Ofcom is reported to be concerned about the high costs of calling directory enquiries services, and this looks likely to lead to another examination of this area of the market.
Historically, up until the 1990s, by calling directory enquiries (for free) you could get a business or domestic telephone number. Directory enquiries was de-regulated in 2003, when calls to the service were charged at a flat rate of 40p.
The now paid-for service is offered by over 200 different providers who can be reached by dialling a six-digit number beginning with 118. These providers supply information from the Operator Services Information System (OSIS). This is run by Directory Solutions, a division of BT Wholesale.
BT’s service is 118 500, but the service that has over 90% of the market is 118 118, and its market position has been built by large amounts of advertising (e.g. TV ads).
What’s The Problem?
The problem as identified by Ofcom is that the prices charged to end customers for calls to these services, and the per-minute prices for connecting (where the provider puts you through to the number you require). Concerns have also been raised that there is a lack of transparency of pricing for the services offered by directory enquiries service providers, and this can particularly affect older people who may have less knowledge about the new-style directory enquiry services. In many cases, this has reportedly led to shock bills.
How Expensive Are These Services?
Ofcom reformed the pricing structure for UK directory enquiries on 1st July 2015, but even under the present system, operators can charge up to a maximum of £23.97 for calls of less than a minute!
Call charges typically consist of an Access Charge (set and retained by the caller’s landline or mobile provider) and a Service Charge (directory enquiries service but it is collected by the caller’s phone provider).
Taking market leader 118 118 as an example, callers to the service can expect a flat-rate connection fee of £7, a per-minute charge of up to £3.50 (which may be much more under other operators) and an access charge of up to 50p a minute from the telecoms operator.
Horror stories that have surfaced online include a report of someone contacting Citizens Advice after receiving a £150 bill for calling a 118 number.
Ofcom has also highlighted an incident where a consumer who called directory enquiries (in 2009) was presented with a bill for £350.
Critics of the current system have pointed out that the de-regulation of directory enquiries has resulted in a failure of choice for consumers.
A new enquiry by Ofcom could mean that a stipulated price cap will be imposed on these charges.
What Does This Mean For Your Business?
Many callers to directory enquiry service provider numbers are seeking business telephone numbers. High prices for call charges could deter potential customers from trying to contact a business via this method at that point. Customers may therefore seek other methods for finding numbers e.g. the Internet. This introduces competition (with the many search engine results and online ads), and businesses could therefore be losing out because of the high directory enquiries call charges. As users of these services, businesses also face the same high costs.