Summary

The Determination

Explanatory Memorandum

Annex A: ICSTIS Code of Practice, Ninth edition(as amended)

Summary

S.1 This document contains a determination relating to the provision of Controlled Premium Rate Services under sub-paragraph 22.5 of Condition 22 of all Public Telecommunications Operator ("PTO") licences and under sub-paragraph 26.5 of Condition 26 of the class licences to run branch systems to provide Telecommunications Services ("TSL") and to provide International Simple Voice Resale Services ("ISVR").

S.2 The effect of the determination under the above-mentioned sub-paragraph 22.5 and 26.5 is to recognise a code of practice governing the provision of Controlled Premium Rate Services.

WHEREAS:

(A) the Secretary of State for Trade and Industry (the "Secretary of State") has granted under section 7 of the Telecommunications Act 1984 as amended by the Electronic Communications Act 2000 (the "Act") the following licences:

i. all those licences granted to particular persons for the running of telecommunications systems which the Secretary of State has designated by order under section 9 of the Act as public telecommunications systems, which shall be taken to include licences granted to British Telecommunications plc (see S.I. 1999 No. 2453), Kingston Communications (Hull) PLC (see S.I. 1999 No. 2455) and any other persons operating under the fixed voice telephony and international facilities operator licences (see S.I. 1999 No. 2451), the cable and local delivery operator licences (see S.I. 1999 No. 2454), and the mobile licences (see S.I. 1999 No. 2452), and any other such licences granted after the coming into force of this Determination and the aforementioned Regulations and subject to substantially the same terms and conditions as the aforementioned licences (the "PTO licences");

ii. the Class Licence to run Branch Systems to provide Telecommunications Services granted on 8^th February 2002;

iii. the Class Licence to run Branch Systems to provide International Simple Voice Resale Services granted on 8^th February 2002.

(B) Condition 22.1 of the PTO licences provides that the Licensee may only provide a Controlled Premium Rate Service in whole or in part by means of the Applicable Systems where the Relevant Condition is satisfied;

(C) Condition 22.2 of the PTO licences provides that the Licensee may only provide a telecommunication service to another person by means of the Applicable Systems by means of which that person (i.e. the service provider), to the knowledge of the Licensee, provides a Controlled Premium Rate Service where the Relevant Condition is satisfied;

(D) Condition 22.3 of the PTO licences provides that the Relevant Condition is that there is in effect, at the time the Controlled Premium Rate Service concerned is provided, a code of practice governing the provision of such a Service, which has been recognised by the Director General of Telecommunications (the "Director General") for the purposes of that Condition after certain specified consultation;

(E) Condition 22.4 of the PTO licences provides that a code of practice shall only be recognised for those purposes if the Director General is satisfied that:

i. its provisions are capable of properly regulating the provision of the Controlled Premium Rate Services to which it relates and, without prejudice to the generality of the foregoing, which provisions may include adequate provision for compensating those who suffer as a result of the provision of such Services or any description of such Services; and

ii. adequate arrangements have been made for the constitution of a body of persons to apply and administer the Code;

(F) pursuant to Conditions 22.6 of the PTO licences, the Director General may recognise a code of practice in relation to any description of Controlled Premium Rate Services or to all Controlled Premium Rate Services;

(G) Condition 26 of Schedule 1 to the TSL and the ISVR licences makes provision in terms identical for the purposes of this determination to those made by Condition 22 of the PTO licences, as set out above;

(H) the Director General is satisfied that the provisions of a code of practice to be issued by the Independent Committee for the Supervision of Standards of Telephone Information Services ("ICSTIS"), which is annexed to this determination, are capable of properly regulating the provision of all Controlled Premium Rate Services, and that adequate arrangements have been made for the constitution of a body of persons to apply and administer the Code (that body being ICSTIS);

(I) in making this determination, the Director General has taken into account representations and observations received as part of the consultation process, and the matters described in the Explanatory Memorandum to this Determination; and

NOW, THEREFORE, THE DIRECTOR GENERAL, PURSUANT TO CONDITION 22.5 OF THE PTO LICENCES AND CONDITION 26.5 OF THE TSL AND ISVR LICENCES, HEREBY DETERMINES THAT:

1. the Ninth Edition of the ICSTIS Code of Practice (as amended), which is annexed to this determination, is recognised for the purposes of Condition 22.3 of the PTO licences to govern the provision of all Controlled Premium Rate Services as defined in Condition 22.11(a) of the PTO Licences, and is also recognised for the purposes of Condition 26.3 of the TSL and ISVR licences to govern the provision of all Controlled Premium Rate Services as defined in Condition 26.11(a), with effect from 10.00am today, 25 October 2002.

