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Ofcom Propose Changes to UK Mobile and Landline Call Charges

Thursday, August 13th, 2020 (12:21 pm) - Score 3,458
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The way we all use UK landline phone and mobile calling services is changing and as a result Ofcom are today proposing changes to their regulation via the new Wholesale Voice Markets Review 2021-26 (WVMR), which among other things will set new caps on call termination charges and deregulate other areas.

In 2019 some 200 billion minutes of calls were made by customers using a landline (often taken as part of a broadband bundle from your ISP) or a mobile service. Today very few of us make heavy use of traditional landline phones and instead we prefer to use cheaper mobile calling services, internet messaging or VoIP based solutions. Over the next few years even the traditional landline telephone service will become entirely IP based.

NOTE: This review excludes the Hull (KCOM) area, which is handled via a separate consultation.

In keeping with all that, Ofcom has today proposed further changes to this side of the wholesale market, although most of this won’t be something that ordinary consumers will notice in a big way. For example, capping termination rates for calls to mobiles at 0.389p per minute (down from 0.468p today) probably isn’t going to write too many headlines and these will remain unchanged for landlines (0.0292p).

Ofcom also proposes that, when someone calls a UK number from abroad, providers in the UK should “charge no more than the rate they are charged when their customers make calls to that international destination.” The regulator also intends to deregulate wholesale call origination, as providers will no longer need to purchase it from BT.

Summary of Key WVMR 2021-26 Changes

What we are proposing

To deregulate the wholesale market for landline call origination, which enables people to make outbound calls over a landline. We propose to remove the current regulation on BT’s Wholesale Call Origination (WCO) service because, as providers move to more modern methods of supplying calls, they will no longer need to purchase this service from BT. We expect the transition to more modern methods to take place by the end of 2025 and BT has offered voluntary commitments to maintain its WCO service during that transition.

To continue to set caps on the charges for terminating landline and mobile calls. Call termination is a wholesale service provided by a phone company to connect incoming calls to a customer on its network. If we did not set caps, providers would be able to charge high rates for termination. This is because the originating provider has no other choice than to buy the termination service from the terminating provider. The caps would apply to landline and mobile calls that originate and terminate within the UK. Under our proposals, the mobile call termination price cap will be lower than the current rate, in line with the lower costs of providing call termination. In the first year of the market review period, 2021-22, we propose this cap to be set between 0.257 and 0.485 pence per minute. For landline call termination, our proposals are to maintain the current price cap at the same level in real terms, which currently stands at 0.0292 pence per minute.

For calls originated from abroad, to require UK providers to charge no more than the equivalent rates charged by their international counterparties where those are higher than the UK regulated cap. This would replace the current caps on termination rates for calls originated abroad. This proposal would only take effect for EEA countries if current EU rules relevant to our regulation of termination rates no longer apply after the transition period.

We propose to allow UK communications providers to set termination charges for incoming calls from abroad that can be higher than the caps we are proposing in this review for calls within the UK, but only in circumstances where the UK communications provider faces a high termination charge when its customers make calls to that international destination, and only up to the level of the termination charge set by its international counterparty. This is a change from the current situation, where the termination price caps apply to all calls regardless of their origin.

To gradually move the focus of regulation from traditional to more modern interconnection. Over the period of the market review, we expect IP interconnection to become the main method of interconnection as industry moves away from the traditional telephony network. We propose to regulate IP interconnection so that BT has to interconnect on fair, reasonable and non-discriminatory terms, including on prices. We do not propose to set more specific charge controls on BT for IP interconnection. We also propose to require BT to publish a timetable for interconnection migration.

As part of the move to modern interconnection, to require BT to offer interconnection with its IP network for all landline calls at the regulated termination rate from April 2025 onwards. This is to provide certainty to telecoms providers that by April 2025, they will be able to access the regulated termination rate via IP interconnection for all calls to BT customers, including for those numbers that may still be held on BT’s traditional network. As a consequence, from April 2025, BT will no longer be able to charge for certain additional services for IP interconnection, on top of the regulated termination rate.

To continue to impose mobile termination rates on calls to 070 numbers. This is to avoid the harm caused by high termination rates, which used to lead to high prices, bill shock and scams.

To remove the charge control for conveyance of calls to ported mobile numbers (Donor Conveyance Charges (DCC)). However, we will retain the requirement that those charges are set at costs, and we expect that in future those charges would not exceed the current level.

To incentivise the use of common technical standards. We are not, however, proposing to require specific technical standards.

The consultation itself will remain open for responses until 8th October 2020 and, assuming there’s no major opposition, then the final changes will be implemented from April 2021.

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