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PhonepayPlus consults on new Code while industry demands clarity

A new regulatory system for the premium rate phone industry has been published and is the subject of consultations by both the premium rate regulator PhonepayPlus (PPP) and the overall telecoms regulator Ofcom.04 May 2010

But one trade body has said that the new regulations have not dealt with the changing media landscape and has said that the industry is confused about which services come under the premium rate regulator's control and which do not.

PPP has published a new Code on which it will base its activity that it says is simplified and streamlined. As previously announced, it will force all providers to register with it and will hold content producers liable for their material, rather than focus on regulating only distributors and technical service providers.

"[The new Code] shifts responsibility for compliance in the PRS [premium rate services] value-chain," said a PPP statement. "This means placing responsibility for consumer outcomes with those who actually operate and promote the service, while emphasising the due diligence and risk assessment duties of other businesses who help deliver the service to consumers."

"[The new Code creates] an industry Registration Scheme that requires all networks and providers involved in PRS to register their companies and services with PhonepayPlus before they can do business in the UK, giving consumers access to more information on services and allowing industry to make better informed decisions on which businesses to partner with," said the statement.

But the Mobile Entertainment Forum (MEF), which represents content producers, intermediary service providers, handset makers and mobile networks, has said that companies are unsure whether the PPP's Code will apply to some of their services.

"There is an issue in the definition of what constitutes a premium rate service in the first place," Suhail Bhat, policy and initiatives director of the MEF, told OUT-LAW.COM. "There is a convergence of services and content on mobile devices and now there is an ability to have access to the same content but to pay for it in different ways."

"If I purchase a service, say a game, using premium rate mechanism, then that falls within the remit of PPP," he said. "If I purchase the same game for the same amount of money through a different platform, perhaps it doesn't fall within remit of PPP."

"If I buy a film at home on Sky or Virgin through set top box, a charge appears on my phone bill and I have received content, so why is that different to me being able to purchase video using a mobile device using a premium rate mechanism which falls within scope of PPP?" he said.

Bhat said that the MEF's members welcomed the changes being made to PPP's regulation, but that they simply needed to be sure when it applied.

"What our members are asking for is clarity," he said. "There is a big difference between just complying with the E-Commerce Directive and dealing with specific sets of conditions imposed in all the countries you operate in."

Bhat said that it was not as simple as PPP regulating only transactions that use premium rate numbers of text short codes.

"The definition [of what the premium rate services regulator is in charge of] in the Communications Act is not that clear, it is much wider," he said. "Technically any purchase using a telecoms platform where there is revenue share and content and services being sold is regulated."

Bhat said that operators needed to know whether PPP regulates services charged to a user's mobile bill where the transaction uses something other than a premium rate number.

"If I use my mobile phone account to pay for a parking ticket or buy a can of coke but there was no premium rate number, does that fall within or outside PPP's regulation?" he said.

Bhat said that his organisation had raised this issue with PPP but that the new regulations do not clarify the situation.

PPP said that its consultation on the new regulatory regime would last for 10 weeks. PPP chief executive Paul Whiteing said that the completely rewritten policy will help consumers as well as the industry.

"We want an industry that puts consumers first and we believe a Code that focuses on outcomes helps to secure that and, as a consequence, a better market for all," he said. "It also allows industry to decide how best to achieve compliance with the Code while ensuring regulation is flexible and nimble enough to meet the demands of a rapidly-changing market."

Overall telecoms regulator Ofcom delegates the regulation of premium rate services to PPP. It is conducting its own consultation.

"Ofcom considers that the draft Code would strengthen the regulatory regime by allowing PhonepayPlus to more clearly target those parties that are causing consumer harm while creating a flexible and proportionate regulatory framework for legitimate providers," it said in a statement.