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A statement on the review of the Oftel Meter Approval Scheme for Public Telecommunications Operators Issued by the Director General of Telecommunications February 2000 Chapter 1 Introduction Chapter 2 A new scheme for a multi-operator market Chapter 3 Making it happen Annex A Summary of the Oftel Standard and the BABT Meter Approval Process Annex B List of bodies who responded to the 1998 Consultation S.1 In April 1998 Oftel issued a consultation document, "Meeting customer needs for accurate telephone bills", which reviewed the current approvals scheme for telecoms operators' metering and billing systems. This statement is a response to that consultation. S.2 Customers buying telecoms services need to be confident that they are paying only for what they have used and that their bills are right. This means that the accuracy of the metering and billing systems used by various operators and service providers should be independently monitored and certified against an agreed standard. The Telecommunications Act 1984 provides for the setting up of a Metering and Billing Approvals Scheme and gives the Director General powers to require operators to submit their billing systems for approval. The current scheme is administered by the British Approvals Board for Telecommunications (BABT). S.3 However, not all the major Public Telecommunications Operators have yet been brought into the scheme. Only BT, Cable and Wireless Communications, Kingston Communications (Hull), Vodafone and Cellnet have been required to have their metering and billing systems approved by BABT. Furthermore, under the current scheme not all items which appear on phone bills are covered – for example fixed charges for line rental and the provision of supplementary services are not included. S.4 A significant proportion of the customer complaints which Oftel handles relate to billing problems – over 25,000 in 1999, 35% of total cases. Billing complaints increased dramatically in 1999 – by over 80%. Inaccurate billing is clearly a major customer concern and ensuring that bills are right is a key consumer protection issue for Oftel. S.5 The consultation in 1998 asked whether the scheme should be extended to other operators, which other services should be covered, and whether the approval process could be improved. S.6 The clear message from consumers was that all significant telecoms operators should be covered and so should all significant telecoms services. Corporate business users noted a high level of billing inaccuracies often representing substantial sums of money. Large businesses were employing staff specifically to check bills. In particular they commented that substantial elements of business telecoms services, such as provision of leased lines, number translation services (eg freephone), Centrex and Virtual Private Networks (VPN) services, were not currently approved and felt they should be. Responses from some telecom operators also supported extension of coverage of both operators and services in order to ensure consumer confidence in billing. Operators argued, however, that the current scheme was over-specified for its purpose, demanding excessive levels of accuracy and in consequence was too time-consuming and costly. There was support for allowing other approval bodies to operate the Scheme in addition to BABT, in order to provide some choice. S.7 In the light of responses to the consultation document Oftel is now proposing that the Scheme be extended to cover other operators and other services. In particular:
S.8 This statement sets out the new framework Oftel intends to put in place and a plan to put it into action. There are several issues on which Oftel wants further views. The consultation period will run until end-March and arrangements for consultation are set out at para 3.5.
Introduction The current Approvals Scheme 1.1 In order to give customers confidence that their bills for telecoms services are accurate, the Telecommuncations Act 1984 provided for the setting up of an Approvals Scheme for the metering and billing systems of Public Telecommunications Operators (PTOs). Sections 24 and 25 of the Act provide that PTOs should submit their billing systems for approval ‘as soon as practicable’ and give the Director General powers, if necessary, to require them to do so and to specify a date by which this should be done. These provisions are reflected in Conditions 11 and 12 of the new standard PTO licence. 1.2 The Approvals Scheme is run by BABT and the accuracy standard required of systems under the approvals process is set out in an Oftel Technical Requirement (OTR 003:1993 – Oftel Standard for Public Telecommunications Operators’ Meter Systems). Annex A provides a summary of the Oftel Standard specifications and the BABT processes. 1.3 The Scheme applies to billing systems for both residential and business customers and covers the systems associated with provision of voice telephony, and ISDN. Once initial approval of systems has been achieved, they are then subject to regular review and an annual renewal of the approval certification process. 1.4 The companies currently covered by the scheme are: BT, Cable and Wireless Communications (CWC – although the billing systems for their cable interests are not yet approved), Kingston Communications in Hull, BTCellnet and Vodafone. Weaknesses of the Scheme 1.5 Limited coverage: only metered calls are included in the current scheme. Bills for fixed charges such as line rental and supplementary services are excluded. Not all discount schemes are covered: those that involve a fixed fee are excluded. Complaints from business users have indicated that ensuring accuracy for line rental charges can be a particular problem. Furthermore the provision of certain telephony services commonly used by businesses – such as number translation services, Centrex and VPN are not yet fully covered whilst leased lines are excluded. 