Least Cost Routing Comparisons

How to compare suppliers

Comparing suppliers isn't too difficult; the hardest thing is working out what is important to you. Getting your international calls at massively reduced rates isn't much use if you only make local calls!

It is important, however, not to just look at the "headline rates" offered by various suppliers. Don't let the small print put you off - you're almost certainly better off switching away from BT whoever you choose - but do read through when you make comparisons.

We've tried to be as neutral as possible in writing this but as a reseller for The Phone Coop it's tricky not to be a little biased. So, please contact us if you think we've missed anything or unfairly weighted something.

Some things to look for:

  • VAT

    Simple thing to look for - but important to note that some carriers include VAT in their prices where others don't.

    Logically it would make sense that suppliers targeting businesses quote prices exclusive of VAT, where those who target residential customers ought to include VAT. However, since most suppliers target both there seems to be little consistency.

  • Billing Increments

    BT bills by the second, but not all of its competitors do. This is important to consider, because you'll rarely make calls which fit exactly into the charging increments used by the supplier.

    In other words, a call which lasts 9½ seconds will cost the same as one which lasts 10 seconds.

    • Per-second billing.

      If the supplier is charging for every second or part second you use, on each call there will be a part second you didn't use but will be charged; on average this works out at an overhead of about half a second per call. (Those who can remember back to BT's old per-unit charging system will appreciate that per-second is a potentially much lower overhead.)

    • Per-minute billing.

      If the supplier charges by the minute, on the other hand, you'll pay approximately 30 seconds extra (on average) per call. If the per-minute rates are good enough this may be a fair sacrifice. On the other hand, with typical rates for calls to mobiles (at time of writing) around 18p/min, that's potentially an extra 9p per call! This can quickly outweight any small percentage savings in the headline per-minute rate.

    NOTE: The Phone Coop charges per second.

  • Charges for short calls

    It's a fact of life that not all calls we make are successful. Often we meet answerphones, or the person we wanted to talk to is not there. Or, in the case of tele-sales companies, the person you want to speak to is there but they just don't want to speak to you!

    Given that the telecom company will have an overhead itself per call (for example the cost of tracking and billing a call will be largely fixed regardless of the call length), suppliers tend to penalise short calls accordingly. Therefore, if you frequently make short calls this is a good point to shop around on.

    • Connection charge.

      Some suppliers make a small charge to connect the call, then a per-minute charge beyond that. Typically the charge is around 3 to 5p, and generally such suppliers have lower per-minute rates as a result. This can work in your favour if you usually make long calls; on the other hand you get penalised for short calls (such as messages to answerphones).

      BT do not make a charge on connection; many of its larger competitors (such as cable companies) do.

    • Minimum Charge.

      Suppliers who don't use a connection charge to guarantee a minimum income per call typically enforce a minimum call charge. For BT this is (at time of writing) 4.2p (+VAT).

      The effect of the minimum charge is much the same as that for connection charges; it penalises short calls.

    As an example, consider a call costing 3p/min - ie 1p per 20 seconds. A minimum charge of 1p probably therefore equates to enough time to leave a message on an answerphone or with a receptionist. If this is a typical call for you, then a supplier with a 4p minimum or connection charge is charging you four times the amount for the same call, even if their per-minute rates are much lower.

    NOTE: The Phone Coop has a minimum charge per call of 1p (+VAT), and no connection charge.

  • Call patterns

    Most suppliers, BT included, charge at different rates during evenings and weekends from what they charge during the daytime. (Most charge bank holidays at normal daytime rate too, which can lead to nasty surprises for people who don't realise the difference in price!)

    In general, there is more competition in the daytime rates than in other rates. Many suppliers don't have a weekend rate as such, charging evening rates instead.

    If you make a lot of calls during the weekend, check the rates carefully. At time of writing, BT's weekend call rates to mobiles are very low, for example. Don't forget that you can still make calls via BT even if you use a different supplier (see below), so unless you only use the phone at the weekend you should still look beyond BT.

  • Billing Frequency and methods

    BT typically bills quarterly; most other suppliers issue bills monthly. In most cases you will continue to receive bills from BT for your line rental and perhaps other services (such as call waiting), with your calls billed separately by your new supplier (or suppliers, if you use more than one).

    Most if not all suppliers allow direct debit payments; some only accept payment by direct debit or make additional charges for other payment methods (such as payment by cheque).

