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A Response to OFTEL's Review of Personal Numbering Services - March 1998 By John Bensley
1. As part of an investigation into a complaint lodged by Redstone against Vodafone, Oftel have published on their web site an analysis of the Personal Numbering market in the UK. Although primarily directed at resolving the Redstone complaint, the analysis uncovers some issues that are fundamentally important to the development of personal numbering, not only in the UK, but everywhere. 2. The complete Oftel consultative document can be found on their web site at http://www.oftel.gov.uk/fairtrade/pnum398.htm. 3. This paper is a summary response to some of the key issues contained in the review. It is not intended to be a detailed analysis of the Oftel determination. 4. This paper provides a brief history of the development of personal numbering, and identifies the key drivers that have produced the current global market. This is essential to a complete understanding of the macro economic significance of personal numbering, and is not contained in the Oftel report. As with all innovations, definition is difficult, and this paper also seeks to identify some of the key areas where clear definition is needed, as well as describe the technical, economic and social significance of personal numbering. This is only partly described in the Oftel paper. 5. In order to contribute to the discussion, this paper describes the broad concepts that define personal numbering, and suggests a framework for service definition. It explores the Oftel discussion of the user benefits of personal numbering, and addresses the issues of calling personal number services, as well as refuting the spurious notion that callers are prepared to pay a premium for deriving value when calling personal number services. It also seeks to dismiss the popular misunderstanding about the relative substitutability of personal number services with both call diversion and mobile phones. It describes the benefits that providers derive from offering personal number services, as well as identifying the main operators and resellers of personal number services in the UK. And finally it discusses some of the demand side substitution charging and provider call charging issues. A Brief History of the Global Personal Number Market 6. Although only a relatively recent market development, personal numbering is an old service concept. At the turn of the century, AT&T were working on a way to assign telephone numbers to people. This was an attempt to fulfil Theodore Vail's vision of "electrical communication of every kind from everyone at every place, to every one at every other place". Unfortunately, then the technology did not exist. 7. From the 1910 until the 1980s, very little development occurred in the field of personal numbering. It was not until the mid 1980s that NTT, AccessLine and Telstra began to technically develop the concept. In the late 1980s, both the ITU and ETSI commenced standardisation activities, with many operators and suppliers contributing to an increasing body of material. During this time, many suppliers, including AccessLine, developed their early products. 8. In the early 1990s, many trials commenced with operators such as Bell South and Bell Atlantic. Shortly after this, commercial services like AT&T's EasyReach 700 began to appear in the market. By the mid 1990s, numbering plans had started to allow for personal numbering, and the number of commercial services had increased. 9. Currently, there are in excess of 100 operators of personal number-like services, being served by more than 30 suppliers. (see also Suppliers, Operators, UK Operators & Resellers) The Drivers for the Personal Number Market 10. There are many reasons for the emergence of the personal number market and its rapid development. 11. First, from a consumer/social perspective, lifestyles are becoming more individualistic and people are becoming more mobile. They are facing product over-choice, and urgently need to rationalise and integrate the ways their telecommunication needs are satisfied. Second, the development of intelligent networks and technical standards has driven the development of the enabling technology for personal numbering. Third, the deregulation of national markets, the introduction of number portability, and the need for low cost/low risk entry strategies has driven the development of a generally supportive regulatory environment. Fourth, the increasingly sophisticated needs of consumers, as well as the need to improve service differentiation, has forced operators to look for a new product and marketing mix. Finally, globalisation, high return investment strategies and channel optimisation have framed the organisational context for the advent of personal number development. (see also User benefits) Difficulties with Defining Personal Number 12. Historically, telecommunication innovations have taken many years to achieve widespread market acceptance. The delicate mix of technology, competition and marketing have always taken time to merge with a receptive and evolving social environment. Additionally, the communicability of any innovation is perhaps the single biggest determinant of its success or otherwise. Personal number services are innovations that require careful definition if a workable understanding is to underscore their communicability and eventual market acceptance. The principle areas in need of definition and understanding include naming (what they are called), feature functionality (what they can do), customer value (why customers would use them) and evolution (where they are going). 