1.6 Concentration on aggregate controls: the Oftel Standard sets out rigorous accuracy requirements but these apply to the overall metering and billing processes used within each PTO. Typically, results are aggregated over half a million test calls that are run over each operator's system on a monthly basis. The standard has thus been effective in ensuring that overall revenues from the services covered have been correct but has not focused on the accuracy of individual bills. As the Standard is currently constructed, over-billing can occur on some bills whilst under-billing occurs on others. Neither error may be big enough to exceed the thresholds in the Oftel Standard because of the relative insignificance of these individual errors compared to the revenue aggregated across the whole network. The current scheme therefore does not give sufficient assurance for individual customers that their bills are correct. 1.7 Operators covered: many telecoms companies are now offering services to customers in the UK market. There are hundreds of operators who have PTO licences and many others who do not need an individual licence to provide telecoms services but operate under class licences, such as the Telecommunications Services licence. Metering and billing approval for telecoms services is a key consumer protection issue. It is the equivalent of, for example, weights and measures checks in other industries. It is thus clearly inappropriate for the multi-operator market in the UK today that only a handful of major companies are covered by the Scheme. 1.8 Operation of the Scheme: discussions about extending the Scheme have also covered operators' concerns that the current Scheme is far too onerous and inadequately focused on the customer benefits it was intended to provide. Operators were also concerned that there was only a single provider of approval services, BABT. 1.9 Consumer complaints: it is clear from the complaints Oftel handles that billing issues are a serious problem for consumers. Over the past three years billing complaints have averaged around a third of all cases handled and in 1999 totalled over 25,000. This represents a massive increase of over 80% on the figures for 1998. Of these complaints around 14% were about disputed bills, a further 25% about payment accounting problems and over 38% were about other administrative billing errors. In the business sector complaints about billing accuracy have amounted to around one in five hundred bills averaged across all the major fixed link operators. The billing errors reported often represent significant sums of money. The magnitude of the problem is such that large businesses often find it necessary to employ additional staff just to check the accuracy of the bills received and to maintain a dialogue with their service providers to keep track of changes made to tariffs, discount schemes and service provision. Consultation 1.10 Against this background and particularly in the light of a rising level of customer complaints about billing, Oftel decided to review with both consumers and the industry the operation of the current Scheme and to clarify what was needed for the future. The consultation document in April 1998, therefore, asked how the Scheme should be modified to address the identified weaknesses. A modified Scheme would need to provide improved confidence for both business and residential customers in their bills and also to meet operators’ concerns that it should not be over-specified and onerous in relation to the level of accuracy required. 1.11 Responses were received from a wide range of organisations: all the major PTOs, Service Providers, Advisory Committees, local councils, Chambers of Commerce and interested parties including BABT, British Standards Institutions, Telecoms Managers Association and the DTI. A few individual consumers also responded. A full list is at Annex B. The main points arising from the consultation were:
1.12 Since the end of the consultation last year, Oftel has had further discussions with BABT and other potential approvals bodies, operators and the Large Business Users' Panel. The next chapter sets out Oftel’s proposals for revising the Scheme in the light of this.
A new scheme for a multi-operator market 2.1 The clear message from the consultation over the past 18 months has been that the Approvals Scheme should be extended in order to improve consumer confidence in the accuracy of their bills. This message is reinforced by the evidence from the volume of billing complaints Oftel is receiving. Oftel has also formally investigated a number of problems with operators' billing systems that have been set out in its Quarterly Competition Bulletin. 2.2 In considering any extension of regulation, however, Oftel has to examine very carefully whether this extension is justified in terms of the costs incurred and the benefits it would bring to consumers and industry; and also whether the action proposed is proportionate to the problem. Oftel’s approach, as set out in its Strategy document (published on 18 January), is to regulate only where necessary to protect consumers and where the market will not itself deliver the desired outcome. 2.3 The issue of ensuring accurate bills for consumers is an area where Oftel considers that continued and indeed extended regulation is required. This is not new economic regulation of the telecoms sector but, as noted earlier, the parallel of weights and measure, checks and inspections of other sectors of the economy. It is a matter of consumer protection. It is not something the market will of itself necessarily deliver – no more in telecoms than in other sectors – so continued approvals measures are needed. The requirement that operators should submit their billing systems for independent approval has, as noted above, been a condition of licences since 1984. Oftel is now activating these provisions so that the measures should apply to all operators offering generally available services to the public (any special individual deals are a matter for the parties concerned). 