Ofcom accused of killing off VoIP competition

VoIP

Charging for numbers could push small telcos out of business

Ofcom has been accused of scuppering competition in the VoIP market over its plans to introduce charging for geographic numbers.

Ofcom plans to start charging for blocks of geographic phone numbers, and has already launched a pilot, but according to ISP Andrews and Arnold, the additional costs will have a huge impact – adding £65,000 a year in costs regardless of subscriber numbers.

One of Ofcom's roles as a regulator is to encourage competition, but A&A's Adrian Kennard claimed new charges will lead to fewer operators and customers losing their existing numbers.

The costs of starting up a VoIP service would balloon from £1,000 for hardware to £1,000 plus £65,000 a year for the numbers, with existing providers having to generate the extra £65,000 to cover charges for numbers already used to connect customers.

I really hope we don't have to hand back our numbering and kill off the numbers in use by our customers. Talking to other small telcos this seems like it may be happening a lot

"The numbering thing is huge. It makes any small VoIP provider's business model break badly. It is a charge for something we already have, not just new blocks or new telcos," Kennard said in a blog post.

The criticism centres on plans to charge telcos 10p per phone number, but sell them in blocks of 1,000. With 650 area codes in the UK, telcos offering a nationwide service would need to buy a block in each area code, leading to sizeable costs.

"We are trying to work out what to do," Kennard said. "We may have to give the blocks to a larger carrier as the larger carriers with more paying customers may find it viable - but these blocks are no longer an asset we could sell, but a liability we are trying to avoid."

If the blocks of numbers are handed back to Ofcom, existing customers could lose their VoIP numbers, resulting in upheaval for users, Kennard said.

Inexhaustible supply

Ofcom was also criticised for treating numbers like radio spectrum, which is a limited resource, and for imposing charges on blocks of numbers that had already been allocated.

"Ofcom seemed to treat numbering like radio spectrum, as a limited resource [and] that they should use charging as a means to control," Kennard said.

"Of course, with radio spectrum, you don't suddenly get a huge bill for spectrum you already have allocated, but importantly you can't just add an extra digit to radio spectrum and have lots more, like you can with numbers."

The changes could see service providers have to add charges for incoming calls over VoIP, which would make them less competitive.

"In a worst case scenario, we'll still offer some VoIP services - but possibly with incoming charges or 'balanced usage' terms, and possibly using another carrier's numbering and not our own," Kennardf said. "I really hope we don't have to hand back our numbering and kill off the numbers in use by our customers. Talking to other small telcos this seems like it may be happening a lot. So, goodbye competition in the UK."

An Ofcom spokesperson told PC Pro: An Ofcom spokesperson commented: "Ofcom is charging for geographic numbers on a pilot basis in 30 area codes where the supply of new numbers is particularly scarce. Ofcom has proceeded with this pilot after consulting publically and extensively on a range of measures to address the scarcity of geographic numbers.

Ofcom’s proposal to lower fixed termination rates to the marginal costs of termination will ensure that the regulated rate better reflects the cost of providing termination services. We are currently considering all stakeholder responses to this consultation very carefully before reaching our final decision."

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