13. First, there are many different names for what Oftel call personal numbering services. They are variously referred to as Single Number Services, One Number Services, or Personal Number Services. They are also known as PCS, UPT, Personal Assistant and Personal Agent services. This complicated array of names is further obscured by vastly different provider branding strategies. Second, because each service has different features and operates quite differently, each service performs quite differently to users and satisfies different needs. Third, because each provider focuses on different aspects of the personal number service, there is no communication consistency about the value that a personal number service can provide to customers. Finally, and irrespective of the naming, feature or communication differences, each personal number service may be evolving in different directions. Evidently, if the personal number market is to develop, clarity of definition, common understanding and simple communication is required. (see also Elements of a personal number service description). The Technical, Economic and Social Significance of Personal Number 14. Personal number services are not just a new telecommunication product category, they represent a fundamentally new service delivery paradigm for the whole telecommunication industry. The technical, economic and social significance of personal number is therefore revolutionary. It requires us to look at telecommunication, from new and different perspectives. 15. From a technical perspective, personal number services separate customer control of telephony from access and carriage for both incoming and outgoing calls. This means that advanced features are not restricted to either carriage or access network technologies, but can be supplied and managed independently of each them. Consequently number portability can be effectively provided via personal number services because of their access independence. 16. From an economic perspective, personal numbering enables companies to compete in the telecommunication industry without the costs of carriage or access infrastructure. This means that efficiencies gained from scope and scale specialisation can be passed on to the market in the form of competitive pricing. It also means that the regulatory environment must not create barriers to entry. Service level innovation, specialisation and value adding (independent to access and carriage interconnection) should be reflected in interconnect revenue distribution. Personal numbering also represents an incremental cost-based platform for innovation and number portability. 17. The Oftel paper does not make this clear enough. The ability to change access providers independently from personal number providers, as opposed to the ability to change personal number providers, has clear economic and regulatory ramifications on the need to enforce access number portability in both fixed and mobile networks. 18. It should be noted that currently personal number customers cannot change provider without changing their personal number. Personal number users may even be restricted in changing between the various product packages of a single provider if the call charges are different. Both these constraints are anti competitive, and are only alluded to in Annex B of the Oftel report. 19. From a social perspective, personal number changes people's calling behaviour, and therefore the way they communicate. With a personal number, people call people without any perception of the calling party's location. People store telecommunication instructions in advance, and change their control behaviour. Personal numbering makes telecommunication contactability simple, and transfers the control of the call from the caller to the personal number user. Important Personal Number Service Concepts 20. Despite the divergent views and mixed understanding of personal numbering, there are some fundamentally important service concepts that must be understood if personal numbering is to be successful in the market. 21. First, and most fundamentally, personal number services are terminally-, and access network-independent services insofar as they separate the delivery and control of telephony from carriage and access networks. Second, and as a direct consequence of this independence, personal number services provide customers with personal mobility. Personal mobility enables a customer to access all of their telecommunication services, and to make and receive calls, on any terminal. This is in contrast to terminal mobility or cellular telephony, which uniquely enables users to make and receive calls while they are moving. Third, a personal number service is a communication agent, manager or assistant that enables customers to control their communication. It lets them control their contactability and organise how, when, where, and by whom they are contacted. (see also Personal Number and Mobile Phones) Elements of a Personal Number Service Definition 22. Although personal number functionality is evolving quickly and there is no universally agreed service description for personal number services, there are some fundamentally important elements that must be included in any service definition. 23. First, there is the number. The number is terminal- and acces network-independent. Second, there are the features used by the customer to control their telecommunication. These will include routing, screening, charging, barring, useability and security features. Third, there will be a range of user interfaces and devices that the customer will use in order to store their service instructions. These will include operators, DTMF, Internet, voice recognition, mobile phones and smart cards. Fourth, a personal number service will support a range of access and media services that the user utilises in order to communicate. These will include fixed, mobile, paging, voice, data and fax. Fifth, there are call charges that apply to receiving and making calls to and from personal number services. Each of these elements will be represented differently in each service, and are all interrelated. 