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Abolish 0870?  What a load of nonsense! (Read 30,207 times)
Redtreble
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Abolish 0870?  What a load of nonsense!
Dec 13th, 2005 at 4:29pm
 
Ok, I'll admit to having a slight agenda as I do work in telecoms, but I am also a user of phone services and call centres much like everybody else.

I thought I'd check this website out and I honestly have not seen such a load of drivel in a long time.  Firstly, it amazes me that people feel strongly enough to start an anti-0870 campaign when as consumers, we're genuinely getting ripped off for petrol, credit cards, income tax and so many other things every single day, yet you all feel the need to complain about calls (that let's face it, we don't have to make that often anyway) which typically cost just 5 or 6 pence per minute.  I wished I had so little going on in my life that I too could dedicate time to your admirable cause.

Have you ever actually stopped to think that maybe 0870 is giving you good value as consumers?  Ok, let's look at it like this;  Ofcom abolishes revenue share on 0870.  What then for the companies running huge call centres?  Do they then turn round and say 'Ok, it was fun whilst it lasted but the gigs up now.  Let's give all our customers free access to our call centres'?  Not a chance.  You will always be funding the call centre whether you like it or not.  If it's an insurance company, your premiums will go up.  If it's a bank, your bank charges will go up.

However, what is more likely is that the major companies that use 0870 now will instead switch to 0871 and in many cases, higher rate premium rate tariffs.  How will you feel then?  A smug sense of satisfaction that you've beaten the big bad telecoms companies even though you're now paying 15 pence per minute for a call that used to cost you 6 pence per minute?  What a victory that would be hey?

To be honest, as a consumer, what narks me far more than the per minute charge is the overall value of a call.  I'd far rather use an 0870 number to get through to a British call centre than pay nothing to spend ages spelling every single word to an operative in an off-shore call centre, but that's just me I suppose.

Anyway, I wish you all the best in your campaign, and if you're successful, perhaps you can then move on to those evil chippies who've started charging for sachets of ketchup.
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kk
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Re: Abolish 0870?  What a load of nonsense!
Reply #1 - Dec 13th, 2005 at 4:57pm
 
Ponder this:

United Utilities 0845 746 1100, date March 05.   
Total length of call: 31 min 32 seconds   
Time on hold (with music): 25 min 30 seconds


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Redtreble
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Re: Abolish 0870?  What a load of nonsense!
Reply #2 - Dec 13th, 2005 at 5:05pm
 
I agree KK; this is my point.  I'm concerned with the overall value of a call and I'd be livid if I'd been on hold for 25 minutes, even if the call was costing me nothing.  Funnily enough, it's not actually in the interest of an organisation like UU to make a call like this last 30 mins plus.  In fact, if you've ever been in a call centre, you'll see that most have huge screens up identifying average hold times and the pressure on the staff is to reduce these numbers, not keep people waiting for longer.  They would much rather get customers problems sorted quickly and efficiently, get them off the line and move on to the next customer.  Part of the problem of course is predicting traffic flows and manning the phone lines appropriately - it's actually very difficult.  Why do you think many companies now are offering e-mail support to customers as an option if 0870 revenue is so vital?

I think what your experience shows is that there is a case for legislating how call centres should operate, if of course you believe in interfering in the free market to that extent....

Oh by the way KK, erm...you're complaining about the cost of a call to an 0845 number?  Thought this was 'Say no to 0870'??

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« Last Edit: Dec 13th, 2005 at 5:15pm by Redtreble »  
 
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Dave
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Re: Abolish 0870?  What a load of nonsense!
Reply #3 - Dec 13th, 2005 at 5:21pm
 
Redtreble wrote on Dec 13th, 2005 at 5:05pm:
I think what your experience shows is that there is a case for legislating how call centres should operate, if of course you believe in interfering in the free market to that extent....

What you have failed to touch on is the fact that (as I'm sure you're aware), these numbers have been promoted as local and national rate. They are in fact premium numbers, and that is by definition.

