relation to costly follow-on services, loss of privacy and the cost of calling 118 DQ services from public payphones. 2.20 Oftel considers that the issue of costly follow-on services should be dealt with by the ICSTIS requirement that pricing information is provided prior to any onward call connection. However Oftel will look at any evidence that this requirement is not sufficient to prevent problems in this area and review what other steps may be necessary. Oftel considers that the introduction of 118 DQ services is separate from the important issue of privacy in relation to DQ services, which is currently being considered as part of a DTI consultation (www.dti.gov.uk/industries/ecommunications/directive_on_privacy_electronic_communications_200258ec.html) on the implementation of European Directive 2002/58/EC on privacy and electronic communications. The cost of calling 118 DQ services from public payphones is also beyond the scope of this Statement, but Oftel is in the process of reviewing this issue with BT and will shortly be in a position to discuss it in more detail with the Industry and the DQ Consumer Group. Timescales Summary of Oftel’s proposals in the Consultation Document 2.21 In the Consultation Document, Oftel proposed that the end date for parallel running between the legacy DQ numbers and the new 118 DQ numbers should be 12.01am on Sunday 24th August 2003, which is during the weekend of the England, Wales and Northern Ireland August Bank Holiday. Oftel considered that this date should remain in place, regardless of which option was chosen for the treatment of the legacy DQ numbers. This was because call volumes are likely to be particularly low during this period, and because it was likely to give the Industry sufficient time to implement Oftel’s decision about the legacy DQ numbers (particularly given the new European regulatory regime for electronic communications networks and services). Oftel also acknowledged the considerable operational and commercial planning that the Industry was likely to have already undertaken based on this date. 2.22 Oftel also proposed that any network messages be withdrawn at 12.01am on 22 February 2004, and that the legacy numbers would then no longer be available for any sort of message other than ‘number unobtainable’. This was because evidence from previous number changes such as The Big Number indicated that consumers continue to dial legacy numbers whilst they can still obtain services on those numbers, despite being aware of the new numbers to dial. Oftel therefore considered that it was possible that any misdialling threshold specified in advance by Oftel would never be achieved regardless of high levels of marketing and consumer awareness. Oftel also felt that it was important that all stakeholders had certainty as early as possible about the duration of any period of network messages on the legacy DQ numbers, to enable efficient planning of consumer awareness raising activities. Providing this certainty was considered by Oftel to be particularly important if an independent network messaging option was chosen, so that funders of the network message would have some idea about the degree of financial outlay likely to be required. 12.01am on 22 February 2004 was proposed rather than 12.01am on 24 February 2004 because 22 February 2004 is a Sunday. Oftel and the Industry prefer to implement number changes during the weekend when peak call volumes are likely to be lower. 2.23 In the Consultation Document, Oftel asked if stakeholders agreed with the proposed end date for parallel running, and the proposed end date for the network message itself. Network operator responses 2.24 Network operators in general agreed with Oftel’s proposal for the end of parallel running to be 24th August 2003, pointing out that as this date had been informally agreed for some time, it would cause significant disruption to change it at this stage. Only one network operator suggested that the end date for parallel running should depend on how long the optimum messaging option would take to implement, but noted that in any case, it did not foresee significant implementation difficulties. 2.25 Some network operators agreed with a six month messaging period (in one case noting that this would amount to 15 months since the launch of 118 DQ services). Others expressed concern about whether six months would be sufficient for consumers who only infrequently use DQ services. One network operator considered that the network messaging period should be similar in length to that used for other number changes, and suggested that no end-date need be set now (but that the end date should in any case be no earlier than September 2004). Some operators suggested that if the network message were only to be in place for six months, then network operators should be allowed to continue a network message of some form on the legacy DQ numbers at their discretion beyond this period to manage mis-dials. DQ service provider responses 2.26 DQ service providers emphasised the importance of maintaining the August 2003 end date for parallel running, due to the amount of business planning that had already been carried out based on this date, and the fact that this date had already been publicised to consumers. One DQ service provider pointed out that implementation of the regulator’s network messaging decision in Spain took only three weeks. Another DQ service provider felt that the August 2003 date should be maintained only if this did not preclude implementing the best option for network messaging. 2.27 In general, DQ service providers also considered that six months was a sufficient period for network messages (one suggested three months only). This was particularly felt to be the case when incentives on consumers to change their dialling behaviour (eg access to cheaper services or innovative services) were taken into account, which could mean that changes to consumer behaviour were faster than with other number changes. Consumer group and independent responses 2.28 Responses from consumer groups focussed on the length of time any network messages should be available (although one consumer group was of the view that parallel running itself should continue for longer than the proposed August 2003 deadline as it felt consumers were not yet sufficiently aware of the changes, although it did not propose an alternative date). Most consumer respondents felt strongly that six months was too short, given that residential consumers may only dial a DQ service once every few months. It was noted that some phone books containing details of the legacy DQ numbers would still be current in February 2004, when Oftel had suggested that the network messages be withdrawn. However, two respondents felt that six months was about right, provided consumer behaviour changed, and one noted that this would minimise the cost of running the network message. Consumer respondents warned of loss of confidence in DQ services that might result if the network message was withdrawn too early. Respondents suggested that the network messages continue for 12 or 18 months. Other regulators’ responses 2.29 ICSTIS considered that continuing as planned with the August 2003 timescale for the end of parallel running would provide certainty to both operators and consumers, given that this date had been the target date for some time. Oftel analysis and conclusions 2.30 Many DQ service providers and networks operators have undertaken significant planning based on an August 2003 date for the end of parallel running, and to change this date now would cause disruption. This date has also been in the public domain for some time, and therefore arguably this is also what at least some consumers are already expecting. The period of parallel running in the UK commenced in December 2002, the aims of parallel running have largely been achieved already, and eight months of parallel running is already longer than in other European countries undergoing similar changes. Call volumes in general, and to DQ services in particular, are likely to be at a seasonal low over the August Bank Holiday, making it a particularly good time to implement these sorts of changes. Similar suitable opportunities are unlikely to arise for several months after August. Oftel acknowledges that this date has become a defacto expectation due to its appearance as a target date on the Industry project plan for some time, but considers that there was considerable informal consultation on this target date in the Directory Enquiry Implementation Working Group, which was specifically charged (through its terms of reference) with managing the project plan for DQ liberalisation. 