24. It is important to recognise that some personal number services may only support a number with a few routing features, accessed by an operator used to control fixed and mobile voice communication e.g. number translation. Others will include extensive feature differentiation, support multiple user interfaces, and incorporate many access services, e.g. personal assistant. Diversity, competition and changing customer needs will continue to drive service developments. 25. Section 2 of the Oftel report describes personal number services as incoming only services. This is an incorrect and narrow understanding of personal number functionality. It also does not recognise that companies including Call Sciences, Ericsson, and AccessLine all provide various outgoing call functionality and features. Outgoing call features enables the personal number user to not only receive calls at any phone, but also make calls from any phone, and charge the call to their personal number account. 26. It may be appropriate for the development of the personal number market in the UK, that Oftel establish a baseline service definition for personal number services, to which all personal number operators must conform. This would ensure that low functionality services not conforming to the generally agreed definition do not unfairly influence the personal number industry regulatory strategy. This would also address the "service equivalence" issues raised in the report. The User Benefits of Personal Numbering 27. It is fundamentally important to recognise that a personal number service has many benefits to users, and that each user will derive some of the benefits some of the time, and other benefits at other times. Therefore, the user benefits of personal numbering cannot be viewed one dimensionally. Personal number services are multi-value proposition products/services that provide multiple user benefits. 28. The Oftel review appears to have only partially identified the real value of a personal number, namely contactability for those customers who place high value on being contactable. 29. A personal number service primarily delivers control of contactability, by enabling the personal number user to determine where and when they will be contacted. A personal number is differentiated by this core value proposition. For those customers who are already very contactable (e.g. those customers with mobile phones), their primary need may be to exert greater control over their contactability in order to actually reduce it. For those customers who are currently not very contactable (e.g. those customers without mobile phones), their primary need may be to exert greater control over their contactability in order to actually increase it. Simply put, some people want to be contactable all of the time. All people need to be contactable some of the time. But all people do not need (or want) to be contactable all of the time. Personal number service deliver control of contactability, and access services like mobile phones provide methods of contactability. 30. In addition to the primary value of controlling contactability, there are other user benefits of personal number services, that uniquely distinguish them from other telephony products. The Oftel report identifies network independence, customer chosen premium number or vanity symbol, single number contactability remote or anywhere service control, and feature sophistication and flexibility. The report also identifies the opportunity for someone who is not an access owner to become a personal number user, thus making a personal number a "virtual" service. 31. Perhaps the most significant user benefit of a personal number, is the fact that it is provided to an individual person, not a line, terminal or household. A personal number is therefore an extremely personal communication service; it is not shared. It manages the calls intended for a specific person. 32. Customers can keep their personal Number when they move dwellings, because the personal number is geographically independent. Related to this, and promoted by such companies as The Personal Number Company, is the customer benefit of keeping their personal numbers for as long as they wish. Both these benefits arise because a personal number is network independent (access & carriage). 33. If a personal number customer uses their personal number as their single number for contactability, then they can rationalise other feature subscriptions, and use their personal number features as a single integrated service, with integrated interfaces. 34. Another important benefit not included in the Oftel report, due to the report's exclusion of outgoing call capability, is the billing flexibility and control provided by a personal number service. Most personal number services now include the capability to make outgoing calls. Personal telecommunication services are delivered to individuals independently of any line or terminal, allowing them to receive and make calls, irrespective of location or circumstance. For example, personal number services are ideal for people who rent and share accommodation. Although only one access line is needed in the premises, each person can use a personal number for their individual incoming calls (at that and any other location) as well as for their own itemised outgoing calls. 35. The Oftel report correctly identifies two groups of customers for personal number, namely personal number callers (secondary customers) and personal number users (primary customers). The adverse impact of high call charges on both callers and users is also correctly identified. 