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Premium Rate Services: Review of Scope of Regulation

Premium Rate Services: Review of Scope of Regulation. Bradley Brady October 2007. Premium rate services. Premium rate services (PRS) offer some form of information or entertainment that is charged to your phone bill.

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Premium Rate Services: Review of Scope of Regulation

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  1. Premium Rate Services: Review of Scope of Regulation Bradley Brady October 2007

  2. Premium rate services • Premium rate services (PRS) offer some form of information or entertainment that is charged to your phone bill. • Consumers can access services in a number of ways – by landline or mobile, by fax, on interactive TV and on your PC. Many mobile services work on a subscription-only basis. • Fixed line services generally vary in cost between 10p per call and £1.50 per minute or message. Mobile and other network charges can vary. Typical services include: Premium rate services • fundraising for charities • interactive TV games • dating • alarm systems • adult entertainment • directory enquiry services • to name a few… • TV vote lines • competitions • ringtone downloads • computer helplines, • scratchcards • horoscopes • football goal alerts

  3. Premium rate services: market size • A £1bn market • PRS through fixed-line and mobile telecommunications plays a significant role the telecoms industry. • The UK premium rate industry is estimated to be worth in the region of £1 billion per annum, with consumer spend as follows: • PRS voice services £350m • Directory enquiries £250m • SMS & content services £400m • TOTAL £1,000m

  4. Premium rate services: the regulatory framework • Ofcom empowered under the Communications Act to regulate PRS • Responsibilities delegated to PhonepayPlus through the approval of their Code of Practice • Ofcom sets the scope of services to be regulated, known as Controlled PRS, through setting the PRS Condition

  5. Why do we need a review? • Huge changes in the sector over the last five years, particularly growth in mobile services and use on other communications platforms, such as the internet and broadcasting • Questions from the industry over what constitutes a PRS • Reviewing and strengthening the regulatory framework, including fair, appropriate and enforceable measures on parties in the PRS value chain • Improving regulatory clarity, given overlaps between Ofcom, PhonepayPlus and other regulators • Continuing issues over consumer protection and trust in PRS, particularly in pricing transparency Try it now, by calling: 0904 194 XXXX (18+, Calls cost £1.50/per min, mobiles may vary)

  6. Terms of reference for the scope review • Terms of reference for the scope review were published in December 2006. The themes of the review are: • the characteristics of the PRS sector; • the consumer experience of PRS; • the types of services, including new services, that are subject to current PRS regulation; • the extent of protection for consumers from the current rules; and • in light of these considerations, whether the current rules are proportionate

  7. Evidence gathering • Since publishing the terms of reference, Ofcom has focussed on gathering evidence for the review. This has included: • extensive research on the consumer experience of PRS (1,624 quant, 45 qual); • a comparison study of the regulation of micro-payment mechanisms; • a feasibility study into a service provider registration scheme; • an international comparison study of PRS regulation (with PhonepayPlus) • All the supporting research will be published at the same time as the consultation document • We have continued to speak to industry and consumer issues to help inform policy options

  8. Issues emerging • The clarity of pricing in PRS has become a core issue for the scope review. Many consumers have no way of knowing what their PRS call will cost. Ofcom’s consumer research has shown this to be a significant issue for consumers, with significant impacts on consumer confidence in the sector • The consultation will therefore set out a range of options for improving pricing transparency for consumers in PRS • Ofcom will set out in the consultation document its view on the defining characteristics of premium rate services, to aid clarity on where regulation extends • The scope review will also set review the current arrangements for regulatory enforcement to ensure we have the right balance of incentives for compliance across the value chain

  9. Aims and objectives of the review • Ensure that there is appropriate and effective consumer protection in the PRS sector – including improved pricing transparency • Build consumer trust and confidence in the use of the PRS payment mechanism • Deliver stability and clarity to the PRS sector for the medium term • Encourage investment and innovation from the PRS industry • Strengthen the regulatory framework

  10. Contact Bradley Brady Senior Consumer Policy Manager Tel: 020 7981 3499 Email: bradley.brady@ofcom.org.uk

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