You state that they "typically cost just 5 or 6 pence per minute". 7.51p/min is lowest rate on BT's tariffs any many others during the daytime, when most of these calls are made. That means that a call to an 0870 which lasts half an hour costs £2.25!!!

Just why should I pay for the service (NTS) provided to my insurance company on a per minute basis? What's more, you talk about "free market." Just how is the UK 084/087 NTS market a "free" one, whereby prices are driven down by competition? The answer, as you well know, is that it isn't. The 'micro-payments' that the telcos providing these numbers are pretty much fixed, are they not?
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Alternative
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Re: Abolish 0870?  What a load of nonsense!
Reply #4 - Dec 13th, 2005 at 5:32pm
 
The website is here to generally cover revenue generating non geographical premium rate numbers and 0845 is one such number although not to the same degree as an 0870.  Why should I as a customer have to pay a premium rate to call someone like an IT company to report a fault in goods they have supplied or if there is a  problem with their delivery which is their fault and why should my call which I am paying for be allowed to 'earn' them a 'Kickback' out of the costs adding insult to injury, when the problem is their fault?  There are some IT companies which have gone to extraordinary lengths to hide their geographical numbers.  WHY?

We once had an American on this website who said something like.

'...if this was the states, there would be blood on the street....'  

In America, they use toll free numbers and over much bigger distances as well.  Well we here don't ask for toll free numbers, just that companies honestly disclose their geographical equivalent numbers.  I have all my geographical numbers provided for a fixed monthly fee of £15, so why should I have to pay a further 7-8p per minute (and hugely more than this from my PAYG mobile phone) just to have to ring one of these numbers?
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« Last Edit: Dec 13th, 2005 at 5:36pm by Alternative »  
 
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Redtreble
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Re: Abolish 0870?  What a load of nonsense!
Reply #5 - Dec 13th, 2005 at 5:34pm
 
Quote:
What you have failed to touch on is the fact that (as I'm sure you're aware), these numbers have been promoted as local and national rate. They are in fact premium numbers, and that is by definition.

You state that they "typically cost just 5 or 6 pence per minute". 7.51p/min is lowest rate on BT's tariffs any many others during the daytime, when most of these calls are made. That means that a call to an 0870 which lasts half an hour costs £2.25!!!

Just why should I pay for the service (NTS) provided to my insurance company on a per minute basis? What's more, you talk about "free market." Just how is the UK 084/087 NTS market a "free" one, whereby prices are driven down by competition? The answer, as you well know, is that it isn't. The 'micro-payments' that the telcos providing these numbers are pretty much fixed, are they not?


I totally agree with your point about local and national rate as definitions.  There hasn't been a link for years, if ever, and in the response that I helped compile to the consulation, I made just this very point to Ofcom.  The use of the terms national rate and local rate is an anachronism in this day of flat rate calls and optic networks.  But that doesn't justify the abolition of revenue share though does it?  It screams to me that Ofcom need to sort out the issue of defining just what an 08 call is.  

The point I was making before is valid here.  If Ofcom decide to abolish revenue share on 0870, then most companies are simply going to migrate to other tariffs anyway, so what on earth will be achieved?  Especially as we all know that the migration will be to higher tariffs.

And again, I don't care if I pay £2 or £2.50 for a 30-minute call; what I object to is the 30-minute per se.  I am not naive enough to think that I am ever not going to be paying for this call in some way or other, so perhaps a per minute basis for charging is as fair as any a method for contacting your insurance company?

I'm not sure I understand your point about lack of competition.  There's loads of telcos out there, plenty of tariffs to choose from, lots of different companies in every industry that have call centres.....
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« Last Edit: Dec 13th, 2005 at 5:36pm by Redtreble »  
 
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Re: Abolish 0870?  What a load of nonsense!
Reply #6 - Dec 13th, 2005 at 5:40pm
 
Alternative wrote on Dec 13th, 2005 at 5:32pm:
The website is here to generally cover revenue generating non geographical premium rate numbers and 0845 is one such number although not to the same degree as an 0870.  Why should I as a customer have to pay a premium rate to call someone like an IT company to report a fault in goods they have supplied or if there is a  problem with their delivery which is their fault and why should my call which I am paying for be allowed to 'earn' them a 'Kickback' out of the costs adding insult to injury, when the problem is their fault?  There are some IT companies which have gone to extraordinary lengths to hide their geographical numbers.  WHY?