36. It is also worth noting that other categories exists, most essentially that of the terminating customer, and the access owner of the line from which the personal number user accesses and controls their personal number service. These customers have needs and rights in respect to line availability and privacy that must be considered and protected. 37. At the most basic level, when a person calls a personal number, they are calling a person, not a location. They leave control of where the call terminates in the hands of the called personal number user. This is markedly different to traditional telephony, where the caller retains control by calling an actual location where they envisage the called party to be (or in the case of a mobile phone, the phone they expect the called party to answer). 38. Clearly, call charges determine calling behaviour. This will in turn determine the number of calls that a personal number user actually receives on their personal number. If the personal number user does not receive all their calls on their personal number, then they will not derive "single number contactability" value (because some callers will make some calls to other numbers). This will constitute an adverse effect on adoption and eventually slow market growth. Similarly, if the personal number user has to pay to receive certain calls, then their willingness to receive calls will be constrained, and therefore the utilisation of the personal number service may be reduced. 39. Simply put, neither callers or personal number users really want to pay a premium in excess of what they currently pay to make and receive calls. The preferred charging regime (for both parties) would be to charge what would have been charged for the call, had it not been made via the personal number service. In the case of personal number in the UK (because of the UK interconnect model for UPT), it would appear that these customer needs are competing. Caller Value when Calling Personal Numbers 40. As already discussed, in telephony their are callers and users. The user benefits have been addressed, but it would appear that the Oftel report has incorrectly assumed that callers derive incremental value as a result of an increased likelihood of contacting the personal number user, and that they will be prepared to pay a premium for it. 41. This value argument, although loosely related to the user benefit of a single number for contact, is spurious for a number of reasons. First, the caller is not guaranteed of reaching the personal number user, as the call may ring out, be answered by someone else, or be answered by Voicemail. Second, it is likely that in the majority of cases the personal number user will be where they would have otherwise been, in which case no additional value was created. Third, callers may not want to pay a premium for calls that are answered by Voicemail or someone other than the user. Fourth, a caller may abort their call attempt prior to answer if there is too long a delay whist the personal number service "finds" the user. Fifth, it is inconsistent with the precedent established by existing call diversion features. 42. In addition to these reasons, there are a number of tariffing scenarios that undermine the caller value argument. When personal number users with F-CPP services direct their calls to their mobile phone to eliminate the premium for their fixed origin callers, they undermine the caller value argument. In this case, the call charge would not reflect any value to the caller, thus effectively levying the caller value premium on only those calls that originate on fixed origins and terminate on fixed destinations. When personal number users with low rate P-CPP services direct their calls to a mobile phone and pay a terminating call charge, they also undermine the caller value argument. In this case, the call charge does not reflect the value to the caller, also effectively levying the caller value premium on only those calls that originate on fixed origins and terminate on fixed destinations. In both these scenarios, it is also worth noting that the call charges from mobile origins do not reflect the same caller value premium as calls charged from fixed origins. 43. Finally, as alluded to in the Oftel report, any caller value that is created by a given personal number service is offset by the fact that originating access providers can charge different amounts to call the same personal number service. 44. Clearly, callers derive value from calling a personal number service, but it is the simplicity of one number contactability (and perhaps an easy to remember number), not the increased likelihood of contact. Because the user controls the contactability, the user should pay for the value delivered via rental and subscription charges. (see also Callers to Personal numbers) Personal Number and Call Diversion 45. Personal number services and call diversion features are frequently poorly differentiated. The Oftel report could reinforce this differentiation more positively. Although both personal number services and call diversion services facilitate the routing of calls, they are fundamentally different, and it is unlikely that they will converge in the future. 46. Most fundamentally, a personal number service is uniquely assigned to an individual and meets their personal needs, whilst call diversion is assigned to a line and meets the needs of all those who use that line. This is the most fundamental and distinctive difference between a personal number service and a call diversion service. 