Conditions regulating Sexual Entertainment Services

26 April 2007

26|04|07

This version corrects a statement in the original publication. The reference in paragraph 3.63 to reverse SMS as an external means of payment has been removed to correctly reflect the fact that SES paid for by reverse SMS are premium rate services as defined in section 120(7) of the Communications Act 2003.

Summary

Proposals

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 require the persons to whom they apply 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 (eleventh edition) was approved for the purposes of sections 120 and 121 of the Act on 9 November 2006 and took effect on 4 January 2007.

1.5 The currently applicable version of the PRS Condition was published on 17 October 2006 and 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”). Of particular significance for the purposes of this Statement is that the definition of CPRS in the existing version of the PRS Condition does not expressly include Sexual Entertainment Services (‘SES’).

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 ICSTIS to take action under section 8 of its Code. In cases of non-compliance by network operators ICSTIS may refer the matter to Ofcom. Ofcom may then take enforcement action under the relevant procedures set out in the Act.

1.7 On 19 April 2006 Ofcom issued its statement “NTS: A Way Forward” (the ‘April 2006 NTS statement’) (-1-) in which, amongst other significant policy decisions, Ofcom announced the decision to extend the definition of Controlled Premium Rate Services (‘CPRS’) to include all adult services regardless of call price. NB: The term adult services has been modified to SES in this consultation exercise in recognition of the view, given subsequently, that the term adult could also include gambling services.

1.8 Furthermore, to facilitate selective call barring in relation to SES, Ofcom further gave notice, in the April 2006 NTS statement, of its intention to amend The National Telephone Numbering Plan (“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.

1.9 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 2006 Numbering statement’) (-2-). 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. 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).

1.10 On 9 November 2006 Ofcom published a consultation document entitled “Conditions regulating Sexual Entertainment Services” (-3-) (the November 2006 SES Consultation) in which Ofcom made three proposals in order to implement the decision in the April 2006 NTS statement and to align with the August 2006 Numbering statement. These were, namely:

  1. To modify the PRS Condition to extend the definition of CPRS to all SES regardless of price;
  2. To modify the Plan to facilitate migration of SES currently operating on ‘08’ NTS numbers to the new ‘098’ number range; and
  3. To amend part 5 of the Annex to General Condition 17 to make it clear that ‘0908’ and ‘0909’ numbers are no longer available for new allocation by Ofcom.

In this consultation Ofcom also proposed that the timescale allowed for services to migrate from ‘08’ to ‘09’ numbers should be six months from the date of this statement.

1.11 The consultation closed on 14 December 2006 and Ofcom received responses from six stakeholders representing Communications Network Providers and groups representing PRS service providers.

1.12 The responses were generally supportive of the proposals although some scepticism was expressed as to the need to prevent SES from continuing to operate on ‘08’ numbers. The predominant concern was that Ofcom had allowed insufficient time for migration to new ‘09’ to be completed. From the network perspective it was suggested that Ofcom had underestimated the contractual time needed by BT to establish new price points in ‘098’ should prices other than those that presently exist (5ppm and 10ppm) be requested. From the advertising perspective it was suggested that some services advertise on media either with long shelf lives or which require a minimum of three months notice to change advertisements.

Conclusion

1.13 Having carefully considered the responses to the consultation, Ofcom has now decided to proceed with the proposed modifications to the PRS Condition, the Plan and to General Condition 17. However, in recognition of concerns that Ofcom had underestimated the time required to implement new price points in the ‘098’ number range and for advertisements to be revised in some media, whilst acknowledging that the probability of both the numbering and media issues applying to the same services is likely to be small, Ofcom has agreed to extend the migration timescale from six to eight months.

1.14 Ofcom is also satisfied that the statutory requirements for modifying the PRS Condition are met in respect of the amendment. In that regard, Ofcom believes the inclusion of all SES within the same regulatory controls is consistent with the principles of transparency, proportionality and non-discrimination.

Effective Date

1.15 The modifications to the PRS Condition shall come into force with the date of publication of this document. However, in order to allow SES providers currently operating on ‘08’ numbers an adequate period to migrate their services to the ‘098’ number range, the amendments to the Plan and Annex 5 of General Condition 17 shall take effect 8 months after the publication of this document.

1.16 It should be noted that as a result of the modification to the PRS Condition, SES using ‘08’ numbers will be brought within the scope of the ICSTIS Code with immediate effect. However, ICSTIS indicated that this will not be enforced for a period of four weeks from the date of the statement to allow the relevant SES providers to complete the necessary registration process required by ICSTIS.

Footnotes:

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

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

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

The full document is available below