Few consumers know that mobile phone calls to 0800 “freephone” numbers cost up to 35p per minute until they receive their bill. No surprises then that mobile phone operators keep the details of their 0800 charges guarded deep within overwhelming legal contracts.
For a fee, BT supplies businesses with 0800 non-geographical numbers so they can provide a “freephone” service for consumers yet customers calling from mobile phones do not benefit from this convenience. A report from telecommunications regulator Ofcom said: “Consumers have an expectation that 080 calls will be free.” Yet BT has been in a decade old dispute with Orange, T-Mobile, Telefonica 02 and Vodafone about call charges to the 0800 numbers hosted by BT.
Mobile operators argue that high charges for 0800 calls cover the cost of “originating” 0800 numbers, converting non-geographical numbers to geographical ones, to 01 or 02 landline numbers. Mobile phone companies refer to origination as “retention”, another word for the same process, also referring to the expense of originating 0800 numbers as “retention cost”. Whilst mobile phone companies recover costs from mobile phone users, BT also subsidises the costs. The revenue mobile phone companies make from 0800 calls may look to the knowledgeable consumer to be in excess of retention costs, however, in an official Ofcom report, mobile phone companies “have not been able to confirm to BT their average retail costs for 080 calls” whilst maintaining that: “BT should pay for originating 080 calls and that this payment should be sufficient to cover their efficient costs of retention.”
The freephone feud between BT and mobile operators became a hot topic again recently. BT won an appeal to increase charges to mobile phone companies for 0800 numbers in August. BT approached the Competition Appeals Tribunal challenging a 2009 decision by Ofcom that BT should further subsidise retention costs. This latest verdict looks likely to benefit mobile phone users as BT will charge mobile phone companies for 0800 charges exceeding 8.5p per minute. This should encourage mobile phone companies to cap the cost of 0800 calls at this rate.
Orange and T-Mobile, now combined under the new name Everything Everywhere, have reduced their charges for 0800 numbers almost immediately. Orange and T-mobile reduced their prices for 0800 numbers to 7p per minute. Vodaphone are set to reduce their charges for 0800 numbers in October from 35p per minute to 7p per minute, although this will rise to 14p per minute in the New Year. Although this is a vast improvement remember that 0800 numbers are, at least by design, “freephone”.
BT also looks to be able to recoup £1.9 million in costs from mobile phone companies following this latest decision. This figure is not to be confused with the annual £1.9 billion revenue that mobile phone companies enjoy from users calling 0800 and other non-geographic numbers. It is ironic that mobile phone companies brought this penalty upon themselves by throwing the first punch in 2001.
Orange requested that BT pay more towards origination costs in what was termed “The Orange Direction”. Ofcom dismissed the request as BT was already subsidising retention for Orange and other mobile networks. Orange could not know the eventual repercussions of sparking this dispute which today sees them involved in what may become an 0800 price war between mobile companies.
A torrent of appeals from both BT and mobile phone companies followed The Orange Direction. During Ofcom’s ‘2006 Numbering Statement’ BT was given authority over 0800 charges and thus classified as a “dominant market leader”. It was decided that BT would have no requirements or legal conditions to meet regarding 0800 numbers, BT could “determine what price they wish to charge for their services”. Mobile phone companies soon accused BT of abusing its power. Ofcom still could not decide “whether or not BT has infringed competition law” and remained on the fence.
In an authoritarian move BT notified the industry it would no longer make origination payments from 2 September 2008. Mobile phone companies agreed in unison that: “Due to its dominant position in the market, BT has engaged in unfair, unreasonable & discriminatory charging.”
Vain attempts to satisfy both parties included a proposal from T-mobile that retention costs should be recovered in full from mobile phone users although this was eventually and thankfully dismissed.
A glimmer of customer care remains. Since the ‘2006 Numbering Statement’, 0808 80 numbers assigned to charities and some government organisations – including MI5 – remain free. It is small comfort to know that whilst being charged an estimated average of £1.70 for paying a water bill, mobile phone users can contact James Bond free of charge.
As awareness of largely hidden freephone charges grows, alternatives to the mobile companies’ "unjust and unfair" costs emerge. Websites such as 0800 Buster and Say No to 0870 convert 08 numbers into geographic numbers. Money Saving Expert assesses the 0800 Wizard app as "by far the easiest method" for smartphone users. Free to download to a Blackberry, Android or iPhone, the 0800 Wizard converts the 0800 number into a geographic 01 or 02 number and connects the user – all you have to do is dial the 0800 number through the app. When the geographic number is called from a mobile phone the cost of the call is covered by the inclusive minutes within any mobile phone contract. If using a Pay As You Go service, the call is charged at the standard network rate for a landline call.
The freephone feud has found mobile phone companies forfeiting £1.9 billion by reducing their non-geographical call rates and leaving us wondering how they will compensate for losing out on such a colossal sum each year. Perhaps customers will again be targeted and prices for other services will rise. As mobile phone charges are exposed, a consumer war is likely to commence and if so we will witness the full fury of mobile phone networks as they battle for customers.
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