When is a monopoly not a monopoly? When portability is involved.

I would think it is fair to say, that if you’re reading this blog, you are aware that the network hosting number ranges in the UK is deemed to have a monopoly on call termination to numbers in those ranges and that network is under stringent regulation and charge controls.

That makes perfect sense; in the normal course of business, only that entity can convey the call from a point of ingress on their network to the network terminating equipment. So, when you define the market like that, which essentially the UK telecoms regulator, Ofcom, have, then that network has a monopoly and perverse incentives that require remedy.

But the UK (Blockchain prospects aside) uses onward routeing for calls to exported numbers. When you call someone that was originally a TalkTalk customer and is now a Sky customer, TalkTalk still receive the call from the PSTN (by virtue of being the network hosting the range in question, essentially advertising it for termination to the world) and then route it to Sky for conveyance to the end user.

So, the onward routeing between the (in UK telecoms parlance) Donor Communications Provider and the Recipient Communications Provider can only be provided by the former. Only it can apply the prefix and route the call. So, by definition, it has a monopoly in facilitating end users switching providers. But there is no Significant Market Power condition. There is no charge control. There is regulation, which requires “fair and reasonable terms” which have later been defined by Ofcom in dispute resolution (and upheld by the courts) as the Long Run Incremental Cost for charges. But this lighter touch regulation, in comparison to call termination, is one of the reasons we consider there is an issue with the regime in the UK.

As I hope came across in a previous blog, the Blockchain project is one of the most promising developments for a long time, with the taxpayer backing it to the tune of £700k.

However, you can build the shiniest, most powerful, advanced engine in the world – but if you don’t have a good chassis and body to go with it, you won’t get the end product you’re expecting.

That is why a root and branch review of the underlying processes is essential. In the late 1980s when number portability was launched in the UK, we were at the technological vanguard of the market. In 2018, the UK has slipped behind Ghana in that “engine” for number portability.

Ofcom are beginning to make some encouraging noises about their role in advancing the portability paradigm; personally, if I were in charge, I would start by considering the monopolistic characteristics a range holder has by definition. What is important to note, is that the issue doesn’t go away if the regulator issues single numbers; there is an inherent moral hazard on having any control on the routeing or allocation of a resource that you are required to transfer to a competitor. Of course, this needs to be balanced against the need to protect your customers from fraud and slamming – you’d be surprised how many taxi companies litigate over who “owns” a phone number and the games that are played around them, for example.

The trade association ITSPA is engaging heavily with this subject – those with an interest in the topic should seriously consider membership to inform and influence the debate.

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