2.31 Oftel therefore considers that the date for the end of parallel running should be 24th August 2003, as proposed in Oftel’s consultation. 2.32 Oftel notes the concerns that have been expressed in responses to the Consultation Document about the duration of the network messaging period, in particular the view that six months may be too short a period. Oftel agrees that experience from previous number changes may not be a good indication of likely consumer behaviour in relation to the legacy DQ numbers. 2.33 On the one hand, Oftel’s own research (details available at www.oftel.gov.uk/publications/research/2001/q3fixr.htm) shows that some consumers dial DQ only once every few months. Unlike previous number changes there has been minimal centrally co-ordinated advertising of the change because all DQ service providers have strong commercial incentives to do their own advertising. Oftel also recognises that in February 2004, some phone books containing details of the legacy DQ numbers will still be current, and this is likely to be the case until at least June 2004. On the other hand, Oftel notes that (unlike previous number changes), there will be incentives on consumers to use the new 118 DQ numbers in order to access lower priced and more innovative DQ services. Also, by February 2004, there will already have been 15 months of parallel running between the legacy DQ numbers and the 118 DQ numbers. 2.34 One possibility that Oftel considered was that the end of the network messaging period should remain February 2004, but with a review of consumer dialling behaviour and a possible re-consultation on extending this period if consumers were still dialling the legacy DQ numbers in significant numbers. However such a review will be largely impractical because under a Statutory Instrument regime (ie if the Communications Bill has not come into force), then the requirement for consultation plus parliamentary procedures for amendment of the relevant Statutory Instrument could mean that the review would have to be based on consumer behaviour in September or October 2003 (as this would be the only data available at the time the review had to commence). Such data would be unlikely to be a reliable predictor of behaviour in February 2004. 2.35 Therefore Oftel has decided to extend the period of network messaging in the designation of the legacy DQ numbers to June 2004, in particular to 12.01am on Sunday 20th June 2004. By that date, the distribution of phone books with information about the DQ numbering change will be largely complete. If the volume of calls to the legacy DQ numbers drops swiftly after the end of parallel running, then the extension of the network messaging period to June 2004 is unlikely to significantly increase the cost of a network messaging solution. If volumes of calls to the legacy numbers do not drop swiftly, then the extension of the network messaging period will act as an important safeguard for consumers, particularly infrequent users of DQ services. 2.36 Oftel will reconsider the duration of the network messaging period (to the extent that it is practical to do so given the consultation obligations in force at the time) in the light of information about consumer dialling behaviour after the end of parallel running, with a view to reducing it if possible. Criteria for evaluating options Summary of Oftel’s proposals in the Consultation Document 2.37 Oftel explained in the Consultation Document that any option considered would depend on changes to the Annex to the General Conditions of Entitlement and/or the National Telephone Numbering Plan. Therefore a pre-requisite for all options is that the tests for modifying the General Conditions and the Plan as set out in Clause 44 and Clause 57 of the Communications Bill respectively are met ie the changes are objectively justifiable, non-discriminatory, proportionate and transparent. (The latest version of the Communications Bill at the time of writing this Statement is the version introduced into the House of Lords on 5 March 2003, available at www.communicationsbill.gov.uk. All clause numbering used in this Statement refers to this version, which is why some clause numbers may differ from those given in the Consultation Document). 2.38 In the Consultation Document, Oftel proposed a set of criteria for evaluating options against each other, using the European Community requirements as set out in Clause 4 of the Communications Bill as the starting point. The proposed criteria were:
2.39 Oftel asked stakeholders for comments on these criteria, whether there were any additional criteria Oftel should consider and what relative weight Oftel should place on each factor. Network operator responses 2.40 Network operators agreed with many of the criteria proposed by Oftel. A number of operators considered that consumer interest should be given priority (with one mobile operator noting particular inconvenience for mobile users if the message was overly long or required redialling) and that practicability and certainty were also important. 2.41 Whilst two operators felt promotion of competition should be given priority alongside consumer interest, several operators were of the opposite view and felt that promotion of competition was not a suitable criterion as DQ service providers should promote their services through the normal marketing channels. One respondent expanded on this line of argument by setting out its view that the network operator has created DQ traffic through its own commercial efforts and that 192 traffic did not exist because Oftel determined that 192 should be used for DQ services. This respondent considered that mentioning competitive 118 numbers in the network message would be an unfair attempt to hand market share to competitors. Another network operator stated that competition should be considered only if consumer needs were met. 2.42 One operator stated that network access and interoperability should not be considered as a criterion. Another interpreted the network access and interoperability criterion as meaning that ‘reciprocity’ should be encouraged, and that given that Oftel’s formal powers in relation to non-dominant networks were likely to be limited in this respect, this criterion would suggest a solution which would be implemented voluntarily. Another operator respondent expressed concerns about Oftel’s methodology, noting that Oftel had not carried out a cost-benefit analysis. Another operator suggested that Oftel should have included