We once had an American on this website who said something like.

'...if this was the states, there would be blood on the street....'  

In America, they use toll free numbers and over much bigger distances as well.  Well we here don't ask for toll free numbers, just that companies honestly disclose their geographical equivalent numbers.  I have all my geographical numbers provided for a fixed monthly fee of £15, so why should I have to pay a further 7-8p per minute (and hugely more than this from my PAYG mobile phone) just to have to ring one of these numbers?


Ah, so this site is about the evils of all revenue share is it then?  Well perhaps I would suggest, a re-brand might be the order of the day?

Distance is largely irrelevant when you're talking about delivering a telecoms call.

And I'll re-state my key message.  If the companies in question provided you with an 01 or an 02 number, do you still believe that they wouldn't find a way of making you as the customer, pay for funding the call centre?  A point people on here seem happy to ignore...
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Dave
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Re: Abolish 0870?  What a load of nonsense!
Reply #7 - Dec 13th, 2005 at 5:56pm
 
Redtreble wrote on Dec 13th, 2005 at 5:34pm:
I totally agree with your point about local and national rate as definitions. [...]

These numbers have been 'sold' as such, and that is where alot of the issues lie. If they had been promoted as a premium paying type, then would businesses have been so quick to sign up? This would have been decided, ultimately, by consumers who would choose whether to do business with such a company.

Redtreble wrote on Dec 13th, 2005 at 5:34pm:
I'm not sure I understand your point about lack of competition.  There's loads of telcos out there, plenty of tariffs to choose from, lots of different companies in every industry that have call centres.....

My point about competition refers to the fact that originating CPs charge pretty much the same price, due to the micro-payments they have to pass on. Typically, service providers peddle the lie that these calls are some 'local' or 'national' rate, and say that it's up to the telco what they charge.

Similarly, all the NGN supplying telcos are in a market where the payments for their services aren't driven down by market forces. How is this reasonabe competition?

I have written to companies I use who use these numbers and they 'justify' the use of such numbers by the routing and statistical benefits they bring. They don't want to answer questions about whether they receive revenue or not.

Redtreble wrote on Dec 13th, 2005 at 5:40pm:
Ah, so this site is about the evils of all revenue share is it then? [...]

No, it's about covertly collected revenue. Pay as you go internet and dial-through services providing cheap overseas calls are two examples of where such revenue is obviously acceptable.

Redtreble wrote on Dec 13th, 2005 at 5:40pm:
And I'll re-state my key message.  If the companies in question provided you with an 01 or an 02 number, do you still believe that they wouldn't find a way of making you as the customer, pay for funding the call centre?  A point people on here seem happy to ignore...

That would provide for a more transparent market. I pay my insurance company an annual fee. I shouldn't have to pay them extra just because I want some service!

And, as I have stated above, my insurance company doesn't want to talk about any revenue it gets from its 0870 numbers.
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« Last Edit: Dec 13th, 2005 at 5:57pm by Dave »  
 
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Redtreble
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Re: Abolish 0870?  What a load of nonsense!
Reply #8 - Dec 13th, 2005 at 6:10pm
 
Quote:
These numbers have been 'sold' as such, and that is where alot of the issues lie. If they had been promoted as a premium paying type, then would businesses have been so quick to sign up? This would have been decided, ultimately, by consumers who would choose whether to do business with such a company.


Er...yes, they would.  Businessmen aren't stupid enough to be fooled by semantics.  It's a revenue stream to them, whatever you choose to call it.

