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What are Premium Rate Services (PRS)?

PRS offer some form of content, product or service via fixed and mobile telecoms lines. These services vary in cost, but are typically charged between 10 pence per minute (or call) up to £1.50 per minute (or call) from the BT network. Services typically include TV vote lines, competitions, adult services, chat lines, mobile phone ringtone downloads and interactive TV games.

How is the PRS industry currently regulated?

Under current arrangements the regulatory regime for PRS follows a co-regulatory approach, with the primary role for consumer protection falling to ICSTIS, the industry-funded regulatory body responsible for UK PRS. ICSTIS has responsibility for regulating the content and promotion of services, and its role is to prevent consumer detriment from the use of premium rate numbers.

ICSTIS carries out this role by enforcing a code of practice on behalf of all telephone companies, and the code contains numerous provisions relating to the need for clear and accurate pricing information, honest advertising and appropriate and targeted promotions.

Where there are breaches of the code, ICSTIS has a range of sanctions that it can impose upon the offending service providers, including obtaining assurances about future behaviour, instructing refunds to be offered (albeit that it cannot guarantee that compensation will be paid), imposing fines, barring access to services and prohibiting certain ‘named’ individuals from operating services for a defined period of time.

How can consumers make complaints about PRS?

Consumers wishing to complain about PRS can do so:

• online via ICSTIS’ website at www.icstis.org.uk
• by use of a freephone telephone number, 0800 500 212
• in writing to ICSTIS, Freepost, WC5468, London SE1 2BR.

What is Ofcom’s role in relation to PRS?

Ofcom’s role is to underpin the co-regulatory regime through its condition regulating PRS. This works as a ‘backstop’ power, and has been designed to be used only following a failure by the relevant provider of PRS to comply with a direction by ICSTIS for the purpose of enforcing the code.

Why did Ofcom review premium rate regulation last year?

During 2004 the premium rate regulator, ICSTIS, experienced very significant increases in complaint and enquiry levels resulting largely from consumer problems with premium rate diallers, albeit not exclusively. As a consequence, Ofcom was asked by DTI to undertake a review of the regulatory framework for PRS in order to assess whether consumers were adequately protected.

What are Ofcom recommendations on premium rate regulation?

Ofcom’s report was published in December 2004. It did not find any single solution or ‘quick fix’ to the issues faced by the PRS industry. However the report made 18 detailed and incremental recommendations which, it is anticipated, will significantly reduce the potential for consumer detriment and restore consumer confidence in the PRS industry.

Ofcom’s news release sets out some of the key recommendations including:

• Securing customer refunds by changing revenue flow through complex PRS value chain;
• Changes to the ICSTIS Code and increased obligations on network providers;
• DTI to consider increasing fines ICSTIS can impose from current maximum of £100,000.

For 9 December 2004 news release in full – see related item:

http://www.ofcom.org.uk/media/news/2004/12/nr_20041209

The report sets out Ofcom’s recommendations in full – see related item:

http://www.ofcom.org.uk/telecoms/ioi/ntsprs/prsindex/ntsprsdti/prs_review.pdf

How will Ofcom's recommendations be implemented?

Ofcom, ICSTIS and DTI have formed a steering committee to oversee implementation of the proposals.

Some of the proposals are already in train, for example Ofcom is already actively engaged with industry in respect of taking forward proposals on the need to improve the early warning system by better monitoring of patterns in call traffic data, both at a network level and in respect of individual consumers with unusually high bills.

Other proposals will require formal public consultation during the course of 2005, including:

• ICSTIS public consultation on changes to the Code of Practice, including statutory three month consultation with European Commission and Member States required under EU Technical Standards Directive;
• Ofcom consultation on amendments to requirements under General Condition 14 and related guidance designed to improve consumer information offered by telecoms companies on premium rate services;

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