1 The History Of The Liberalisation Of The UK Telecoms Market
Least cost routing is now 25 years old!! In the very early days of telephony it was the responsibility of the state owned General Post Office to provide telephones to UK homes and businesses. The Public Switched Telephone Network (PSTN) was therefore state owned and was run as a monopoly.
The perception was that, because the supply of telecommunications equipment and services was a monopoly, the network was not being run efficiently or to the benefit of its users. The network was also getting old and needed huge investment to be updated to provide UK customers with new ‘advanced’ features by employing digital technology.
1980
In 1980 a distinguishing name was given to the telecommunications business of the Post Office and British Telecommunications was created. The initial objective being to allow the competitive supply of terminal equipment such as handsets, telephone systems, fax machines etc and value added services such as system maintenance, installations and customer support . However BT remained part of the Post Office until the following year.
1981
On 1 October 1981 under the British Telecommunications Act, 1981 British Telecommunications, trading as British Telecom, severed its links with the Post Office and became a totally separate public corporation. They were now two separate organisations with their own chairmen and boards of directors.
1984
On 6th August 1984 British Telecommunications was incorporated as a public limited company (plc).
The 1984 Act that allowed BT to become a public limited company also abolished their exclusive privilege of running telecommunications systems and established a framework to safeguard the fair introduction of competition.
However, standards had to be maintained so licenses were required to run a telecommunication networks in fact the 1984 Act made running a telecommunications system without a license a criminal offence. The license granted to BT laid down strict and extensive conditions affecting the range of its activities.
The government therefore needed to appoint an organisation to monitor and scrutinise BTs activities and their adherence to their license. They appointed the Office of Telecommunications (Oftel) later to become Ofcom.
1984 Mercury Communications Launches 2300 Service – Least Cost Routing Is Born
Although the intention was to create competition for the supply of telephony services in the UK it would not have been cost effective to have an alternative call carrier run cables to every home or business in the UK. At the time this would have been in excess of 20 million locations.
If the government had expected the first alternative operator, Mercury Communications (a subsidiary company of Cable and Wireless), to carry out this enormous task the launch of an alternative calls provider service would have been too costly for them to enter the market.
It would also have taken decades to deliver a UK wide service with the technology available at the time.
The solution was to have BT carry the first and last ‘mile’ of the call and allow the alternative network operators to carry the call between their own telephone exchanges at the near and far end of the call. BT could then charge the alternative carrier for delivering the call to their networks and again for delivering the call to their terminating destination. These charges are referred to as ingress and egress charges However, charges for both legs meant it was not cost effective for Mercury to carry local calls so their early call tariffs assumed local calls were still routed via BT. The customer, therefore, always had two bills – one from BT for line rental and local calls and one from Mercury for other calls.
To make matters worse Mercury’s 2300 service was very ‘clunky’. The caller had to remember to prefix their calls with a three digit code (131) followed by a 10 digit password, followed by the desired telephone number – phew!
This was improved by replacing the 131 + auth code + number with, what is now one of many, 1xx access codes – in Mercury’s case ‘132’. For more details of all the 1xxx access codes follow this link.
All the customer had to do now was to remember to dial 132 followed by the desired number (as long as it wasn’t a local call).
1993-4
More licences were now granted to alternative networks providers. Energis Communications, formed in 1992 by the National Grid as Telecom electric, ran its networks along the Earth Cables on the national Grid – The Energis 1xx access code was 162.
Around the same time City Of London Telecom – COLT constructed a telecommunications network throughout London – 1690 access
2001
2001 ushered in the launch of Carrier Pre-Selection (CPS) - the ability to route calls to an alternative network without the need of an access code.
Carrier Pre-Selection (CPS) is a mechanism that allows end-users to select, in advance, alternative Communications Providers to carry their calls without having to dial a prefix or install any special equipment at their premises. The end-user subscribes to the services of one or more CPS operators (CPSOs) and chooses the type of calls (e.g. all national calls) to be carried by them. The end-user may have a direct retail relationship with the CPSO, or may purchase the service via a CPS Reseller. The end-user is billed for these calls by the CPSO or CPS Reseller
OFTEL held a review of the fixed telephony market and concluded that BT’s ability to provide a bundled calls and access service, provided them with a significant competitive advantage over alternative providers
August 2002
OFTEL modified BT’s licence to require it to provide a new Wholesale Line Rental (WLR) product to other network operators and service providers on cost-based and non-discriminatory terms.
This allowed alternative suppliers to rent exchange Lines on wholesale terms from BT, and resell these lines to the end-users, enabling the alternative supplier to provide a single bill that covered both line rental and telephone calls and therefore stimulate competition in the fixed telephony market.
September 2002
BT introduced a basic WLR product (WLR1). However, it needed to be further developed further if it were to be ‘fit-for-purpose’ in the mass market and operate efficiently at large volumes and seamlessly with other products such as carrier pre-selection (CPS).
April 2004
First ‘fit for purpose’ WLR product was launched.
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