Quote:
My point about competition refers to the fact that originating CPs charge pretty much the same price, due to the micro-payments they have to pass on. Typically, service providers peddle the lie that these calls are some 'local' or 'national' rate, and say that it's up to the telco what they charge.

Similarly, all the NGN supplying telcos are in a market where the payments for their services aren't driven down by market forces. How is this reasonabe competition?

I have written to companies I use who use these numbers and they 'justify' the use of such numbers by the routing and statistical benefits they bring. They don't want to answer questions about whether they receive revenue or not.


What you have to remember is that the competition in this market place occurs at both ends - from the consumer making calls and also from the end users demanding an ever-increasing slice of the pie.  The result is that the margin squeeze tends to affect the middle men and there is very little left for them if you know the numbers.  The only way that the rates can come down is if the end users take a lower cut (like for instance if revenue is abolished) but all that will happen is that they'll migrate to new, higher tariffs, with larger outpayments.

Quote:
No, it's about covertly collected revenue. Pay as you go internet and dial-through services providing cheap overseas calls are two examples of where such revenue is obviously acceptable.


My point still stands - the campaign name is misleading.

Quote:
That would provide for a more transparent market. I pay my insurance company an annual fee. I shouldn't have to pay them extra just because I want some service!

And, as I have stated above, my insurance company doesn't want to talk about any revenue it gets from its 0870 numbers.


You will always pay for having to contact them, whichever way they choose to charge you.  And as for asking for revenue stats. on 0870 payments, did you really expect them to share that info. with you?
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Dave
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Re: Abolish 0870?  What a load of nonsense!
Reply #9 - Dec 13th, 2005 at 6:50pm
 
Redtreble wrote on Dec 13th, 2005 at 6:10pm:
Quote:
These numbers have been 'sold' as such, and that is where alot of the issues lie. If they had been promoted as a premium paying type, then would businesses have been so quick to sign up? This would have been decided, ultimately, by consumers who would choose whether to do business with such a company.


Er...yes, they would.  Businessmen aren't stupid enough to be fooled by semantics.  It's a revenue stream to them, whatever you choose to call it.

My point refers to the fact that consumers would be plainly aware that the calling party benefitted, rather then paying for a 'standard' UK geographical rate call.

Redtreble wrote on Dec 13th, 2005 at 6:10pm:
What you have to remember is that the competition in this market place occurs at both ends - from the consumer making calls and also from the end users demanding an ever-increasing slice of the pie. [...]

It is my understanding that BT charges its local/national rate for 0845/0870 calls. It keeps a small amount to cover the cost of originating the call and passes the rest to the terminating provider. Where other providers originate a call to one of these numbers, they have to pay the terminating provider the same as what BT pays them. They also have to add on their cost for originating the call which may be more than what it would cost BT. So surely the reality is that there is really no competition with the retail prices of these numbers. This seems to be bourne out by the fact that prices are pretty much the same or slightly higher than BT's.

Redtreble wrote on Dec 13th, 2005 at 6:10pm:
Quote:
No, it's about covertly collected revenue. Pay as you go internet and dial-through services providing cheap overseas calls are two examples of where such revenue is obviously acceptable.


My point still stands - the campaign name is misleading.

Yes it is, in a way. On looking at the title, people may not be aware that 0845 is an issue, to a lesser extent.

Redtreble wrote on Dec 13th, 2005 at 6:10pm:
Quote:
That would provide for a more transparent market. I pay my insurance company an annual fee. I shouldn't have to pay them extra just because I want some service!

And, as I have stated above, my insurance company doesn't want to talk about any revenue it gets from its 0870 numbers.


You will always pay for having to contact them, whichever way they choose to charge you.  And as for asking for revenue stats. on 0870 payments, did you really expect them to share that info. with you?

