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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 In August 2004 Ofcom was asked by the Department of Trade & Industry (‘DTI’) to undertake an urgent review of the regulatory framework for Premium Rate Services (‘PRS’) in order to assess whether consumers are adequately protected from the potential for consumer detriment involving PRS.

1.3 The review was prompted in part by problems that had arisen in the premium rate sector caused by internet diallers and, more generally, by broader concerns relating to the PRS regulatory regime as a whole.

1.4 Ofcom’s review was carried out between August and November 2004. During the course of the review, Ofcom identified a number of problems with the current regulation of PRS, and our report made a number of detailed and incremental recommendations which, it was anticipated, would significantly reduce the scope for consumer detriment and restore consumer confidence in the PRS industry. Ofcom’s report is available on the Ofcom website at: http://www.ofcom.org.uk/telecoms/ioi/nwbnd/prsindex/ntsprsdti/prs_review.pdf

1.5 One such recommendation concerned the speed and frequency of out-payments from Terminating Communications Providers (‘TCPs’)^(-1-) to Service Providers (‘SPs’), and the report noted concern about current commercial practices where monies were paid out quickly (typically weekly or twice-weekly), which merely facilitated the flow of monies to unscrupulous SPs. These arrangements make it very difficult for the Independent Committee for the Supervision of Standards of Telephone Information Services (‘ICSTIS’) to identify a breach and take action against an SP before the money is paid out by the TCP to the SP.

1.6 On 15 April 2005 ICSTIS published a consultation document on a proposed emergency code amendment (‘the ECA’) to the ICSTIS Code of Practice (Tenth Edition) (‘the approved Code’) seeking comments on the proposal to include a specific obligation on Network Operators (‘NOs’)^(-2-), as defined in the approved Code, not to make payments to their SPs, also as defined in the approved Code, for at least 30 calendar days after calls have been made.

1.7 ICSTIS received 20 responses to its consultation document and, in light of comments received, concluded that the proposed ECA, as set out in its consultation document, should be endorsed in its entirety. ICSTIS published a statement on 13 June 2005 setting out its conclusions. It submitted the statement to Ofcom on the same day in order for Ofcom to give approval to the ECA in accordance with section 121(6) and 121(7) of the Communications Act 2003. ICSTIS’ statement is available on the ICSTIS website at: http://www.icstis.org.uk/icstis2002/pdf/A%20Statement%20on%20the%20ECA%20Condoc%20-%20FINAL.pdf

1.8 On 27 June 2005 Ofcom published a draft Notification under section 121(7) of the Act inviting comments on Ofcom’s approval of the proposed ECA. The document is available on the Ofcom website at: http://www.ofcom.org.uk/consult/condocs/icstis/

1.9 In light of comments received in response to Ofcom’s consultation document, Ofcom has decided to give effect to the proposed ECA set out in its consultation document by publication of a Notification under section 121(7) of the Act.

1.10 The effect of the amendment will be to impose requirements upon all NOs not to make payments to SPs for at least 30 calendar days after calls have been made by consumers. The amendment to the approved Code is set out in the Annex to the Schedule to the Notification, published at Annex 1 to this statement.

1.11 In reaching its final conclusions set out 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 tests set out in sections 121(1) and 121(2) of the Act.

Effective date

1.12 In light of comments received, Ofcom is endorsing its proposal that the ECA should take effect six weeks from the date of publication of this Notification.

Footnotes

1.- TCPs facilitate the provision of PRS through the provision of network facilities and terminate the call on behalf of the SP. The TCP is the party that contracts with the SP.

2.- Ofcom’s report referred to those Providers that facilitated the provision of PRS through the provision of network facilities and who terminate calls on behalf of SPs as TCPs. This document refers to those Providers instead as ‘Network Operators’ in line with the ICSTIS Code of Practice (Tenth Edition)

The full document is available from the PDF link below

• Statement: Notification of approval of an emergency code amendment to the ICSTIS Code of Practice [pdf]

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