2.4 The approvals process does, however, need to be efficient and focused on the problem it is meant to be addressing. Oftel recognises that the current Scheme has been insufficiently focused on the accuracy of individual bills and that the approval process has been too onerous in relation to the accuracy required. 2.5 Oftel is therefore now proposing that the Scheme should be extended but that its delivery should be refocused. Details are set out below. Extending to other operators 2.6 Oftel considers that the protection against incorrect billing provided by the Scheme should initially apply to all companies offering services to the public with a minimum threshold per company of £1 million annual revenue from the provision of voice telephony services. Oftel will keep this threshold under review. The billing systems of mobile service providers and resellers should, in Oftel's view, also be subject to the Scheme just as those of major PTOs. The Director General will use his powers under the Telecommunications Act and licences to require PTOs to submit their systems for approval by specifying a date by which this should be done (see below). For service providers and resellers, the Director General will invite these companies to submit their systems for approval, although recognising that he has no power to require this. Oftel considers that the importance of being able to assure their customers that their bills are accurate will encourage these companies to use the scheme voluntarily. 2.7 Extending the Scheme in this way will entail a major increase in the number of companies needing new approvals and annual audits thereafter. In order to manage the increased volume of approvals work Oftel proposes that companies not already within the Scheme should be asked to submit their billing systems for approval in phases. In order to be non-discriminatory and equitable, Oftel proposes that similar types of operator (eg cable, mobile) should fall in the same phase. The proposed staggering of dates for different types of operators has been based roughly on the retail revenues of the different types of services offered. In this way, operators with the greatest number of customers are dealt with first. The proposed implementation schedule is therefore: Operators Date to submit systems for approval Orange, One2One end-2000 Mobile Service Providers All Cable Operators March 2001 (CWC already submitted) Colt, Energis, June 2001 Worldcom Thus, (Norweb, Torch, Racal) September 2001 All other PTOs and service providers progressively thereafter on a schedule to be decided in due course. Extension to other services 2.8 Oftel will amend the Standard to ensure that it applies to fixed line rental, supplementary services and all discount schemes. Leased lines should be brought into the Scheme and Number Translation Services, Centrex and VPN should be more fully covered. Oftel will discuss details of this further with the industry. Firm proposals will be made in the Spring on this. Oftel will modify the Standard to set a level of materiality for all services to be included in the approvals process. Only those services which comprise a material part of a company's revenue – and therefore of customers' bills will be included. A threshold of about 5% seems appropriate. 2.9 New telecoms services are coming into the market all the time. Consumer protection for new services is just as important as for old. But there is the issue of proportionality. Oftel proposes that new services should be brought within the approvals regime when they get to the stage of comprising a significant proportion of customers’ bills, - 5%, as above. Oftel will therefore keep the service coverage of the Scheme under review and will specifically revisit this issue in 2 years time. This fits with the general approach in Oftel's Strategy document: that market developments will be formally reviewed every 2 years. Focusing and streamlining the approvals process 2.10 The present Standard lays down stringent accuracy requirements on the whole metering and billing process. Oftel will look again at the specifications in the Standard to ensure that they meet appropriate accuracy requirements without being unduly onerous. Oftel is minded to consider an approach which recognises the accuracy levels which are inherent in the electronic equipment itself, but also recognises that such limits may not be appropriate when considering the end to end process, including various elements of human intervention. 2.11 The current Scheme places too much emphasis on assuring overall accuracy of call revenues whilst still allowing what may be significant errors due to over-billing or under-billing in individual bills. The Standard will be revised to put the accuracy of the individual's bill at the heart of the approval's process. Monitoring a sample of actual bills could achieve this. Alternatively, the level of justified complaints concerning inaccurate billing could be used, if it could be adequately audited. Oftel hopes that operators will retain billing records for the last 12 months to enable these approaches to be tested. 2.12 The proposed changes, including the agreement of suitable transition arrangements for those operators approved under the current scheme, will be discussed fully with all sides of the industry and consumers before implementation (see Chapter 3). Choice of approvals body 2.13 The extension of the requirement for approvals to many more operators will be a significant step change in the volume of approvals work. In addition, a key issue arising from the consultation was a wish to see some choice of approvals body. Oftel therefore intends to open up the Scheme to other approvals organisations, in addition to BABT, accredited by UK Accreditation Services (UKAS) or other equivalent European National Accreditation Services. To do this Oftel will work with interested bodies in developing the Standard into an appropriate approvals process. Oftel will keep a list on its website of bodies who will undertake this approvals work.