I do not expect to have to pay my insurance company on a per minute basis. That should be covered by the cost of my premium. As far as revenue goes, a straight-forward 'yes' or 'no' would be fine. Simply ignoring my question just emphasises that all of what you're talking about is covert and underhand.
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Redtreble
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Re: Abolish 0870?  What a load of nonsense!
Reply #10 - Dec 13th, 2005 at 7:13pm
 
Quote:
My point refers to the fact that consumers would be plainly aware that the calling party benefitted, rather then paying for a 'standard' UK geographical rate call.


Maybe, but would it make a blind bit of difference?  Would I be less inclined to call a £1 per minute PRS number because the end-user is receiving revenue as opposed to just the telco?  Wouldn't make a jot of difference to me personally, in fact it might even encourage me to call depending on who the number belonged to.  Besides, in this day and age of dial-in competitions, consumers are largely aware that telephone numbers are a revenue stream.  After all, how has Simon Cowell got so damn rich?

Quote:
It is my understanding that BT charges its local/national rate for 0845/0870 calls. It keeps a small amount to cover the cost of originating the call and passes the rest to the terminating provider. Where other providers originate a call to one of these numbers, they have to pay the terminating provider the same as what BT pays them. They also have to add on their cost for originating the call which may be more than what it would cost BT. So surely the reality is that there is really no competition with the retail prices of these numbers. This seems to be bourne out by the fact that prices are pretty much the same or slightly higher than BT's.


What makes it uncompetitive is that the outpayment to the end user and associated transit payments are regulated by Ofcom (at the moment anyway), therefore, there is a limit as to how much the originating charge to the consumer can be reduced to.  Nevertheless, some originating telcos take advantage of their monopoly positions in charging far more for these calls.  I'm referring to the mobile providers here*.  The real competition comes in the range of tariffs available more than anything.

Quote:
I do not expect to have to pay my insurance company on a per minute basis. That should be covered by the cost of my premium. As far as revenue goes, a straight-forward 'yes' or 'no' would be fine. Simply ignoring my question just emphasises that all of what you're talking about is covert and underhand.


Look, we all know that every major organisation that uses an 0870 number is getting a kick-back, so why try to be smart and get them to admit to it?  If you're so anxious to know about how much money they make from 0870, have you tried looking in their accounts at Companies House?  And again, I'll ask the question - what difference how you're charged?  If 0870 revenue is abolished and in the unlikely scenario the insurance company decides not to migrate to another tariff, you will pay for it in your premium, except your premium will be raised to cover the cost.  Personally, I like the idea that I'm not funding the cost of a call for somebody who continually makes vehicle changes on their policy or keeps adding new drivers or getting quotes for new vehicles.  Why should I pay for that?

* I asterisked this because I'd be interested to know what all of you complaining about 0870 charges feel about mobile providers.  If you haven't an opinion, try making a FREEPHONE call from your mobile phone and see how free it really is.  Or try calling a £1.50 PRS number and see how much you get charged.  My point is, that of all the pricing issues that the UK telecoms market has, 0870 is one of the lesser ones IMO.
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Re: Abolish 0870?  What a load of nonsense!
Reply #11 - Dec 13th, 2005 at 8:18pm
 
Redtreble wrote on Dec 13th, 2005 at 4:29pm:
I thought I'd check this website out and I honestly have not seen such a load of drivel in a long time. 


If this site is such drivel, why are you wasting your time here ?  Perhaps it would be better spent developing your own
SayNoTo
SayNoTo0870.Com  Wink Wink Wink Wink Wink
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« Last Edit: Dec 13th, 2005 at 8:21pm by gdh82 »  

There's more of us that them, stick together and challenge 0870/0845 etc etc
 
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Dave
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Re: Abolish 0870?  What a load of nonsense!
Reply #12 - Dec 13th, 2005 at 9:08pm
 
Redtreble wrote on Dec 13th, 2005 at 7:13pm:
Quote:
My point refers to the fact that consumers would be plainly aware that the calling party benefitted, rather then paying for a 'standard' UK geographical rate call.


Maybe, but would it make a blind bit of difference?  Would I be less inclined to call a £1 per minute PRS number because the end-user is receiving revenue as opposed to just the telco? [...]

