Monday, September 06, 2004

Daiwa EuroTelcoblog No. 71: Monday 6th September, 2004 - OFCOM interim policy on Voice-over-Broadband

UK super-mega regulator OFCOM has this morning issued a set of papers relating to its ongoing policy formulation effort around the Voice-over-Broadband issue in the UK market ( Headline items at this point are:

  • OFCOM has allowed broadband telephony providers to issue numbers in geographic number ranges 01 and 02, which theoretically opens up interesting number portability options for consumers. We previously feared that there would be a move to "ghetto-ize" such service providers in the 056 non-geographic number range, which is still available as a numbering option on an elective basis;
  • In the absence of greater clarity from the European Commission on the legal basis of its classification of broadband telephony service providers, OFCOM has adopted an interim policy as regards Publicly Available Telephony Services (PATS). In contrast to standard practice, OFCOM has moved to allow new services into the market and to offer emergency services (999) calls without being required to fulfill all the requirements of a PATS classification;
  • OFCOM is opening a public consultation until 16th November on consumer protection issues surrounding Voice-over-Broadband services, and has published a Plain English summary ( and FAQ section which gives more flavor on the public face of this process (

Our cursory reading of the documents leads us to believe that this is, on balance, a positive result for the new entrants into the market. The number portability issue is a key one in our view, though there may some signficant complexities involved, as technically, only operators classified as PATS are currently allowed to port numbers. There are four conditions which PATS operators must fulfill:

  • be a service available to the public
  • enable originating and receiving of national and international phone calls
  • give access to emergency services
  • offer numbers in a national or international telephone numbering plan

Therefore, an operator could enter the market and offer a best-effort 999 service without being subjected to all PATS obligations, yet still qualify for number portability. Operators opting to avoid a PATS classification (an option OFCOM seems to favor in order to stimulate competition and consumer choice) would theoretically be excluded from number portability, which might significantly limit the commercial appeal of their service. Until the Commission clarifies its views on this issue, the current OFCOM halfway house is of uncertain longevity, in our view. It will be interesting to see, what, if any, tensions arise between the legalistic guidance from Brussels and the more common-sense spirit of OFCOM's policy to date.

OFCOM rightly seems to believe that the key to the market lies in consumer education rather than arbitrary regulation, and related to this issue, Annex 6 of the main document contains some interesting market research into attitudes towards emergency services reliability. Unsurprisingly, 91% of the adults surveyed expect to have access to emergency services from any phone, but 58% said that it is sufficient to have reliable access from one phone in the home. This suggests that, if only as a second line service, or perhaps among the 9% of consumers in the UK who use only a mobile phone at home, broadband telephony services have a considerable addressable market in the UK irrespective of the consumer protection issue. If a result allowing for a more permissive PATS framework comes back from the EC, then the picture for new entrants probably grows much brighter.

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