Making it happen 3.1 This Statement sets out Oftel’s proposals but there is still a lot of work to be done to put this into effect. As a first step, Oftel intends to organise a workshop with industry, standards bodies and consumer representatives in mid April to determine how the Standard needs to be changed. Oftel will put a paper to the Workshop with draft proposals reflecting the decisions set out above. In the light of this and subsequent discussion with BABT and other interested standards bodies, Oftel will issue a revised Standard by July 2000. Oftel intends that this will also cover leased lines, NTS, Centrex and VPN. 3.2 In parallel with this Oftel will be holding discussions with other interested standards bodies so that they can work up their own approvals processes and be in a position to offer their own services from Autumn 2000, alongside those of BABT. 3.3 The Director General will in July 2000, when the new Standard is settled, formally notify operators of the dates, set out in para 2.7 above, by which the operators must submit their systems for approval. By Autumn 2001 all major companies offering services to the public should have submitted their systems for approval and by end-2001 all operators with voice telephony revenue above the minimum threshold of £1 million will have submitted their systems for approval. 3.4 In mid-2002, Oftel will review the service coverage of the approvals Scheme to ensure it continues to provide appropriate protection for the services available in the market at that time. How can you input to this process 3.5 This is a statement of Oftel’s decisions on the future of the approvals Scheme but clearly further consultation is needed on the detailed implementation. If you have comments on the decisions set out above and how they might be put into effect, please send these to: Malcolm Davies Oftel 50 Ludgate Hill London EC4M 7JJ e-mail: malcolm.davies@oftel.gsi.gov.uk Responses please by end-March. Please also let Oftel know if you want to attend the workshop in mid-April. Details about the workshop will be posted on Oftel’s website and through the e-mail notifier system. 3.6 Oftel would be happy to discuss these proposals further with operators, consumer groups and potential approvals bodies. Please contact Malcolm Davies to arrange a meeting.
Summary of the Oftel Standard and the BABT Meter Approval Process Legal basis of the Oftel Standard – OTR 003:1993 The Oftel Standard, OTR 003:1993, is the designated Standard for Public Telecommunications Operators’ Meter Systems. This standard lays down requirements which meters for voice telephony must meet before being approved. This standard is formally designated by the Director General of Telecommunications. Requirements of the Oftel Standard The standard requires that the performance of the PTO’s metering and billing systems, including all equipment, data, procedures and activities used by the PTO to determine the charges to be made, shall satisfy the accuracy requirements set out in the standard. The standard sets out the performance limits for the PTO’s metering and billing systems measured at the network level. The standard defines an ‘inaccurately metered call’ as any call for which the charge to the customer differs from that calculated on the basis of published tariffs. The standard requires that no more than 1 call in 10,000 shall be inaccurately metered and that the absolute summation of the value of all inaccurately metered calls shall not exceed 1 in 20,000 of the value of the total charges recorded on the PTO’s metering and billing system. The standard requires that no more than 1 in 5 of inaccurately metered calls shall result in overcharging. The standard requires that measurement systems shall be put in place to monitor the performance of the PTOs’ metering and billing systems for the purposes of accuracy assessment by the appointed approval authority. The standard recognises that in practice there may be certain inherent inaccuracies in the metering and billing process and permits that as long as these only result in under metering then, following acceptance by the appointed approval authority, these will not be included in the accuracy assessments. Scope of the Oftel Standard In its present form, the standard only applies to the charges made for metered calls for voice telephony services provided by PTOs. The standard does not apply to charges made for the following elements:
Summary of the BABT Meter Approval Process The BABT Meter Approval Scheme is based on four elements as detailed below:
The BABT approval process is partitioned into the following work packages:
Once the first approval has been granted to a PTO, BABT continues to monitor compliance with the Oftel standard and maintains close liaison with the PTO to track any material changes or network performance deficiencies. Additionally BABT monitors growth in revenue from both new and existing voice telephony products not initially included in the approval scheme and will extend the approval scheme to include any of these products once they become of material significance. Assessment competencies required (by the PTO and the appointed approval authority)
List of bodies who responded to the 1998 consultation British Approvals Board for Telecommunications (BABT) British Standards Institution (BSI) British Telecommunications (BT) Consumer Communications for England (CCE) AT&T (UK) Ltd Cable and Wireless Communications (CWC) Cellnet Department of Trade and Industry (DTI) Energis Local Authorities Co-ordinating Body on Food and Trading Standards (LACOTS) National Weights and Measures Laboratory (NWML) One2One Orange Racal Telecom Scottish Telecom Secor Consulting Limited (SECOR) Telecommunication Managers Association (TMA) Telewest Communications Vodafone Aberdeen Chamber of Commerce East Lancashire Chamber of Commerce Cheltenham Borough Council Wandsworth Council Whitby Town Council Responses were also received from the following Telecommunications Advisory Committees (TACs): Birmingham East Suffolk Harlow Harwich and Manningtree Ipswich Leicester and Rutland North Lancashire and South Rutland Nottingham Plymouth and District Purbeck Shropshire Taunton Truro Area Individual responses were received from: Brian Bull Mark Dunn R L Warner
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