Of course you wouldn't. But the reason people come here is, in the first instance, because of the cost of the calls. It is only when one looks further and finds out why this is the case.


Redtreble wrote on Dec 13th, 2005 at 7:13pm:
What makes it uncompetitive is that the outpayment to the end user and associated transit payments are regulated by Ofcom (at the moment anyway), therefore, there is a limit as to how much the originating charge to the consumer can be reduced to.  Nevertheless, some originating telcos take advantage of their monopoly positions in charging far more for these calls.  I'm referring to the mobile providers here*.  The real competition comes in the range of tariffs available more than anything.

[...]

* I asterisked this because I'd be interested to know what all of you complaining about 0870 charges feel about mobile providers.  If you haven't an opinion, try making a FREEPHONE call from your mobile phone and see how free it really is.  Or try calling a £1.50 PRS number and see how much you get charged.  My point is, that of all the pricing issues that the UK telecoms market has, 0870 is one of the lesser ones IMO.

But how could the market operate freely when it is BT that terminates most calls to 0845/0870 numbers? For those it doesn't terminate, it's quite likely that it is a transit operator for the call. The terminating provider wants to push up the amount it receives. Therefore, how can do you suggest that the cost of these calls can be driven down by market forces?

As far as the mobile providers go, I quite agree; it's disgusting that freephone numbers are chargable, and often at a higher rate than geographical calls (or not included in inclusive minutes). The regulator seems to sit idley by whilst all this goes off.

At the end of the day the market is distorted by freephone numbers being charged for. So too are the insurance markets (for example), where service providers generate per minute revenue, covertly.

The distortion also occurs in the landline provider market where telcos promote 'unlimited' packages that don't include all calls to geographical destinations, which NGNs typically route to. The telcos, as a whole, sell these packages to consumers whilst providing businesses with numbers exempt from such packages. If we all adopted such numbers we would be back to square one with us all paying (essentially) pre-competition rates.

Redtreble wrote on Dec 13th, 2005 at 7:13pm:
Look, we all know that every major organisation that uses an 0870 number is getting a kick-back, so why try to be smart and get them to admit to it?  If you're so anxious to know about how much money they make from 0870, have you tried looking in their accounts at Companies House? [...]

I expect that in doing business with a company, it is clear what it will cost me in return for what is on offer (i.e. the service/product).

Redtreble wrote on Dec 13th, 2005 at 7:13pm:
[...]And again, I'll ask the question - what difference how you're charged? [...]

Answer: None, to how I'm charged. The other answer to your question is that it matters alot to how much I'm charged. I've already said, the fact that revenue is/can be generated from 0870 (and other 084/087 NGNs) is not transparent. What's more, it is on a per minute basis, so the amount I pay them depends on the length of time I am connected to their telephone line.

Redtreble wrote on Dec 13th, 2005 at 7:13pm:
[...] If 0870 revenue is abolished and in the unlikely scenario the insurance company decides not to migrate to another tariff, you will pay for it in your premium, except your premium will be raised to cover the cost. [...]

...except that they won't bill me on a per minute basis.

Redtreble wrote on Dec 13th, 2005 at 7:13pm:
[...] Personally, I like the idea that I'm not funding the cost of a call for somebody who continually makes vehicle changes on their policy or keeps adding new drivers or getting quotes for new vehicles.  Why should I pay for that?

Which is fair enough and shows that there is room in the market for insurance companies to charge overtly for telephone calls to them, in much the same way as some companies charge for technical support and the like.
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Re: Abolish 0870?  What a load of nonsense!
Reply #13 - Dec 14th, 2005 at 12:50am
 
Greetings Redtreble,

I would like to deal with the points you raise one by one and explain why, on my view, in each case, either the point fails to hit its mark, or it is something upon which we can generally agree.