47. There are other differences. A personal number service provides a wide range of enhanced features via a range of interfaces, whilst call diversion is a single feature with its own interface. With a personal number the user can remotely access and control their service, whilst with call diversion the user must be actually using the line with the activated diversion feature (or in the case of a mobile phone, from the handset when it is within in mobile coverage). Because personal number services integrate features and numbers, a user needs only one number and one set of features, whereas because call diversion is line-dependent, a customer needs to have call diversion subscriptions on each line, each with different interfaces and access numbers. Because a personal number is access network-independent, a user can retain it when moving, whereas they must relinquish the number of the line with the call diversion subscription. 48. The Oftel report also assumes limited routing functionality in its comparison between personal number services and call diversion services. Most personal number services provide for re-directing calls on busy, no answer, not reachable, as well as advanced forwarding features like sequential number lists, parallel alerting and combined screening features like selective call forwarding. 49. It is worth noting that network embedded call diversion in both fixed and mobile networks, is associated with the access, not the number. Therefore, the advent of number portability for mobile (or fixed) networks will not effect the independence of feature and number alluded to in section 4 of the Oftel report. Personal Number and Mobile Phones 50. Personal number services and mobiles phones are frequently poorly differentiated, and their differences are regularly misunderstood. The Oftel report could reinforce this differentiation more clearly. 51. Although they are both mobility services, a personal number service enables a customer to access and control their telecommunication from any phone (personal mobility), whilst a mobile phone enables a customer to access their telecommunication whilst in motion (terminal mobility). A personal number service is a tool for control, and a mobile phone is an access mechanism for contactability. Due to their access network independence, personal number services work wherever there are phones, whereas a mobile phone will only operate where there is suitable mobile network coverage. 52. There are other features of a personal number that further differentiate it from a mobile phone. Because there is no need for special equipment, a personal number service has no problems with battery life, robustness or ergonomic reliability. It is also easier and more cost effective to provide enhanced feature functionality via a personal number service, and they are usually more feature-rich than mobile phones. 53. Additionally, customers can use a personal number in a variety of ways to deliver additional secondary benefits over and above a mobile phone alone. For example, when roaming internationally, rather than paying high roaming call charges, a personal number customer can substitute their normal SIM for a local pre-paid SIM and make calls at the local rate whilst maintaining continuity of incoming contactability via their personal number. 54. Far from being substitutable, they are complementary. When used together, a personal number service and a mobile phone can deliver enhanced mobility and customer control of telecommunication. Personal Numbers and Organisations 55. The Oftel report raises the possibility of assigning a personal number to an organisation. Although technically possible, as the name suggests, personal numbering is intended for people. There are other telecommunication services that are more appropriate for organisations. This is not to say that people within organisations cannot subscribe to personal number services. There are however difficulties associated with splitting the ownership of a personal number service (the organisation) and its usage (the user), that include privacy issues relating to the user, integration of personal numbering with corporate number plans, and interactions between the personal number service and the organisations PBX. Personal numbers are best used by people for inter-personal telecommunication. Benefits for Providers of Personal Number services 56. Apart from the obvious customer benefits of providing personal number services, there are some very strong financial and business benefits for providers. 57. First, personal number is a mechanism for the control of call carriage, and therefore call revenue. New providers can use personal number to capture call revenue, and increase market share; similarly incumbent operators can use personal number to retain call revenue and protect market share. Second, personal number enables a provider to augment, synchronise and differentiate its product range. It may also help rationalise its product infrastructure. Third, through subscription fees, packaging and improved call completion ratios, a personal number provider can use personal number to maximise prices and generate additional revenue. Fourth, personal number, through facilitating customer ownership, can provide a mechanism for fixed mobile convergence and personal customer identification and management. Finally, and perhaps most significantly, personal number increases the total size of the telecommunication market. Rather than the market being sized in relation to households, access lines, or mobile phone penetration, it can be measured in terms of numbers of people. Demand Side Substitution and Charging 58. In section 4 of the paper, Oftel address demand side substitution issues. 59. It could be argued that fixed customers who subscribe to a personal number service, or mobile customers who subscribe to a personal number service, are in the same product market. However, the adoption of the personal number service is not mutually exclusive of the fixed or mobile subscription, it is complementary (as identified by Oftel). And although a personal number service does allow outgoing calls, it is extremely unlikely that a user would relinquish a terminating access subscription because (as Oftel have noted) it is required to terminate their calls. Additionally, it must be remembered that the personal number service delivers the control of the call, and the access service delivers the mechanism for contactability. They provide distinctly different and complementary functions. 