its six principles of cost recovery as explicit top level criteria to assess the options, so that economically inefficient options could be ruled out. On the other hand, a different respondent felt that Oftel’s six principles were irrelevant, because Oftel should not be expecting that network operators would refer to competing 118 DQ services. This operator considered that commercial terms only would be appropriate for providing network announcements and messaging services, and only if network operators choose to do so voluntarily. DQ service provider responses 2.43 DQ service providers in general considered that competition and consumer interest should carry more weight than the other criteria. Several DQ service providers noted that the purpose of Oftel’s liberalisation of the DQ market was to introduce competition, and that therefore the network message on the legacy numbers must not undermine competition. One DQ service provider noted that Oftel’s apparent lack of formal powers to make competing 118 services available across all the different UK originating networks made consideration of competition an even more important factor when Oftel decided on the appropriate network messaging option. Consumer group and independent responses 2.44 Responses from consumers were heavily in favour of consumer interest taking the highest priority. One consumer group response stated that this meant that consumers dialling a legacy DQ code should be provided directly with a 118 number, and should not be charged for hearing this message. In two cases, consumer groups considered that minimising inconvenience for those consumers who only occasionally use DQ services was vital. Other regulators’ responses 2.45 ICSTIS felt that the consumer interest should take precedence, because directory enquiry services are intended to provide information for consumers. ICSTIS noted in particular that some consumers might be using DQ services to obtain socially valuable information, and that consumer confusion regarding DQ services could contribute to an increase in social exclusion. Oftel analysis and conclusions 2.46 Oftel notes that the Director is obliged to consider all the requirements in Clause 4 of the Communications Bill in exercising his functions to ensure that, where they are relevant, he is acting in accordance with those requirements. Promotion of competition is a requirement set out in Clause 4(3) of the Bill and is highly relevant to the issue of network messages on the legacy DQ numbers, as the content of these messages will clearly have an impact on competition in the liberalised DQ market. Depending on the precise messaging option chosen, matching that impact through traditional marketing channels might be very difficult for DQ service providers. The argument that network operators have entirely through their own efforts built up traffic on the legacy DQ numbers is not entirely persuasive to Oftel, as the historical fact that the same short, memorable code (ie 192 or 153) was made available for DQ services on all networks clearly has a role to play in the development of traffic on these numbers. It is not possible therefore, as some respondents suggested, to ignore the promotion of competition as one of the criteria when assessing options for the legacy DQ numbers. 2.47 The requirement to encourage the provision of network access and service interoperability is also a requirement set out in Clause 4 of the Communications Bill. Whilst this is clearly not limited to provision by particular providers only, whether or not to encourage such provision in a particular case is a matter for the Director, and he only needs to do so to the extent that he considers appropriate for the purposes of securing sustainable competition, efficiency and benefit to customers and those making available associated facilities. This criterion does not impose a blanket requirement to encourage ‘reciprocity’. 2.48 One respondent noted that Oftel had not carried out a cost-benefit analysis or a regulatory impact assessment on the options considered in the Consultation Document. Oftel’s response to this point is set out at paragraph 2.18. 2.49 Whilst one respondent considered that Oftel’s six principles of cost recovery should have been included as explicit top level criteria in order to ensure that an economically efficient option would be chosen, another considered that these principles were irrelevant as in no case should network operators be obliged to refer to competing DQ services, and that commercial terms only should apply for cost recovery. Oftel notes that in this case, efficiency is only one of the goals set out in Clause 4 of the Communications Bill, and Oftel must clearly balance this requirement with the other requirements inter alia to promote competition and consider the consumer interest. 2.50 Oftel therefore concludes that all the criteria set out in the Consultation Document should be used for assessing the options for network messaging on the legacy DQ numbers, namely:
2.51 Given that the goal of Oftel’s liberalisation of the DQ market was to introduce competition for the benefit of consumers and in light of responses to the Consultation Document, Oftel considers that the consumer interest and promotion of competition criteria should be given particular weight over the other criteria when carrying out this assessment. The consumer interest criterion covers short term consumer convenience. Clearly the consumer interest is also served in the medium-to-long term by effective competition, and this aspect of consumer interest is covered by the promotion of competition criterion. 2.52 Oftel has decided that the date for the end of parallel running should remain 24 August 2003 as proposed in the Consultation Document. Oftel therefore considers that the practicability criterion should be given greater weight relative to the other criteria as well. This should help to ensure that the Industry has a realistic opportunity to implement any network messaging option chosen by Oftel.
Option A Summary of Oftel’s proposals in the Consultation Document 2.53 Under Option A, the legacy DQ codes are removed from the Annex to the General Conditions of Entitlement at the end of parallel running and do not appear in the Plan. The Numbering Condition of Entitlement only permits the adoption of numbers where there is an allocation by the Director or where there is a stated exception in the Annex to the General Conditions. Therefore no Communications Provider can adopt the legacy DQ numbers for any purpose. A consumer dialling 192 or 153 would receive a ‘number unobtainable’ tone. 2.54 Oftel’s initial assessment of Option A was that it would score well against the promoting competition, practicability and certainty criteria, but not against the consumer interest criterion for the reasons set out in the Consultation Document. Oftel noted that it would take a view on the extent to which this option encouraged network access and interoperability in the light of responses to the consultation. 