To begin with, you express surprise that anyone would make an issue of such a trivial matter. Why waste time on something so small when there are much bigger fish to fry. In return, I am surprised you would make an issue of something so trivial as people complaining about something so trivial. Whatever triviality is possessed by the content of the original complaint, i.e. 0870 numbers, must surely be possessed to the next order of magnitude by the complaint itself. What value beyond a mere microscopic smidgeon could then possibly remain in complaining about the already doubly trivial complaint, I cannot imagine. Still, you are entitled to complain, as are we. We may simply have to regard each other across a wide divide of mutual surprise and disbelief.

Your next point is that 0870 services may offer good value. Here I find common ground upon which we can readily agree. Any 0870 service may be good value. I’m not sure whether you understood the nature of the general objection to the use of these numbers. Let’s proceed.

Your next point is that the consumer surplus which pays for the 0870 numbers will, if returned to the consumer, have to be made up for by a rise in prices which will result in an aggregate revenue increase for the firms involved equal to the decrease in consumer surplus in the first place and thus, in the long run, the consumer surplus will remain unchanged. I hope that puts your point fairly, albeit in perhaps rather technical jargon. It is a pressing and, on the face of it, plausible claim. Let’s pause for a few moments to look at it more closely. Please bear with me. This will require some unavoidable, but I hope, very easy, economics.

Let’s suppose a farmer happens to rent very rich agricultural land? He will make what we call supernormal profit from that land. He might work no harder then his hill-farming colleague, but, for all that, his profits would be the greater in proportion as his land was richer. But you can see how, in the long run, the forces of the market would push up the price of renting such superior land. How much would the farmer be making then? Well, his profits would return to normal and what were his supernormal profits would now become rent. Our hardworking colleague farmers would wind up on a par.

Imagine now the scenario in which something happens to make farming the rich low-lying terrain less productive than it had previously been? Naturally, our lowland farmer will protest in horror. “This will drive me out of business”, he will complain. “I am already just about breaking even because of these huge rents I am paying on this superior land. Now I will have to lay-off hands, and may not be able to survive in the long run.”

But what will happen in fact is that the farmer, so long as he is efficient, equally with all the others, will remain in business. Rather, the rent will fall. It will fall because the diminished productivity of the low-lying agricultural land is reflected in the diminished demand, which, as anyone knows, will result in a falling price.

Nothing changes in our model if the farmer owns the land he farms, by the way. He can then simply be regarded as a two-headed beast, namely, an amalgum of landowner and farmer and indeed, if he is an inefficient farmer, he would be better to retire to landowning alone, but I digress.

In just the same way, the supernormal profit of those firms which provide services through 0870 numbers, is likely to already have been converted into the various forms of rent which apply in their respective industries. In short, the fixed assets of these firms will, now that they are marginally more productive, find themselves correspondingly increased in demand. And once again, by that iron law of economics, the fundamental one of supply and demand, an increased demand is an increased price. But likewise, if the opportunity to make these extra profits through 0870 services is removed, the demand for the fixed assets will diminish, and their rent will fall. Prices to consumers, however, will in the long run remain unchanged.

So I hope you can see, after that brief detour through the foothills of the terrain of economics, that removing charging on 0870 services need not result in price rises in the long run. Rather, it could well result in reduced rents for the various fixed assets in the industries involved. What will be the effect of the latter on the general welfare? As I see it, it may be none, overall, because the marginal cost to the owners of the fixed assets may be simply redistributed in the form of benefit to the consumer. It does not do to blithely assume that diminished profits will result in increased prices. Indeed, if the consumers are unaware that they are paying for these services, as is the contention, and its very core, then the price paid does not reflect consumer preference, but rather is sneaked in without the consumer’s realizing it, and, once removed, need not correspond to a genuine industry-wide demand increase which would support your proposed industry-wide price increase. It seems all the more likely to me, given the absence of a genuine consumer preference for these services at these prices, that rents would, instead, fall, and prices remain the same.
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Re: Abolish 0870?  What a load of nonsense!
Reply #14 - Dec 14th, 2005 at 12:54am
 
(continued from previous post)

Your next point is fairly easily dealt with. You assert that service providers will simply switch to 0871 numbers instead and we will end up paying even more. But by your own logic, the extra money we pay firms through 0871 numbers will result in reduced prices elsewhere. We need not concern ourselves further. Only if there was some flaw in your original case will I then have reason to worry about this switch you propose. Do let me know.

