This is a tale of deceit, greed, and intrigue. Well before the broadbandits burst onto the scene, the copper highwaymen have been perfecting their tricks for decades. Their sly plans continue to this day.
How I found out about the scam
One of my many tasks on return to the UK from the USA has been to select a landline telephone provider. Like many people in the UK, I have a choice of exactly one access network provider, namely BT. Whilst cable passes the front door, it somehow failed to make it up into the apartment block. And wireless broadband has only been deployed on the other side of town. (There’s a hill I can see from my living room about 10 miles away across the Forth river — anyone looking for a good site for a tower, just drop me a line, I’ll tell you where to build it…)
I can’t buy naked DSL, so I might as well make the most of the circuit-switched connection I’m forced have. As in the US, it has been possible for a long time to dial a prefix for an alternative carrier, or to permanently switch via carrier pre-select. Both cases have required a separate bill from the basic BT connection charge, although that’s about to change; the third party provider can soon opt to remit the BT line charges too. There’s been an explosion of service providers, and a profusion of different rates and prefixes.
One very useful website has been set up, uswitch.com, for enabling comparisons between utility providers. Incidentally, there’s a business opportunity lurking here. I want a box that does intelligent carrier preselect and least-cost routing for me. When I dial a call, it uses my broadband connection to look up the best provider from an on-line database. It would also optimise the provider accounts I hold over time, based on my call patterns. (Some accounts require a monthly fee for lower call rates.) Take the uswitch.com idea, and take it down to the individual call level. Any takers?
Anyhow, I haven’t yet signed up for any alternative carriers. Whilst I procrastinate I’ve been using an alternative means of bypassing BT’s outrageous rates for the many international calls I make. (This is all in addition the usual free calls I make over Skype, of course.) A whole raft of countries can be called by dialling a special number of an alternative access provider. You don’t need an account with them, it just gets billed as a normal BT call. In their own words:
Call USA for just the price of a national call!
- 1. Just-Dial 0870 794 0000
- 2. Then dial your international number in full
- 3. That’s it - you’re connected - try it now!
NO accounts to open NO credit cards needed NO bills from us
So how does this work? How are they making money? How much am I payng to call this number? Well, this is where we discover a dirty great big scam being pulled on the British public. The villains aren’t these toll-bypass carriers, though. Rather, the whole numbering system has been poisoned to favour the telco incumbents. Oh my, this is a real humdinger of a story. Hold on tight.
Numbering in the UK
A bit of dull background first. Following years of confusion and scandal, the regulator set up a national numbering plan in the mid 1990s. In the UK, normal geographic phone numbers begin 01xxx or 02xxx. Mobile numbers (plus some other stuff - another scandal for another day) were given 07xxx. Premium rate numbers have 09xxx, and are regulated by a separate body. Finally there’s the 08xxx range for “non-geographic numbers”. Keep this last one in mind.
The transition to the new numbering system was so expertly managed that people in London only had to change their number, oh, four or five times in a decade. Gives you a clue as to how ineffective regulation can be. Clueless and toothless regulation is a bit of a theme here, actually.
Lies, damned lies, and BT price lists
Everything in this scam hinges on the phrase “just the price of a national call”. You, and about 98% of the UK public, probably think that’s the same as calling a geographic UK number, right? Nice try, no banana. The national call rate was, indeed, the price of a UK national call on BT’s standard call plan. It’s expensive, at 7.5p/minute peak times (about $0.14). But BT scrapped standard calling plans this summer, and forced everyone onto the more expensive BT Together plans. These (well established) plans have lower call charges, but higher monthly fees. So feel free to desert BT for metered calls — they’ve just unilaterally decided to charge you more regardless. Only a few obscure social-obligation plans remain on the old call charge scale. You and I don’t qualify.
And the “price of a national call” isn’t yet regulated, either. So if you’re not calling from BT, it could be anything your provider feels like charging. Maybe a bit more than BT, or a lot more than BT from a mobile or less scrupulous alternative carrier. (Orange, for example, charges post-paid customers 10p/minute. Good luck finding out the charges — they aren’t posted on the mobile carriers’ web sites. If you’re pre-paid, they’ll even charge you for calling customer services to find out!)
To put this in perspective, the cheapest UK toll-bypass carrier charges a 1p flat connection fee for a (geographic) national call, and that’s it. So if you spent 10 minutes calling an 0870 number, you’re paying eighty times the going rate. Yes, you read that right, no need to rush to Specsavers for some new glasses.