2.55 In the Consultation Document, Oftel asked stakeholders for comments on Option A, and whether they agreed with Oftel’s initial assessment. Network operator responses 2.56 Network operators identified several benefits of this option such as ease of implementation, emphasis being placed on commercial marketing of DQ services and all operators being guaranteed to implement the same solution. However, all network operators also identified the major consumer detriment that would result from having no network message at all, and the likely resultant confusion and frustration for consumers. Respondents also noted that customers might respond by dialling their access operator’s customer service number, thereby increasing indirect costs and degrading the quality of service for other consumers trying to contact customer services. One respondent identified the risk that in dialling customer services, consumers might simply be given the access operator’s 118 DQ number, which in this respondent’s view would harm competition. Some network operators did not agree with Oftel’s suggestion that it would be possible for network operators to offset the additional customer services cost against this promotional benefit due to the cost of dealing with customer service calls, and the fact that customer service centres are not designed for dealing with calls about DQ services. DQ service provider responses 2.57 Like the network operators, DQ service providers identified several benefits of this option such as competitive neutrality and ease of implementation, but in general considered this option was unacceptable due to the likely consumer detriment. One DQ service provider believed it would be extremely beneficial for competition, as it would encourage network operators to provide access to a range of 118 DQ services, particularly those that were being heavily advertised. Another DQ service provider felt Option A might not be pro-competitive, as consumers dialling network operators’ customer services numbers would be given the network operators’ 118 DQ numbers. Consumer group and independent responses 2.58 Responses from consumers were almost unanimously opposed to Option A due to the detriment to consumers, particularly those who only infrequently dial DQ services. One consumer group rejected the idea that consumer behaviour would change rapidly because of the number of infrequent users of DQ services. One respondent identified that large businesses might find this option most attractive as they would be able to decide in-house which new 118 service to use, but that clearly this option would not be good for residential, mobile or public pay phone users. Concerns were also expressed by the burden placed on network operators’ customer services facilities Other regulators’ responses 2.59 The view of ICSTIS was that this option would cause a great deal of consumer confusion, with a detrimental impact on the most vulnerable. Oftel analysis and conclusions 2.60 Oftel consulted on Option A in order to provide a ‘baseline’ against which the other, more complex, options could be evaluated. The cost of any departure from Option A (which would be the quickest and easiest solution to implement) should be justified by the benefits such a departure would bring to stakeholders, as assessed by the criteria set out by Oftel. Consumer interest 2.61 In light of responses to this consultation and Oftel’s own assessment, it is clear that this option would be severely detrimental to consumers (particularly those who only infrequently dial DQ services) despite its other attractions. As particular weight is being attached to the consumer interest criterion in assessing the options, this is likely to count heavily against this option. Promotion of competition 2.62 Oftel considers that on balance this option would promote competition, and the potential harm to competition done by network operators giving out their own 118 numbers to consumers calling customer services would be outweighed by the benefits to competition of making all DQ service providers rely in the first instance on traditional forms of marketing and promotion. Network access and interoperability 2.63 As the legacy DQ numbers would not be available for adoption under Option A, a discussion of whether Option A encourages network access and interoperability in relation to the legacy DQ numbers is not relevant. As a secondary consideration, this option appears to Oftel to contribute to encouraging network access and interoperability for the 118 DQ numbers themselves because consumers would place pressure on network operators to open access to those 118 services which they saw being advertised, as advertising would be the most important means of communicating the new 118 numbers to consumers. As set out in Annex E, Option A does not, when compared to the other options, appear to present any particular problems when assessed against Oftel’s six principles of efficient cost recovery, not least because the total level of costs incurred under Option A would be lower than under the other options. Practicability and certainty 2.64 Responses indicate that this option would be practicable. This option would also appear to provide certainty with little risk of further Oftel intervention. Summary 2.65 Oftel’s assessment of this option against the established criteria may therefore be summarised as follows:
Option B Summary of Oftel’s proposals in the Consultation Document 2.66 The legacy DQ codes remain Type A Access Codes. However, the designation of these numbers in the Annex to the General Conditions of Entitlement would change. If a Communications Provider did adopt the legacy DQ numbers, it would be obliged (by the Numbering General Condition of Entitlement) to adopt the numbers in order to provide network messages advising callers that DQ numbers had changed and advising of sources of information about the new 118 services, and not for any other purpose. It would not be permitted to announce any specific 118 numbers at all. 2.67 Oftel proposed that one or more of the following sources of information be mentioned in the network message:
2.68 Oftel’s initial assessment of Option B was that it would score well against the promoting competition criterion if the caller was pointed to an impartial web site or freephone service, and to a lesser extent if the customer was additionally given the network operator’s customer services number. Oftel considered that Option B would rate well against the consumer interest and certainty criteria, and reasonably well against the practicability criterion. Oftel noted that it would take a view on the extent to which this option encouraged network access and interoperability in the light of responses to the consultation. The reasons for this initial assessment are set out in the Consultation Document. 2.69 Oftel asked stakeholders for comments on Option B, including which source or sources of information should be provided via the network message and whether they agreed with Oftel’s initial assessment. Network operator responses 2.70 Network operators did not in general see Option B as the best option for the future use of the legacy DQ numbers. 2.71 Network operators considered that this option would not be as consumer friendly as some of the other options considered, as consumers would have to dial an additional number to obtain a 118 DQ number or visit a web site. One network operator asked if there would be an option for onward connection to the 118 DQ services from the freephone number or from customer services. Network operators would have to cover the cost of additional calls to customer services that might result. For mobile consumers, writing down multiple telephone numbers would be particularly tricky. The fact that consumers would receive a different 118 number each time they phoned the freephone number was felt to potentially add to consumer confusion. Network operators were concerned that the appropriateness of any 118 number provided would vary depending on the caller’s network and calling line type. Resellers and virtual network operators might want a different number provided to their customers. That would however require technical development which would not be feasible in the short to medium term. Calls to 192 from payphones were identified as a particular issue, as only 118 numbers charged on an elapsed time basis (ie with retail charges that depend solely on the length of the call) are available from payphones. BT noted that it currently allows callers to DQ services from Wales to receive a Welsh language version of the service, and that it was not clear how this facility could be continued under Option B, other than by making reference to the network operator’s customer service number. It was suggested that the message should include a disclaimer advising that any 118 services provided (for example) via a freephone number were not the network operator’s responsibility. It was noted that ICSTIS requirements would need to be met every time a 118 number was promoted. 