    Some suppliers allow you to access your billing information via their website or can provide itemised call information on disk so that you can analyse the data with Excel or something similar.

    A few suppliers also support cost centre codes. If you chose to use them, you need to dial a 2 or 3-digit code before each call you make, and those codes get totalled separately on your bill. This can be very useful for companies making calls on behalf of clients who need to track the calls made, and its just as useful for use in the home for keeping tabs on the kids telephone usage, or by people sharing a house (such as students) who share a phone but need to share the costs fairly.

    Most suppliers have no tie in period or minimum call spend requirement, although in most cases the call charges will vary depending on how much you spend.

    NOTE: The Phone Coop bills monthly, and accepts but doesn't require direct debit. At present, billing information cannot be accessed via the website but can be sent as an Excel spreadsheet by email. Cost centre codes are available if required.

  • Access methods

    Aside from cable companies, access to your new supplier's services will require a BT line and involve one of three methods to route your call over your new supplier's network rather than BT's.

    The oldest access method is to use a "dial prefix" - typically a four digit number you dial before each call to direct your call correctly. The advantage is that you can have accounts with several suppliers and choose on a per-call basis; the biggest disadvantage is that you'll sometimes forget and when you do you'll be billed by BT for your call instead.

    When you forget your prefix the telecom supplier loses out as much as you do, so it's in their interests to find a way to prevent this happening. Most can offer an auto-dialer - a box which plugs into your phone socket with a socket on it to plug your phone in to. Effectively the dialer "hears" you dialing a number and inserts the right prefix automatically. Whilst reasonably effective, our experience is that they tend to degrade the quality of the connection, and you'll generally need a separate box for each telephone socket.

    On the other hand, if you have an internal telephone exchange ("PABX") these can normally be programmed to divert the calls for you, and most suppliers will assist you in that process.

    The preferred, and newest, solution is to get BT to do the hard work for you. Instead of your local BT exchange forwarding calls from you onto the BT network by default (ie unless it receives a prefix telling it to route elsewhere), the exchange can now be programmed to default to your new supplier automatically instead. BT carries out the change at the request of the new supplier (and makes a small charge, although most suppliers don't pass the charge on). It takes around 28 days to complete the process, during which time the methods above need to be used instead. But once complete there are no prefixes to worry about, no auto-dialers, no exchange configuration. This is called "Carrier Pre-Selection", or CPS, and all that is really happening is that your default, or preferred supplier is being changed. Indeed, you will get a prefix which you can use to route calls via BT should you want to, they're just no longer your default. You can, of-course, still change from one supplier to another (including back to BT) when you want to.

    NOTE: The Phone Coop supports all of the above methods, although we recommend the last option - CPS - for simplicity. Dialer boxes costs and CPS setup charges are not normally passed on, although for those spending less than 10/month a small one-off charge may be made.

  • Other services and features

    Most suppliers have their selling points, and these are often worth considering if you find yourself torn between two or three options.

    For BT, the main selling point tends to be "better the devil you know", or just a general fear of the unknown (something we hope that this information helps to dispell). Some suppliers offer other services as well - gas and electricty, for example, or internet access.

    Other suppliers promote themselves primarily on the basis of price, often in specific areas such as international calls.

    Of-course there can be other, less direct, selling points. The company might make donations to charities you support, or take strong "ethical" stances on issues such as the environment. Indeed, if you are a charity or similar organisation they may offer discounts or affiliate schemes which allow you to raise funds whilst offering discounts to your supporters.

    NOTE: The Phone Coop offers:

    • Excellent rates on "inbound" numbers such as 0800 (freephone) and 0845 ("local rate") numbers. Both are offered with no setup or monthly charges; the 0800 numbers attract a charge per minute for calls you receive whilst the 0845 is free even of these charges. Note that although "0845" numbers are charged by BT at their local rate, other suppliers are usually able to discount genuine local calls more than they can discount calls to 0845 numbers, so the charges tend to differ.
    • Reduced rate internet access and flat-rate packages.
    • The Phone Coop is a co-operative, as its name suggests, and you are able to invest in the co-operative and receive a share of the profits and a good rate of interest on your investment as a return.
    • The Phone Coop offers special rates to other co-operatives and to charities, and runs affiliate schemes.
    • The Phone Coop also has a strong ethical policy, both in terms of how it conducts its business (it tries very hard not to mislead customers with its clear pricing plan, for example) and in how it impacts those around it (with a clear environmental policy). Contact us for more information.