Ofcom pushes cheap broadband telephony

Small businesses could benefit from telecoms regulator Ofcom's plans to facilitate the introduction of new low-cost voice over...

Small businesses could benefit from telecoms regulator Ofcom's plans to facilitate the introduction of new low-cost voice over broadband services in the UK

Small businesses could be set to make substantial savings on telecoms costs through the use of voice over broadband technology.

Telecoms regulator Ofcom has launched a consultation on how best to deliver voice over broadband (another term for voice over IP) services to a wider market.

VoB systems allow users to bypass the public switched telephone network, where normal phone charges are incurred. Users can do this using software and IP-enabled phones.

Broadband can offer significant cost savings and higher bandwidth than traditional leased lines for small and medium-sized organisations with branch offices.

Changes to phone numbers

Ofcom will complete its consultation in November, but it has already made some key decisions about phone numbering that will take forward an idea promoted five years ago, when the first broadband services appeared.

Then, niche firms sprang up selling hardware and software to allow the first digital subscriber line users to make voice calls over their broadband lines. But the technology failed to break into general use because none of the major phone providers signed up to the products on offer.

Ofcom has made it easier for new providers to compete with existing phone operators by ruling that users wanting a VoB service will be able to either use their existing geographic phone number, an alternative 01 or 02 prefix, or an 056 prefix denoting that the number used is a VoB number, rather like 07 to denote a mobile phone.

The 056 number is particularly useful as it has full number portability, meaning that a user with an IP phone plugged into a wireless-enabled laptop operating over a mobile network could make a free call from any location over the internet to another 056 or VoB-enabled number.

Low-cost services

Ofcom is bullish about VoB's prospects. It said, "Ofcom believes the emergence of these services will offer important benefits to customers.

"Call costs should reduce significantly. Where a call connects from one VoB service to another, the only cost to the consumer is typically a standard monthly fee for the line, regardless of whether the call is to the next town or to the other side of the world."

VoB services also include new features such as sophisticated call handling and messaging, multi-party conference calling and video calls.

The relatively low cost of the technology needed for VoB also means that the barriers to entry for new companies are lower than those in traditional switched-circuit telephony.

In addition to the numbering decisions, Ofcom has agreed that new providers will not necessarily have to adhere to established technical and service norms that traditional services have to satisfy, including the costly provision of an emergency services 999 facility.

"Ofcom's approach is intended to minimise the regulatory burden associated with the creation and delivery of new voice services, while ensuring that providers benefit from fair and effective competition in the infrastructure markets on which they will depend," the regulator said.

Ofcom chief executive Stephen Carter said, "Broadband voice services are a new and emerging market. Our first task as regulator is to keep out of the way. As the market develops, we will ensure that consumers are appropriately informed and protected."

Users, analysts and providers have so far welcomed Ofcom's approach to VoB.

Protecting the users

Michael Dixon, leader of the Communications Management Association's special interest group on billing, said Ofcom's thinking was broadly in line with the CMA's, but that certain caveats would have to be put in place to protect users' interests.

For instance, Dixon said, "Charges to call these numbers must be part of normal charging plans, ie within BT Together or bundled mobile operator rates. There is already enough antagonism as a result of perceived operator greed."

Stefano Nicoletti, an analyst at Ovum, said regulators in other countries may copy Ofcom's hands-off approach, but he warned against users being able to take geographic numbers with them if they moved out of the location the prefix is attached to.

Such a scenario, said Nicoletti, would have a "disruptive impact on the numbering system". The German regulator has already ruled against this happening following attempts by providers to offer users a selection of city-specific numbers.

The global view

Japan has six million voice over broadband users, the US has 220,000 and Europe has 100,000, but there are only 10,000 in the UK. Most of these domestic customers use freeware solutions such as Skype.

Widespread "local loop unbundling" is the main driver for VoB adoption, where new providers are able to offer completely new broadband lines and services independent of established telcos. Less than 0.03% of UK phone lines are currently unbundled.

The Internet Telephony Service Providers Association, set up to support new providers in the fledgling VoB market, welcomed Ofcom's stance, but said the general question of number portability still had to be decided.

Eli Katz, founder member of the association, said, "Key issues have been addressed but others remain, including number portability and the commercial viability of ported numbers.

"Under the current 'onward routing' charging method, the ongoing costs for portability are a significant barrier to porting which, in turn, is a significant barrier to the mass market, at both the consumer and business level."

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