2.72 Network operators in general considered that a web site was unlikely to be useful, as not all consumers have access to the web (including mobile users) and consumers with access to the web were felt likely to use the free DQ services available on the web. Attention was drawn to the fact that socially disadvantaged customers are more likely not to have access to the web, and the fact that web site addresses are not easy to communicate verbally. It was suggested that the only suitable impartial web site would be one created and maintained by Oftel listing all 118 numbers diallable from any UK network. 2.73 The idea of providing the network operator’s customer services number was noted, and it was suggested that in this scenario, it would be reasonable for network operators to provide their own 118 numbers to any consumers dialling customer services. It was however considered in general that this would be better achieved by means of Option C. 2.74 One network operator thought that the best source of information for an impartial 118 DQ number would be a freephone number run and paid for by a group of DQ service providers. This network operator did not totally reject Option B, but considered it should be simplified. 2.75 In relation to competition, one network operator felt that only DQ service providers with substantial marketing budgets could afford to participate in the freephone service, which would damage competition. Concern was expressed that network operators’ brands might suffer if customers accessed a 118 DQ service via a freephone number that was not necessarily the best value-for-money service or the best service in other respects for that particular consumer (compared to the service of the network operator, which the consumer would be arguably expecting to receive). The commercial viability of a freephone service was questioned, as it was felt that the promotional benefits might not outweigh the cost of participating. One network operator noted that only a small number of DQ service providers are likely to be sustainable in the market and that they should do their own advertising, rather than being subsidised by consumers and network operators if unwilling to make their own investments in promotion. Several network operators considered it disproportionate for originating network operators to have to cover the cost of the network message as this would require them to cover the costs of sending their customers to competitors. 2.76 Option B was felt by some network operators to be more acceptable if the network operators could provide their own 118 numbers, followed by a freephone number or web site address if necessary. 2.77 In relation to network access and interoperability, it was noted that if the message includes a freephone number, network operators might choose not to adopt the legacy numbers. Some network operators did not consider it was appropriate for network operators to be forced to cover the costs of promoting a competitor’s DQ service. The fact that freephone services are often not free from mobile phones was considered to increase the likelihood that mobile operators would not adopt the legacy DQ numbers under Option B(iii). One network operator claimed that originating operators would have to carry the cost of three times as many calls for DQ as currently. Also, one network operator noted that some network operators are not making a full range of 118 numbers available on their networks, whilst others are. This would mean that the freephone service for some network operators would provide only one 118 number, whilst freephone services for other network operators would have to make many different 118 numbers available. It was felt that this would represent an unfair lack of reciprocity between network operators. 2.78 It was pointed out that current Industry freephone origination arrangements are not popular with some network operators. Depending on the network operator hosting the freephone number, it was noted that additional interconnect capacity might be required which might be expensive and hard to arrange at short notice. DQ service provider responses 2.79 DQ service providers also pointed out that this option would be cumbersome for consumers because they would have to make an additional phone call or visit a web site to obtain an appropriate 118 number, rather than being given one directly. One DQ service provider noted that this inconvenience might encourage consumers to change their dialling behaviour. Concern was expressed that consumers might try to use the same freephone number from different originating networks and therefore receive an inappropriate 118 number. A web site was not generally considered to be very useful or friendly for consumers. 2.80 DQ service providers felt that Option B might undermine competition if network operators were allowed to provide their customer services number, as network operators would then give out their own 118 numbers to any consumers who called this number. This was seen by at least one respondent as allowing BT to leverage its dominance from the fixed access line market into the newly liberalised DQ services market. If this sub-option were not available, then Option B would be acceptable to many DQ service providers (although not as good as Option E to some). At least one DQ service provider considered that if a freephone number on its own were mandated, this would rate highly against all Oftel’s proposed criteria. Several respondents and the MoU Group itself suggested that the MoU Group (by means of Directory Affairs Ltd) could provide the network message on the freephone number. Another respondent suggested that if more than one 118 number were to be given out on the freephone number, then this should be done on a rotating basis, not in a fixed order. 2.81 As regards practicability, the cost of providing a freephone service was noted to potentially be higher than providing a network messaging service on 192, as the volume of calls would be lower because of the additional effort required by consumers, thus making the cost per message higher. DQ service providers noted that the existing freephone model might not be commercially attractive enough for network operators to open access to the required freephone numbers. The MoU Group proposed that if necessary it would enter commercial negotiations if the normal freephone commercial arrangements were not acceptable to network operators. 