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Ofcom accused of killing off VoIP competition


By Stewart Mitchell

Posted on 8 May 2013 at 12:52

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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User comments

This article reads like there is going to be retrospective charges for existing voip numbers. If so, has anyone at Ofcom really thought this through? Someone there needs kicking.

By WilliamW on 8 May 2013

Surely telephone numbers should belong to the users, not the suppliers. If there has to be a charge to buy a phone number, sufficient only to defray the real cost of supporting the numbering system, fine. Then I should be able to pay once to own my number for keeps, maybe need to pay an admin charge each time I assign it to a new service provider.
The whole 'geographic' thing is a relic from the past - VoiP is inherently mobile anyway. We don't have 'geographic' email addresses, despite that we might mainly access them from home. VoIP is an analogous situation.

By martindaler on 8 May 2013

Ofcom already killed VOIP by allowing BT to force customers to have Evening and Weekend calls as part of their internet contract

We used to live in a Virgin cable area and it was great 'cos we could have just fibre cable internet and a VOIP phone.

But since moving into a BT only area we found that BT are being allowed to abuse their position when it comes to stopping VOIP competition.

For our internet with Plus.Net we MUST have a phone line as it's ADSL. For a phone line we MUST have evening and weekend calls as part of the deal. Why? we don't need evening and weekend calls we already get that with Vonage.

We kept Vonage because we wanted to keep our old phone number from Warrington but we are very annoyed that just for internet we have to still have a phone line with evening and weekend calls which we don't want and only use for the internet connection.

Sometime this year we're meant to be getting fibre but I notice even with BT's fibre it's still a requirement that you have to have a phone line and evening and weekend calls. Virgin can do a fibre box only with no phone line or TV so why can't BT? Clearly BT's way of stopping any VOIP competition and Ofcom let them get away with it.

By TheKLF99 on 28 May 2013

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