1.1 The principal duty of Ofcom (the Office of Communications), in carrying out its functions, is to further the interest of citizens in relation to communications matters and to further the interests of consumers in relevant markets, where appropriate by promoting 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 adverse consequences of competition if they arise.
1.2 This statement sets out Ofcom’s modifications to General Condition 14 on Codes of Practice and Dispute Resolution (General Condition 14), issued under section 45 of the Communications Act 2003 (“the Act”) in relation to two matters. First, it deals with the recommendations in the Ofcom report to the Department of Trade & Industry (“DTI”), “The Regulation of Premium Rate Services”, issued on 9 December 2004 (“the Ofcom report”). The review was triggered by growing concern over the problem of “rogue” internet diallers and other such problem services, and the extent to which the current regulatory regime was able to deal effectively with problems of this kind.
1.3 During the course of the review, Ofcom identified a number of problems with the current regulation of Premium Rate Services (“PRS”), and our report made a number of detailed recommendations which, it was anticipated, would significantly reduce the scope for consumer detriment and restore consumer confidence in the PRS industry.
1.4 One such recommendation concerned the current arrangements for dealing with consumer enquiries regarding PRS which, in Ofcom’s view, were no longer sustainable, and did not provide an adequate basis for consumer protection. As noted in the Ofcom report and set out in this explanatory memorandum, the scope for consumer detriment arising from PRS was considerable, and consumers would be better able to protect themselves if they were well informed.
1.5 Ofcom therefore recommended that Originating Communications Providers (“OCPs”), assisted by Terminating Communications Providers (“TCPs”), should take on more responsibility for handling general PRS enquiries and for dealing with number check queries. Ofcom also recommended that this should be achieved by amending the obligations on OCPs under General Condition 14 and related guidance to require OCPs to produce a Code of Practice which would include the provision of practical information relating to the nature of PRS, and their costs and availability to consumers, e.g. information regarding call barring facilities, number checking etc.
1.6 The second matter to which this statement relates is concerned with Number Translation Services (“NTS”) provided on 08 numbers or 0500 Freephone numbers. In the remainder of this statement, the term NTS is used to refer to the services provided on these numbers. For the avoidance of doubt, this use of the term NTS excludes services provided on 09 PRS numbers, Surftime internet access services provided on 0844 04 numbers and flat rate internet access call origination services provided on 0808 99 numbers. Ofcom has also taken this opportunity to further modify General Condition 14 in relation to existing obligations under General Condition 10 relating to the Transparency and Publication of Information (specifically General Condition 10.2(d)(ii)) in so far as those obligations relate to NTS calls.
1.7 The purpose of the NTS changes is to improve price transparency for NTS calls. This follows research into consumer awareness of the prices of calls to 08 NTS numbers carried out as part of Ofcom’s ongoing NTS Framework Review. The results of this research, which are discussed further in Section 2 below, revealed very low levels of consumer knowledge about the prices charged by OCPs for calls to 084 and 087 numbers. This is exacerbated by the lack of visibility of NTS call prices in OCPs published price lists.
1.8 Ofcom published a consultation document (“the GC14 Consultation”) on 28 September 2005 setting out proposals designed to provide citizens and consumers with improved information about NTS and PRS, and inviting comments. The document is available on the Ofcom website. A second consultation document entitled “NTS: A Way Forward” (the Second NTS consultation – see paragraph 2.26), which proposed a number of other changes in the regulatory regime for NTS calls, was published on the same date.
1.9 In the light of responses received to the GC14 Consultation, Ofcom has decided to give effect to the proposals set out in that consultation document, with modifications, by publication of a Notification under section 48(1) of the Act.
1.10 The effect of the modification will be to impose requirements on OCPs:
- to modify their codes of practice to ensure NTS call prices are given greater prominence in published price lists and in promotional material for different service packages, so that they are not hidden. The information provided should include clear statements of whether or not discount schemes apply to NTS calls; and
- to provide appropriate information to customers in relation to complaints handling and enquiries about PRS.
1.11 The amendments to General Condition 14 are set out in the Schedule to the Notification, published at Annex 1 to this statement.
1.12 In reaching the 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.
1.13 In recognition of concerns voiced about the proposed implementation timescale of one month, Ofcom has extended this period so that OCPs will have two months from the date of publication of this Notification to implement the new procedures.