2.82 At least one DQ service provider noted that if network operators gave out their own 118 numbers as a result of calls to customer services numbers as a result of the message on the legacy DQ numbers, DQ service providers might bring complaints to Oftel generating uncertainty for the Industry. Consumer group and independent responses 2.83 Consumer representatives in general expressed serious reservations about Option B and its impact on consumers, particularly infrequent users of DQ services. They noted that the consumer would be required to make three calls to obtain a DQ service, and that this could have serious implications, particularly for consumers in vulnerable positions. They also noted that freephone calls were chargeable on some networks, increasing the potential harm to consumers. The web site was not considered to be a good source of information due to its limited accessibility for mobile users and users without Internet access (in particular the elderly and those on low incomes). 2.84 One consumer group response supported Oftel’s proposal to implement Option B, and accepted Oftel’s view of the practical difficulties of Option E which might otherwise have been a good choice as well. Other regulators’ responses 2.85 ICSTIS noted that in its view, the desirability of Option B would depend on what information source or sources were mentioned in the network message. ICSTIS considered that a web address on its own would be of no value due to the significant proportion of the UK population without web access. In relation to mentioning the network operator’s customer service number, ICSTIS noted that network operators would probably mention their own 118 numbers, unless unable to do so on competition law grounds. If unable to do so, ICSTIS questioned what other information customer service advisors could give to callers. As regards a freephone number, ICSTIS noted that the consumer would be required to make three calls to obtain a DQ service. If customers were charged for the freephone call (eg if calling from a mobile network) this would cause additional annoyance. ICSTIS suggested that if Oftel were to choose Option B, Oftel should give more consideration to how consumer confusion could be minimised. 2.86 ICSTIS noted that provision of specific 118 numbers would constitute a promotion of those numbers for the purposes of the ICSTIS Code of Practice, and there would therefore be requirements that pricing information be given. 2.87 The Isle of Man Communications Commission agreed with Oftel’s preliminary view that Option B would be the best option for the future use of the legacy DQ numbers. The Commission suggested that after a period of one or two years, Oftel could redesignate the legacy numbers as Type C access codes, thus making them available for any network operator to use without specific allocation. The Commission considered that this would give network operators greater flexibility and would improve consistency in the new National Telephone Numbering Plan. The Commission noted that in any event, Manx Telecom would continue to use 153 and 192. Oftel analysis and conclusions General 2.88 It appears to Oftel in the light of responses to the Consultation Document that there will be little value in the provision of web site details on the network message. This is because of its limited accessibility to mobile users and users without Internet access, the difficulty of providing a web site address verbally and the fact that users with Internet access may well use the free DQ services available on the web instead. Oftel therefore does not consider this sub-option further in this document. 2.89 Oftel also considers that the provision of the network operator’s customer services number would not be a useful addition to the network message, either on its own or in conjunction with a freephone number and/or a web site address. Most consumers already know their network operator’s customer services number anyway. Network operators have expressed concern about the additional costs of dealing with customer services calls, and DQ service providers have noted the potential for this approach to adversely affect competition in the newly liberalised DQ services market. The potential for harm to competition and legal action by DQ service providers in this situation introduces in Oftel’s view unacceptable disadvantages into implementing this sub-option, given what are likely to be limited informative benefits to consumers and possible costs to network operators. Oftel therefore does not consider this sub-option further in this document. 2.90 Oftel’s analysis and conclusions will therefore focus on Option B(iii), the provision of a freephone number. At least one network operator, several DQ service providers and one consumer group indicated that this would be an acceptable option. 2.91 Oftel notes the comments made by the Isle of Man Communications Commission in relation to the legacy DQ numbers. Oftel has no jurisdiction over the Isle of Man and the other Crown Dependent Territories. These Territories voluntarily opt into the UK telephone numbering arrangements but retain the right to continue to use 192 and 153 regardless of Oftel’s decision in this Statement. Oftel does not intend to redesignate the legacy DQ numbers as ‘Type C’ access codes in the future, as this could encourage network operators to begin to use these numbers for DQ services again, which would undermine the market liberalisation process. Consumer interest 2.92 Oftel considers that Option B(iii) is reasonably beneficial to consumers. As far as Oftel is aware, it should be possible to ensure that consumers are given a 118 number appropriate to the network and line type they are calling from, by providing callers with a different freephone number (and hence a different freephone message) depending on the network and line type they are calling from. Requirements for callers from Wales could also be handled appropriately by a similar mechanism. 2.93 Oftel acknowledges that it would be preferable for consumers (as pointed out in many responses to the Consultation Document) to receive a specific 118 number directly when dialling 192 to minimise confusion and frustration. The possibility of additional consumer confusion or frustration is of great concern to Oftel, and Oftel and Industry will be taking steps to promote consumer understanding of these changes both during and after the run-up to the end of parallel running. However, in order to promote competition effectively, it is important that the 118 numbers provided to consumers on the legacy DQ numbers are not the network operator’s 118 numbers only. Competition should maximise consumer interest over the medium-to-long term, and has already delivered a DQ service that is half the price of BT’s 192 service, as well as having made innovative services such as call completion and combined white pages and classified listings more widely available. DQ service providers have made it clear (in accordance with Oftel’s own belief) that these services will not continue to be available to consumers unless the conditions for fair competition are fulfilled. Effective competition will also make it possible for DQ service providers to invest resources in promotion, thereby helping to reduce consumer confusion. 