OFTEL Consultations To Examine ISP Phone Pricing
The UK Telecommunications watchdog, OFTEL, is to issue a consultative document examining the use of local rate phone codes by internet service providers (ISP) the results of which could upset the current growth in free internet access.
OFTEL says that it is currently examining a number of telephone codes, including the local rate 0845 numbers, some of which are used by ISPs to give customers access to the internet. Currently, the network at the receiving end of a call, be it either modem internet access or a helpline query, receives a greater amount of money from the call than the originating network (the caller’s network). Due to the rise in the number of people online some telecommunications networks are handling many more calls but receiving relatively little payment.
OFTEL’s consultation may result in the money made from calls being more evenly distributed between originating and terminating networks. However, this in turn might mean that the free ISP companies make less money from calls and might decide to introduce a monthly rental charge to customers to make up the difference.
An OFTEL spokesperson this morning told Newsline that the watchdog has not actually made any recommendations to the industry but is offering the different parties the chance to air their views in the hope that a solution will be reached that best benefits the consumer.
The outcome could be significant for the UK internet market which is understood to have grown by around 10% since the launch of Dixons’ free access provider, Freeserve, in September (see DoubleClick To Sell Ad Space On UK’s Fastest-Growing ISP). Freeserve now has a customer base of over one million people. Tesco has recently unveiled a free Net access service for its ten million Clubcard holders and the Mirror Group (see Mirror Group In Talks To Launch Free Internet Access), the Sun and WHSmith are all rumoured to be planning the launch of a similar free Net access service.
The money made from the calls to these and similar non-internet services is an issue which the industry has been discussing for the last couple of years according to OFTEL. The results of the forthcoming consultation could shake up the way this system currently operates. This may have farther-reaching ramifications on the free access industry as a whole. However, the marketing and customer profile information gained by ISPs with a large customer base, like Freeserve, is unlikely to be relinquished easily by the providers. This could well see companies such as Dixons continue to subsidise their free ISP services with revenue gained from other areas of the business.
OFTEL: 0171 634 8700