2. the previous determination made under sub-paragraph 22.5 of condition 22 of all PTO licences and under sub-paragraph 26.5 of condition 26 of the TSL and ISVR licences on 8 February 2002 recognising a code of practice governing the provision of all Controlled Premium Rate Services is hereby revoked.

DAVID EDMONDS

DIRECTOR GENERAL OF TELECOMMUNICATIONS

25 October 2002

EXPLANATORY MEMORANDUM

E1. ICSTIS supervises the promotion and content of Premium Rate Services ("PRS") on behalf of telephone companies through its code of practice. The ICSTIS code of practice is designed to set and maintain standards for PRS, inter alia:

i. provisions aimed at ensuring the legality, decency and honesty of PRS;

ii. rules on promotional material, advertising and tariff transparency of PRS; and

iii. provisions relating specifically to live services, and other services such as children’s services and sexual entertainment services.

E2. On 8 February 2002 the Director General of Telecommunications (the ‘Director General’) made a determination recognising an ICSTIS code of practice annexed to the determination under sub-paragraphs 22.5 and 26.5 of the PTO licences and the TSL and ISVR licences respectively. The Director General was satisfied that that code of practice was capable of properly regulating the provision of all Controlled Premium Rate Services (‘CPRS). The matters addressed by the ICSTIS code of practice evolve over time, however. In this regard, amendments to the Code are carried out on a regular basis through a transparent consultative process carried out by ICSTIS whereby network operators, service providers, consumer representative organisations and relevant regulatory authorities are invited to comment.

E3. ICSTIS has recently completed consultations on provisions within the Code relating to the promotion of telephone and internet sexual entertainment services when these services are paid for by a premium charge to a telephone bill. ICSTIS sought views as to whether the ‘top shelf’ rule¹ - which is intended to prevent children/and or persons not wishing to view advertisements for sexual entertainment services from being exposed to such material either by choice or inadvertently – should be retained in its present form. In particular, views were sought as to whether the rule, as it stood, failed to reflect changes in the print world, particularly the rise in popularity of ‘lifestyle’ magazines, with clear editorial and content focus on sexual issues and the growth in internet sex sites using premium rate charging where sites can be found through a search engine rather than any form of print promotion.

E4. In consulting, ICSTIS recognised that regulations on the promotion of services do not function in isolation from other safeguards applied by ICSTIS, service providers, other agencies, publishers, parents and others. Moreover, ICSTIS was mindful that any restrictions that it places upon the advertising of such services should be justifiable and no more than is required to achieve the stated aims.

E5. ICSTIS received 50 responses to its consultation document published in October 2001, including network operators, service providers, charitable organisations, consumer bodies, and other associations, publishers and members of the public. ICSTIS issued proposals for further consultation on 22 March 2002, and received 25 responses to this consultation. Respondents were broadly supportive towards the proposed reforms, although there were some issues raised relating to the application and interpretation of the contextual element of the reforms – particularly in its application to internet services.

E6. Following consultations, ICSTIS have proposed to introduce the following provisions:

• promotions for sexual entertainment services must not appear in publications targeted at persons under the age of 18;

• promotions for sexual entertainment services must be within the context of the publication in which they appear;

• providers of premium rate internet services must ensure that all of their websites are content rated with the Internet Content Rating Association ("ICRA") in addition to providing users with guidance on filter settings;

• providers of premium rate internet services must ensure that advertisements for the website and the advertisements featured on the homepage are in context with the editorial content of the publication;

• all sexual entertainment services must provide an introductory warning at the start of the service stating that the caller must be over the age of 18, and that the caller should be the bill-payer or have the bill-payer’s permission;

• all sexual entertainment PRS must state on connection to the service that call details may appear on the telephone bill.