2.94 Having reviewed the responses to the Consultation Document and as a result of Oftel’s own examination of the issue, Oftel no longer considers that it is necessarily less confusing for consumers if the same 118 number is given out on the freephone number on every occasion. Oftel considers that a significant number of consumers will only hear the network message in its entirety once, and will hang up immediately when mis-dialling 192 again subsequently. Oftel also considers that a proportion of consumers will simply dial 192 out of habit rather than out of ignorance of the changes to DQ services. Such consumers will again hang up as soon as they hear the start of any message alluding to the withdrawal of 192. Therefore the question of whether or not the same 118 number is given out on every occasion via the freephone number is not of prime relevance. If some consumers do hear the network message in its entirety more than once, the fact that a different 118 number may be provided on the freephone message will make consumers aware of the choice available to them. 2.95 Oftel notes suggestions that consumer confusion will be generated because the 118 number obtained may not work if a consumer dials it again from a different line type (eg another fixed network or from a payphone). Oftel considers that this will be the same for Options B, C, D and E under which the consumer is provided directly or indirectly with a 118 number to dial. This observation does not particularly help distinguish the benefits of one option from another. Oftel also notes that consumers can always dial 192 again and obtain an appropriate 118 number for that network if they are having difficulties. 2.96 Oftel acknowledges that some mobile operators may charge consumers for the call to the freephone service. Such a scenario would clearly not be ideal. Oftel notes however that if mobile network operators make a charge for a call to a freephone service, they must notify callers at the start of the call of the charges, giving consumers the option of not continuing with the call. Mobile consumers are familiar with having to pay for freephone calls, the tariffs are not particularly high and the freephone message will be short, so any such charges should not be too unexpected to consumers. Oftel understands that making off-network calls free-to-caller on mobile networks would require in some cases significant investment of resources and time, and in Oftel’s view the benefits of doing so would be unlikely to outweigh the costs. 2.97 At least one respondent was concerned that consumers might retain the freephone number provided on the network message, and dial it again from a different network and therefore obtain an inappropriate 118 number not available from that network. Oftel considers that this would depend on the consumer remembering a freephone number in preference to the 118 number used on the previous occasion, a scenario which Oftel does not think is likely to occur very often. 2.98 It is not correct in Oftel’s view to argue that consumers dialling 192 are somehow expecting explicitly to receive the network operator’s DQ service. Given the existing absence of service-level competition in telephone directory enquiry services, consumers can only be argued to be expecting a general DQ service of some description when dialling 192, as this is all that they have historically received. At present, the provider of the 192 service and the precise characteristics of that service vary from network to network in a way which is unlikely to be uppermost in a consumer’s mind when dialling 192. At present consumers are of course not expecting to access a competing DQ service when dialling 192, as this has never before been available to them. Oftel notes that the characteristics of some network operator’s DQ services have changed significantly with the introduction of competition in this market. For example, some network operators are charging prices for their new 118 DQ services that are different from the prices charged for the network operators’ 192 services. Consumers’ historical expectations are therefore of less relevance in the context of a liberalised market. 2.99 The purpose of Oftel’s liberalisation of the DQ market is to allow consumers to make a choice between different DQ service providers, all of whom are able to compete on as level a playing field as possible, rather than being routed by default to their network operator’s DQ service. An argument that because consumers have previously by default been using their network operator’s DQ service they should continue to do so is not in Oftel’s view valid given the context and goals of Oftel’s DQ market liberalisation. 2.100 One respondent asked if the freephone number would have a facility for onward connection to a DQ service. Whilst this would clearly be ideal, Oftel understands that a mid-call tariff change from a free call to a paid-for call for a call originated and terminated on different networks is not technically possible at the moment and would require substantial development. 2.101 In relation to consumer interest, Option B (iii) clearly scores better that Option A as it provides consumers with an identified source of information about the new 118 DQ numbers. Because Option B (iii) requires that consumers make another call to find out a 118XXX number (assuming they are still dialling 192 out of ignorance of the changes rather than habit), then Option B (iii) is less in the short-term interest of consumers than Options C, D or E which all provide a consumer with a 118XXX number immediately. Promotion of competition 2.102 In relation to the promotion of competition, one network operator felt that only DQ service providers with substantial marketing budgets could participate in the freephone service (or indeed in Option E). Oftel does not consider this argument to be very strong. Network operators are on average many times larger than independent DQ service providers, and their marketing budgets are likely to be correspondingly much larger. Whilst network operators may not focus their marketing currently on DQ services, this is a commercial choice made by the network operators which they are free to change. Oftel does not therefore consider that in this case this represents a barrier to network operators competing in this market to an extent that would justify the exclusion of independent DQ services providers from the message on the legacy DQ numbers. The marketing opportunity represented by the legacy DQ numbers is a very important channel as it provides information to the consumer who has a need at that exact time to access a DQ service, and is therefore likely to be more effective than other channels. The opportunity to use the legacy DQ numbers as a marketing opportunity must be available to all DQ service providers, regardless of the position they occupy in the value chain. 2.103 It was suggested that DQ service providers should use traditional marketing channels, rather than relying on the legacy network messages to promote their services. Oftel considers that a similar argument could be used for the DQ services of network operators, yet network operators are clearly very keen themselves (from their responses to Option C) to use the legacy network messages. This appears to be a tacit admission by network operators that the legacy network messages will be an extremely effective form of promotion. Oftel notes with interest that the amount of traditional promotion of 118 numbers done by network operators is in general much smaller so far than that done by independent DQ service providers, suggesting that network operators may be relying on marketing channels that are not generally available to DQ service providers to increase consumer awareness of their services. 