By Simon Woodhead
Charging a premium for calls based on where they appear to originate, a.k.a. origin based billing, has until now been a uniquely European hustle. However, empowered by (and indeed citing) Ofcom’s latest WVMR, Vodafone UK have decided to join the party, effective June 1st.
Frankly, I’m surprised Vodafone have gone first, but have little doubt others will follow. I also have some sympathy why in the current regulatory environment they may feel the need to do so.
On the one hand this forces other operators, especially that particular mobile operator renowned for lax CLI handling, to clean their act up. In the interim it is going to cost them a packet so we expect them to fight it, but ultimately pass it (or the risk of it) on to the consumer.
Simwood already handles origin-based billing in real-time on the buy-side so this is perfectly manageable for us, but other wholesale operators aren’t so prepared. The highest tiered surcharge is for invalid CLI (where, of course, the jurisdiction can’t be determined), but thankfully we already block invalid CLI for most accounts*. Again though, other operators aren’t so prepared and will let anything through. We fear peer operators risk massive bill-shock here, which doesn’t help anyone, least of all their customers, if they don’t survive it.
Doubtless there will also be scrotey operations who jump on the opportunity to make a turn on the surcharge while this plays out – we suspect the cogs turning in BT already as they sniff a win-win, but they won’t be alone. One major caveat for anyone entertaining dumping traffic that Simwood will not accept (i.e., that traffic non compliant with GC.C6 that you’re choosing to pass regardless of obligations!), on such an operator, is the terms of the contract. Vodafone’s basis for the surcharge is the origin of the call, for which the network number is a proxy. In other words, if they think the call came from somewhere else they can apply the surcharge, regardless of what network number has been set, putting such fly-by-night operators out of business unless they’ve stitched you up with a contract that lets them pass the cost on.
We think Vodafone are in breach of at least two of their SMP conditions here, and there will be a bun fight over this. However, our experience is that such spats take years to play out. In that period we expect others are going to jump on the bandwagon and surcharging is going to be more of a thing. None of that is good for the market as it drives out competition, and it isn’t good for the consumer either as the cost (or risk of cost) is going to be passed on to them. Ironically, the biggest beneficiary here is BT, which I’m pretty sure wasn’t Vodafone’s intention.
As to how we handle this, we think passing on origin billing to our customers introduces too much complexity for CPs. We want to try to eat this charge as we do the EU surcharges, which means no change for our customers. We already have our unique ‘loss protection’ which ensures that whilst the odd call is allowed through at a loss, anyone trying it on will have loss making traffic swiftly and automatically blocked. This means customers having an occasional non-UK originated call to Vodafone won’t notice a change and don’t need to worry about this. As with EU destinations though, we will possibly need to raise prices to reflect the inevitable increase in real-cost based on the blend of traffic we see, possibly on a per-customer basis.
Whilst this seems the fair and sensible way to handle it, we don’t want to end up in a position of being the ‘expensive’ carrier and losing business simply because we’ve tried to shield our customers from the complexity of origin billing. So if we think the market is going towards passing on origin billing, we will have to do so too. A likely first and possibly pre-emptive step in that direction is a single per-call surcharge for non-UK CLI which would need to be in the 25p per minute ballpark. We can’t disclose Vodafone’s pricing ladder of course to give that any context – but this surcharge is not small relative to the Mobile Termination Rate.
We’d welcome your thoughts on how we handle this and what it means for you in our community Slack channel.
Whichever way this goes, Simwood has for donkey’s years given you the ability to cap the cost of calls by setting SIP headers. This is used for fraud protection, but can also be used as a kind of reverse LCR. In other words, whatever we end up needing to do here, customers can protect themselves from bill-shock by using these headers to define – on a per call basis if you want – the maximum rates we should charge you. We’ll reject the call ourselves if it is going to be more. Just be careful though, as you’ll probably send the call somewhere else and they may not be so nice, especially three months hence when they pass the Vodafone surcharges on to stay in business!
Welcome to another day in the cess-pit of UK telecoms. I’m off for a shower!
* Some accounts have signed an agreement which requires them to filter CLI and we merely transit. For them we apply a surcharge where the call would otherwise have been blocked by us. This surcharge will need to increase in the next rate update to accommodate the scale of Vodafone’s surcharge.