E7. The Director General has given consideration to the revised code of practice and, in particular, the proposed package of reforms relating to the promotion of telephone and internet sexual entertainment services when these services are paid for by a premium charge to a telephone bill. The Director General considers that it is right that the ‘top shelf’ principle be retained. However, the Director General is persuaded that the application of a contextual approach to non top-shelf publications would better reflect societal changes yet still address public concerns over sexual material and children. In particular, the proposed changes will provide ICSTIS with a satisfactory basis to focus on the absolute prohibitions and enforcement action on those services and promotions most likely to cause offence. The Director General notes that the amendments referred to above are the only amendments to the code of practice which was recognised on 8 February 2002.

E8. On 9 August 2002 the Director General gave notice that he proposed to make a determination under sub-paragraphs 22.5 and 26.5 of the PTO licences and the TSL and ISVR licences, respectively. The Director General allowed a period of 28 days in which to make representations, with no further period for comments on comments. The draft determination was published and a copy sent to all licensees operating under the PTO licences.

Representations received during the consultation period

E9. The Director General received four representations during the consultation period, and these have been considered.

E10. Vodafone and NIACT expressed support to ICSTIS’ revised approach to the advertising and use of Controlled Premium Rate Services where these are used to offer Sexual Entertainment Services. Vodafone, in particular, argued that "ICSTIS’ approach that the restrictions it places on advertising of such services should be justifiable and no more than is required to achieve its aims is a fully proportionate one".

E11. British Telecommunications plc ("BT") agreed that it was right that the ‘top shelf’ principle should be retained in relation to the promotion of adult entertainment services, but was disappointed that the Director General had been persuaded that a contextual approach to non top shelf publications would reflect changes in society yet address public concern. Accordingly, BT urged the Director General to reconsider his approach. BT further argued that in the event that the Director General considers that there should be a contextual approach to non top-shelf publications, the additional safeguards that have been detailed within the revised Code of Practice should not be dismantled. BT also noted that the Code no longer made reference to sexual entertainment services in relation to unsolicited publications, and argued that it was inappropriate for advertising of adult PRS to be allowed in any unsolicited publication.

E12. MENCAP expressed concern that adult PRS are able to be published, and argued that there should be total exclusion of references from publications targeted at children or young people as well as warnings and clear references on the bill to what is being paid for.

E13. The Director General has given consideration to the representations made and notes that opposition to the draft determination was limited, with only BT expressing opposition. Given the absence of evidence of significant opposition to the proposed modifications to the ICSTIS Code of Practice, the Director General has not altered his view that the determination should be made. While the Director General has carefully considered BT’s response, the Director General believes that the proposed package of reforms detailed within the revised ICSTIS Code of Practice provide adequate additional safeguards to address BT’s concerns about unauthorised use by children. In particular, the Director General notes that proposed measures include requirements limiting the explicitness of services promoted in non-top shelf magazines as well as requirements preventing the advertising of sexual entertainment services in those publications targeted at under 18s.

E14. The Director General also notes that BT have expressed concern that reference to sexual entertainment services in relation to unsolicited promotions has been removed, and shares BT’s concern that it is inappropriate for advertising of adult premium rate services to be allowed in any unsolicited publication. However, the Director General notes this issue would continue to be specifically addressed within the revised Code in paragraph 3.9 dealing with inappropriate promotion as well as through the ICSTIS Guideline (17) dealing with unsolicited promotions.

The Determination

E15. In the light of this, the Director General is satisfied that the provisions of ICSTIS’ Ninth Edition of the ICSTIS Code of Practice (as amended), which is annexed to this draft determination, are capable of properly regulating the provision of all Controlled Premium Rate Services, and that adequate arrangements have been made for the constitution of a body of persons to apply and administer the Code (that body being ICSTIS).

E16. Accordingly, the Director General is now making the dDetermination contained in this document recognising the Code for the purposes of Condition 22.3 and 26.3.

E17. The Ninth Edition of the ICSTIS Code of Practice (as amended), annexed to this Determination, supersedes the Ninth Edition of the ICSTIS Code of Practice, last recognised by the Director General on 8 February 2002, and effective from 25 March 2002.

E18. The new Code of Practice will come into effect on 09 December 2002. ICSTIS will make available copies of its new Code to all service providers, network operators and other interested parties. The new Code will be accessible on the ICSTIS website from 28 October 2002.

Annex A

ICSTIS Code of Practice – Ninth Edition (as amended)

Please click here to go to view the code of practice