You scratch my back
Now for the really juicy bit. It isn’t just the carrier raking in the cash here. These numbers offer revenue sharing to the callee. This can be up to about 4p/minute. The volumes of calls can be huge, and business plans commonly run into the millions of minutes. That means you’re paying the callee for them to answer your call. And you’re paying to stay in their queue. And paying to wait. And paying more to wait more. And paying to talk to Mandy the customer service rep who’ll no doubt transfer you to Dave her supervisor for an extra chat. Pay and pay and pay some more.
So you can see why British businesses have flocked to using 0870 numbers. Forget the US approach of offering freephone 0800 numbers. We good old Brits know how to give our customers a good rogering.
(I’m going to book some airline tickets using flyer miles later today. But I’m not calling the British Airways 0870 number in the UK, no siree. I’m using Free World Dialup to call their US 0800 number at no charge. So take that and stick it, etc.!)
And it’s not just businesses using 0870. Want to call your police station? Your school? Driver licensing? It goes on and on. University students in campus accommodation can only be reached via 0870 numbers, with the university taking a cut from every inbound call. Credit card swipe machines autodial 0870 “maintenance” numbers in the middle of the night.
It wasn’t meant to be this way. The 09xxx range was supposed to be for premium rate calls. They’re pretty tightly regulated. For example, you are not allowed to have a queueing system on a premium rate number. Either the call is properly answered immediately by the service provider, or there is no charge. The cost must always be prominently displayed. And they were supposed to be the only place for revenue sharing between carrier and callee. Whoops. A triple regulatory failure when it comes to the covert premium rate 0870 numbers and their cousins.
Billion-dollar bank heist, no arrests made
You might be thinking what’s the big deal really? Charging 8p a minute isn’t much of a premium rate, is it? Err, actually it’s more expensive than some “offical” premium rate numbers. But here’s the bit that really surprised and shocked me:
… BT wasn’t wishing to jeopardise the future of the UK [Number Translation Services] market as this accounted for between a quarter and one third of switched revenues for BT. [my emphasis]
Wow. And you can bet this figure is increasing rapidly too. We’re talking billions of pounds here.
As some of you will have noticed by following the links, there’s a small consumer backlash forming. The site SayNoTo0870.com lists geographic alternatives to 0870 numbers. Remember all those times on the back of your credit card when it says “If calling from outside [your country] dial +44 123 4567890”? Well that’s the number you really want to dial, regardless of where you are.
Oh, and could someone please update my little personal least-cost call routing box to do these translations for me too, I’d be grateful. Cheers.
Take-aways
There are several phenomena here of note. The first is that this is microeconomics in action. Who gets more value out of the call? If I need to change my airline ticket, then my airline has temporary monopoly power over me. Need to tell your pension provider you’ve changed address? You’re hardly going to shift your pension funds about to avoid a 50p call charge. It’s a beautiful example of price discrimination and market economics in action. (Of course, it’s also underpinned by fraud and obtaining financial advantage by deception since the telephony transaction is neither based on mutually clear terms nor freely entered into — two essential elements of a valid contract.)
The second thing of interest is the size and complexity of the billing tables. You practically need a broadband connection just to download and view the BT price list! I counted 58 screenfuls of data. Obfuscation of real prices has long been an essential part of operating a telephony service. The art is now progressinging into a scientific discipline. How can you evaluate the relative attractiveness of a VoIP provider to an incumbent if an increasing majority of your call costs are to mobile, non-geographic and premium numbers? It would take you a week to re-rate you bill by hand.
Finally, there just the sheer cunning of it all. If the smart network loses against the stupid network on an architectural level, then just change your locus of competition to the financial and political spheres. Tens of thousands of businesses and government agencies now have a financial interest in perpetuating the old system. The media aren’t exactly going to be up in arms when they and their advertisers have a finger in the pie. Who cares about free person-to-person VoIP calls when you need to pay protection money to a telco in order to engage in any commercial or public activity?
PS If you have any comments or complaints about this article, please contact me on my 0870 number listed here. (Only kidding!)
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There is nothing wrong with the concept of non-geographic numbers.
The problem is with service providers *overcharging* for their use.
We live in a free market. If you don't like what your local butcher charges you for your sausages, you go to another butcher.
If you are being overcharged by your telco - you should switch telco.
I'm with Dean, Companies have a choice whether or not they take advantage of Non Geographic Numbers as do customers have the choice of whether they choose a company who uses a Non Geographic Number. Dean's right its a Free World.
Posted by: at February 2, 2007 07:48 PM