2.104 Oftel continues to be of the view that Option B(iii) scores well against the promotion of competition criterion because all DQ service providers are given an equal opportunity to promote their own 118 numbers on the network message on the legacy DQ numbers. Oftel considers that Option B(iii) is comparable to Option E in this respect. Option B(iii) scores better than Option D on this factor because of the problems with free-riding under Option D (see below). Option B(iii) scores better than Option A against this criterion because under Option A, network operators will have a greater opportunity to promote their own 118 numbers via calls to customer services. Network access and interoperability 2.105 In relation to network access and interoperability, some network operators expressed concern about possible damage to network operator’s brands if responsibility for the 118 services was not clear to consumers, which could act as a disincentive to adopting the legacy DQ numbers. At least one suggested that some form of disclaimer would be appropriate on the network message or freephone number. Oftel does not consider that this is a strong argument. All 118 DQ services available in the UK (whether national or international) will be providing a DQ service that meets certain minimum quality requirements by virtue of Oftel and ICSTIS requirements placed on 118 DQ numbers. Differences in pricing and responsibility for services will be dealt with by the ICSTIS requirements to provide pricing information and the identity of the service provider with any promotion of a 118 number. Oftel notes that network operators routinely provide access to premium rate services on this basis and so are clearly able to manage the impact of such services on their own brand image to a degree that they currently accept. Oftel therefore believes that Option B(iii) (and other options considered in this consultation whereby the consumer is given an alternative service provider’s 118 number) cannot be argued to damage the network operator’s brand to a significant extent. 2.106 Oftel has considered the views of some network operators that the costs of Option B(iii) might be excessive, and that the fact that calls to freephone numbers on mobile networks may not necessarily be free might deter network operators from adopting the legacy numbers. As described in the assessment against Oftel’s six principles of cost recovery in Annex E, under Option B(iii) network operators would have to bear the cost of providing a free-of-charge network message to consumers dialling the legacy DQ numbers, together with any incremental calls to customer services – as under Options C and D. However, DQ service providers wishing to promote their services will have to cover the costs of the provision of the freephone service (supplied by network operators at normal freephone origination rates), and manage the fair and equitable distribution of network messages amongst DQ service providers. This effectively shares the costs of the network messaging solution in its entirety between the originating network operator and the DQ service providers. Oftel’s analysis in Annex E shows that Option B(iii) scores better than Option D but not as well as Options A, C and E against the ‘distribution of benefits’ principle. Option B(iii) does not appear to present any particular problems when assessed against the other principles. Given network operators’ comments elsewhere in their responses about the importance of minimising consumer confusion and calls to customer services, Oftel considers that there will be reasonable incentives on network operators (including mobile network operators) to adopt the legacy DQ numbers. 2.107 Oftel is aware that some network operators are not making a full range of 118 numbers available on their networks, whilst others are. It remains Oftel’s policy goal that all 118 DQ services should be available on all networks, and Oftel has actively encouraged network operators and DQ service providers to achieve this goal. However the reasons for the current limited availability are much wider than the issue of what network messages should be played on the legacy DQ numbers at the end of the parallel running period, and relate to the current interconnection regime for these services. Oftel acknowledges that this means the freephone service for some network operators might only be able to provide consumers with one 118 number, whilst freephone services for other network operators would have to make many different 118 numbers available. However, as Oftel has explained above, the requirement in the Communications Bill to encourage the provision of network access and service interoperability does not impose a blanket requirement to encourage ‘reciprocity’. 2.108 In relation to network access and interoperability, Oftel considers that Option B(iii) scores better than Option D because under Option D, the network operator must bear the cost of the entire network messaging solution. Oftel has ranked Option B(iii) as highly as Option E against this criterion because, although network operators can recover all costs from DQ service providers under Option E, Option B(iii) will be simpler for network operators to implement. Option C scores more highly against this criterion than Option B(iii) as under Option C, the network operator is able to exclusively promote their own 118 services. Practicability and certainty 2.109 Oftel considers that Option B(iii) offers both practicability and certainty, and has scored this option well against both these criteria. As noted above, it should be relatively simple to ensure that consumers are given 118 numbers appropriate to the network operator and line type by use of different freephone numbers, including consumers using pay phones or callers from Wales. Several DQ service providers and the MoU Group itself note that Directory Affairs Ltd (DAL) could provide the freephone network message. Directory Affairs Ltd is the not-for-profit company limited by guarantee set up by several DQ service providers to be the legal entity responsible for providing the network message on the legacy numbers under Option E, and providing the freephone service under Option B(iii). The MoU Group’s response indicates that arrangements have been put in place between DAL and a supplier of a network messaging platform that has ample experience in dealing with high-volume calling events and for which sufficient interconnection capacity should be in place. DAL has informed Oftel that it will be putting a process in place to establish that DQ service providers who wish to promote their 118 DQ numbers on the freephone message are likely to have sufficient capacity to deal with the 118 DQ calls driven into their call centres as a result. The use of freephone numbers should mean that existing commercial arrangements for freephone origination can be used, without the need for further commercial negotiations. As Option B(iii) promotes competition, the risk of further complaints to Oftel or the courts from DQ service providers (and the resultant uncertainty) should be minimised. Summary 2.110 Oftel’s assessment of Option B(iii) against the established criteria can be summarised as follows:
Option C Summary of Oftel’s proposals in the Consultation Document 2.111 Under Option C, the legacy DQ codes would remain Type A Access Codes. However, the designation of these numbers in the Annex to the General Conditions of Entitlement would change. If a network operator did adopt the legacy DQ numbers, it would be obliged (by its Numbering General Condition of Entitlement) to use the numbers for network messages advising that DQ numbers had changed and providing at least one appropriate 118 number, and not for any other purpose. Oftel considered it likely that network operators would use the network message to announce their own new 118 numbers, and not those belonging to other DQ service providers. | ||||||||||||||||||||||||||||||||||||