60. Therefore, because fixed and mobile embedded call diversion, and personal number services perform different customer functions and provide distinctly different value, it is reasonable to assume that they are not part of the same product market. Therefore they can and should be priced separately and differently to each other, and the pricing of call diversion, should not have an anti-competitive impact on the provision of a personal number service. (see also Personal Number and Call Diversion, Personal Number & Mobile Phones) Personal Number Providers, Call Charges & Interconnection 61. In section 6 of the The Oftel report, questions are raised in respect to the role that personal number service providers might play in the setting of call charges. 62. First, the dynamics of the personal number industry are such that a personal number provider may also be an access and carriage provider, or they may not even resell carriage, they may just provide the personal number functionality. Because any particular personal number call involves an incoming as well as outgoing component, it needs to be viewed as one call from origin to termination. This is different to call diversion which actually establishes two calls. Calls to personal numbers are therefore best thought of as calls made via personal numbers. It is therefore important that personal number providers, derive their revenue from the contribution they make to a given call, and not according to some arbitrary determination. Different calls will have different costs structure, margins and participating providers. This raises an important interconnection principle. Personal number calls should be interconnected according to a new end-to-end personal number interconnect model, and not according to any existing models for calls that may be incorrectly considered similar (see Personal Number and Call Diversion, Personal Number and Mobile Phones). 63. Second, when a person subscribes to a personal number service, they do so for some or all of the benefits outlined above (see User Benefits of Personal Number). Foremost among these benefits is that of exerting control over how and where their calls are routed. The personal number provider delivers a service to the user, and has a contract with the user. It is the user that derives the primary benefit, not the caller. Therefore, the revenue associated with providing the service, should primarily be obtained from the user, not the caller. Any revenue that is obtained from call carriage (or conveyance) should be collected by the primary carriage provider/s. In the case that a personal number provider also resells carriage, then they should obtain their normal margin from the carriage resale agreement. If they do not provide any carriage, and all they provide is the personal number service, it would be unfair to carriage providers for them to derive carriage revenue. This raises another important principle of interconnection. The revenue should be distributed according to the value added by the various providers. 64. Third, when a caller makes a call to a personal number service, it should be assumed that they do not know who the provider of the service is, nor would they necessarily have a billing relationship with that provider. In contrast, they do know their access provider, and they do have a billing relationship with them. In addition, personal number service providers would not want to invoice customers for extremely low amounts, because of the billing infrastructure and cost. This raises another important principle of interconnection. The caller billing function should be performed by the access provider. 65. Fourth, as the personal number market grows, and number portability becomes an accepted feature of the wider telecommunication industry, there will be increasing pressure to provide number portability between personal number providers. Personal number users will want to change service providers, to take advantage of more competitive service offerings, and number portability will stimulate competition between providers. This raises another important interconnect principle. The personal number interconnect model must include provision for portability of personal numbers between service providers. UK Personal Number Operators and Resellers 66. The highly competitive UK personal number market is in many ways a laboratory for the global development of personal number. There are a number of operators including,
67. There is also a highly developed reseller and dealer market established, which includes the following companies:
68. The market for personal number services has developed over a long period of time, for a variety of reasons, and is of significant technical, economic and social importance. Personal number services offer users a variety of benefits, characterised by the primary benefit of increased control over their individual contactability. In this respect, personal number services are quite different to both call diversion and mobile phone services. The personal number market in the UK is growing quite rapidly, and the existing regulatory framework for personal numbering may not support the mass market diffusion that is possible with a highly competitive personal number industry. The Oftel report raises demand and supply-side issues that need industry wide resolution. There is an urgent need for an agreed service definition for the personal number industry and a comprehensive interconnect model.
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This page was last updated on Friday, 08 May 1998, by webmaster@telescapes.com.au
