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Summary

1.1 Ofcom (“the Office of Communications”) exists to further the interests of citizens and consumers through a regulatory regime which, where appropriate, encourages competition. Effective competition delivers choice and lower prices to consumers as well as opportunities for new services and providers. However, consumers may need protection from inappropriate behaviour by certain providers that may undermine confidence in the market as well as causing consumer detriment.

1.2 One example of such protection is the regulation of Premium Rate Services (“PRS”). PRS are defined in section 120 of the Communications Act 2003 (“the Act”). In broad terms, PRS offer consumers some form of content, product or service accessed via fixed or mobile telephones and charged to the user’s telephone bill. While the majority of PRS providers promote and provide PRS responsibly, a minority do not. The activities of that minority can harm consumers; for example, by causing them to unknowingly incur charges or run up high phone bills, or by providing children with access to content that is inappropriate for them. Some PRS providers even use PRS to deliberately mislead or defraud. PRS regulation is designed to offer consumers a degree of protection from such harm.

1.3 The statutory provisions for the regulation of PRS are set out in sections 120 to 124 of the Act. These provisions provide Ofcom with the power to set conditions (“the PRS Condition”) that bind the persons to whom they are applied, for the purpose of regulating the provision, content, promotion and marketing of PRS. Briefly, where Ofcom has approved a code for regulating the provision and contents of PRS, the PRS Condition can only require the persons to whom it applies to comply with directions given in accordance with that code by that code’s enforcement authority.

1.4 PRS are currently regulated primarily by the Independent Committee for the Supervision of Standards in the Telephone Information Services (ICSTIS) under a code which Ofcom has approved (“the Approved Code”). The currently applicable version of the Code was approved for the purposes of sections 120 and 121 of the Act on 29 December 2003, and approval was also given for an emergency code amendment on 4 August 2005.

1.5 The PRS Condition requires ‘Communications Providers’ (as defined in the PRS Condition) to comply with directions given by ICSTIS under the Approved Code. ‘Communications Provider’ is defined within the PRS Condition in such a way as to restrict that expression to persons involved in the provision of a subset of PRS known as ‘Controlled Premium Rate Services’ (“CPRS”).

1.6 A failure by a Communications Provider to comply with an ICSTIS direction will normally amount to a contravention of the PRS Condition and may lead to ICSTIS referring the matter to Ofcom. Ofcom may then take enforcement action under the relevant procedures set out in the Act.

1.7 The PRS Condition has undergone a number of modifications since its introduction in order to address a number of concerns and possible scams that have emerged. The currently applicable version of the PRS Condition was published on 17 October 2006 in a statement entitled “Conditions regulating Premium Rate Services”^(-1-) This statement notified a modification to the PRS Condition to clarify its applicability to providers of premium rate services provided over mobile phones and similar communications devices.

1.8 Ofcom is now proposing a further modification to the PRS Condition to ensure that in the future all such premium rate services collectively known as sexual entertainment services (‘SES’) will be regulated by the PRS Condition regardless of the price charged for the service. This is to address concerns over the fact that an increasing number of such services are currently being offered for a price below 10 pence per minute (‘ppm’) and thus falling outside the scope of the PRS Condition.

1.9 Additionally, Ofcom is proposing to amend the National Telephone Numbering Plan (‘the Plan’)^(-2-) and the Annex to General Condition 17 to ensure that SES offered on ‘08’ numbers will migrate to a new ‘098’ number range.

1.10 Both proposals aim to implement previous decisions made by Ofcom. In its statement “NTS: A Way Forward” issued on 19 April 2006 (the ‘April NTS statement’)^(-3-) Ofcom announced its decision to extend the definition of Controlled Premium Rate Services (‘CPRS’) to include all SES regardless of call price. To facilitate selective call barring in relation to SES, Ofcom further gave notice of its intention to amend the Plan to clarify that SES should only be provided on the ‘0908’ and ‘0909’ ranges that were designated for SES services, at the time.

1.11 On 10 August 2006 Ofcom published a statement entitled “Supplying numbers for ‘09’ premium rate services and codes to facilitate mobile number portability” (the ‘August Numbering statement’)^(-4-). This document introduced a new range (the ‘098’ range) to be used for SES in future. The ‘098’ range was made available on the date of publication of the statement and at the same time the existing ‘0908’ and ‘0909’ ranges were closed to new number allocations. Given this change, Ofcom now proposes to modify the Plan to clarify that new SES may only be provided on the designated ‘098’ range. For the avoidance of doubt, ‘0908’ and ‘0909’ numbers already allocated for SES may continue to be used for that purpose for the present time (see further paragraph 1.15 below).

1.12 This document seeks comments on (a) the proposed modification of the PRS Condition to extend the definition of CPRS to all SES regardless of price and (b) the proposed modification of the Plan to facilitate migration of SES currently operating on ‘08’ NTS numbers to the new ‘098’ number range. This also requires an amendment of part 5 of the Annex to General Condition 17. Ofcom has considered the impact of this requirement on SES service providers and further proposes that a period of six months should be allowed, from the date of publication of the final statement following this consultation, for the migration to be completed.

1.13 In setting out its proposals in this document, Ofcom has considered, and acted in accordance with, its principal duty in section 3 as well as the community requirements in section 4 of the Act. Ofcom has also considered the test set out in sections 120(5) and 47(2) of the Act to modify the PRS Condition, the test set out in section 60(2) of the Act to modify the Plan and the test set out in section 47(2) to modify the Annex of General Condition 17.

Related Work

1.14 As part of the concluding stages of Ofcom’s ongoing Numbering Review a further consultation is planned for early 2007 on the future structure of the ‘09’ number range in general which will include a consultation proposing migration of services currently operating on 090 and 091 numbers to newly designated ranges. Such a proposal might include the requirement for SES operating on ‘0908’ and ‘0909’ numbers to migrate to the new ‘098’ range.

1.15 For the avoidance of doubt, this consultation does not seek to address migration of services from 0908 and 0909 to the new 098 range. Those services currently using 0908 and 0909 numbers may continue to use them at present.

Consultation

1.16 Ofcom is inviting written views and comments by 5pm on Thursday 14 December 2006, on the proposed changes to the PRS Condition, the proposed modification to the Plan and consequential changes to part 5 of the Annex to General Condition 17 and the proposed migration timescale which are set out in Annex 6, 7 and 8 to this document.

1.17 Details of how to respond on each of these issues can be found in Annex 1.

1.18 Ofcom will give careful consideration to all comments received during the consultation period, and in light of the comments received, may give effect to the proposals set out in this document, with or without modification, by publication of a Notification and explanatory statement. Ofcom aims to publish the Notification and Explanatory Statement early in 2007.

Effective date

1.19 Subject to the outcome of the consultation, Ofcom proposes that the amendments to the PRS Condition will take effect from the date of publication of the Notification and Explanatory Statement whilst the amendments to the Plan and the Annex to General Condition 17 will take effect 6 months after the date of publication of the Notification and Explanatory Statement in order to allow SES providers an adequate period to complete the migration of services from ‘08’ to new ‘098’ numbers.

Footnotes:

1.- http://www.ofcom.org.uk/consult/condocs/prsconditions2/statement/

2.- http://www.ofcom.org.uk/telecoms/ioi/numbers/100806.pdf

3.- http://www.ofcom.org.uk/consult/condocs/nts_forward/statement/

4.- http://www.ofcom.org.uk/consult/condocs/supply_numbers/statement/

The full document is available below

• Conditions regulating Sexual Entertainment Services [pdf]
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