Your next and final move is to set up a trade-off between the cost of a call and the quality of the service provided. You suggest that, if we pay less, firms will be more encouraged to outsource to Bangalore, for instance, and the quality of the service will diminish. This trade-off does not exist and I can prove it to you. Take a look at the following link.

http://www.bankofamerica.com/deposits/checksave/index.cfm?template=contact_us

It contains the contact us page for the Bank of America for current accountholders. According to Forbes the Bank of America was the 6th largest company in the US in 2003. You will assume with me, I hope, that its call centres are much in demand. They are large. The high quality of service provided by this highly successful bank (and I can personally assure you that, in keeping with most US customer service it surpasses anything you will likely be used to in the UK --I lived there for ten years) will, by your logic only be capable of support by higher call charges. But all the numbers provided are 800 numbers, free to the caller in the US, with the single exception of a 206 dialling code, which is a non-revenue-sharing geographic number for Seattle. How do you explain that? Look around at your sister services being offered as we speak across the Atlantic in economies which do not collapse, but which in fact take the 800 numbers to be the very expression of the quality of service that is your concern, and you will see that there is no trade-off between good service and cheap calls, instead they are directly proportional. Indeed, it is not that paying more means better service; rather charging more constitutes worse service.

Of course, you might reply that I have missed your point. Your point, you might say, was that reducing charges will encourage outsourcing to foreign non-English speaking lands and you find talking to these folks less congenial than talking to native Britons. This may well be. I will concede for now, rather than argue the point, that native English speakers can provide better customer service than those foreign to both our language and our culture. But aren’t companies already outsourcing to Bangalore anyway? Does it follow that if they can continue to rip us off they won’t do so? If a firm has an opportunity to increase its profits through a reduction in the cost of one of its factors of production its choice is to reduce costs or, in the long run, go out of business. That is Hobson’s choice. That’s just the way the market works, i.e. the same market you claimed would push up prices. I regret you cannot have it both ways. Either the market is made up of rational self-seeking agents or it is not. If it is, the long run consequence of an opportunity to reduce costs is that the industry as a whole will take that opportunity. If it is not made up of such rational agents, then your case collapses, if it had not already done so under the force of my attack. Either way, the question of outsourcing is a separate one.

To recap, then, firstly, what is trivial for the goose is trivial for the gander and would by implication be trivial for the service providers to relinquish. Secondly, you will not find in this contributor anyone who objects to 0870 numbers because they are poor value. Good or bad value, the objection lies elsewhere. Your most penetrating point is that a reduction in call charges will result in increased prices elsewhere to recoup revenue losses. If I am right, however, it is more likely that rents will fall and prices remain the same. At the very least, we cannot rely on your assumption. Fourthly, switching to 0871 numbers is a joy to look forward to because, according to what you tell me, prices will fall elsewhere. And finally the supposed trade-off between quality of service and cheapness of price is a shibboleth clung to uniquely by the British consumer, so inured has he become to his role as vassal in the world of corporate controlled “democracy”. Oh, and outsourcing will happen anyway.

I find, in conclusion, and I have given your thoughts the benefit of careful attention, nothing remains to weaken the strength of my objection to the uniquely British practice of extorting unbeknownst to the consumer a price for a service under false terms, a service of the type available throughout most of the industrialized world for no marginal cost, and a practice made all the more egregious when it concerns public services already paid for by progressive taxation and now charged again, this time as a flat-tax unduly burdensome in many cases to the very sections of the public on the bottom of the social pyramid who stand in need of them the most.

Sorry for such a long post.  Roll Eyes Sometimes I get carried away.
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