PHONEPAYPLUS BEGINS CONSULTATION ON 12^TH CODE OF PRACTICE

24 June 2009

PhonepayPlus, the regulator for the phone-paid services industry, has today launched a wide-ranging discussion paper on the development of its 12th Code of Practice. PhonepayPlus is inviting response from industry, consumers and all other stakeholders in order to properly inform thinking as it develops its full Code consultation for later in 2009.

The paper takes into account recommendations made by Ofcom in its recent PRS Scope Review.

The Code of Practice is the document through which PhonepayPlus regulates the phone-paid services industry, enabling it to protect consumers from harm while providing reputable businesses with every opportunity to develop new, useful products and services for consumers to enjoy using their phones.

The 12^th revision of the Code will be among the most significant in the organisation’s 23-year history. PhonepayPlus intends to carry out a thorough examination of the current version to determine how it might be improved, especially with regard to developments in this technologically fast-paced industry, such as the explosion of mobile phone-paid services, which have changed the face of the industry in recent years.

Recognising it cannot regulate effectively in isolation from industry and other regulators PhonepayPlus is publishing this discussion paper ahead of an initial draft of the new Code, upon which it and Ofcom will consult later this year.

PhonepayPlus proposes, and explores the impact of, four main changes to its regulatory regime in the discussion paper. These are:

1. That the new Code is based on identifying desirable outcomes, and supporting them with rules where appropriate, rather than prescribing a step-by-step guide to compliance

2. That every business in the phone-paid services value chain will assume an appropriate degree of responsibility for the provision of compliant services and the delivery of consumer protection measures

3. The creation of a database on which all Service Providers (SPs) and Information Providers (IPs) will be registered for due diligence and risk management purposes

4. That providers must have in place adequate customer care facilities to ensure consumers are able to register a complaint and seek redress as quickly as possible

Commenting, PhonepayPlus Chief Executive, Paul Whiteing said: “Development of our 12^th Code of Practice is one of the most important activities we will undertake this year and it is imperative we get off on the right foot. We want to ensure the Code protects consumers in the ways it should do, while enabling reputable providers to offer innovative, compliant services. This is why we have published this discussion paper ahead of a draft of the Code; in order that we might canvass a wide cross section of views from industry, consumers and our peer regulators as early in the process as possible.”

Comments and submissions are invited from anyone with an interest in phone-paid services, industry, including peer regulators, trade associations and consumers. The closing date for comments is 1 August 2009.

Ahead of an industry workshop organised by Ofcom to discuss its PRS Scope Review, PhonepayPlus has prepared an initial assessment of the potential impact of the proposals on PhonepayPlus. To read this document, click here.

To read the Code 12 discussion paper click here.

To read Ofcom’s PRS Scope Review click here.

LEVY ANNOUNCEMENT 1 APRIL 2009 – 31 MARCH 2010

Following consultation with industry, PhonepayPlus reduced its proposed 2009/10 budget to 0.0% on 2008/9. This was subsequently presented to, and approved by, the Ofcom Board.

As a result, PhonepayPlus has announced that its levy for 2009/10 will be 0.48%. The levy applies to all outpayments payable by network operators to service providers in respect of revenue generated by premium rate services, and is calculated as a proportion of every outpayment to ensure that PhonepayPlus continues to receive adequate funding to carry out its activities, as required by Section 121 Communications Act 2003.

Although an increase, this levy reflects the levels that were in place from 2000 to 2006. The levy rate has only reduced to below 0.45% in the last two years. We are keen to minimise changes in the levy year on year but to do this will require stakeholder support for us to build higher reserves in times of market growth to be utilised when the market declines. Support for this proposition when we have tested it with stakeholders has, however, been limited.

The levy has been set following extensive consultation with the industry and other stakeholders with regard to the Business Plan & Budget to be allocated to PhonepayPlus for its operations.  However, the size of the levy is determined by a range of factors beyond just the PhonepayPlus annual budget. A declining market is also an important contributing factor as is the income we receive from fines, administrative charges and bank interest.

Arrangements as to the payment, adjustment and auditing of the levy are set out in Annex 1 to the PhonepayPlus Code of Practice.

MARKET TRENDS

As part of our business cycle, we asked network operators for data on their actual outpayments for the first three quarters of 2008/9. In previous years, the timing of the consultation on our budget has only enabled analysis of a half year’s data.

The information received suggests the market has reduced in size by 6% for these first three quarters, compared with 10% for the year 2007/08 , and will continue to remain flat or in decline as a consequence of global, European and UK economic forces. We have therefore based the levy on a full year decline of 8% in 2008/09. We recognise however that there is considerable macro-economic uncertainty in the UK market and we will therefore keep this levy under review during 2009/10.

PhonepayPlus will shortly publish its full statement following its consultation on the 2009/10 Business Plan & Budget.

Comment from Bluewave Media

At this present time, we do not pass this levy cost on to our customers. Instead, this cost is factored into our pricing structure. Therefore, the vast majority of our PRS and SMS customers will remain unaffected by this announcement.

To comply with PhonepayPlus regulations you may be required to include the following information in promotional material. Promotional material may include print advertising, website and flyers or cards, basically anywhere that your premium rate number appears to entice people to call:

• Contact information, such as a PO Box address and/or customer service telephone number.
• Cost of the call. E.g. “Calls cost £1.50 per minute unless otherwise stated”
• The cost of the call is charged in addition to their normal call costs. E.g. “Charges from mobile and other networks may vary.”
• You must be over 18 to use these services (if applicable), be the bill payer or have the bill payer’s permission.
• Live call may be recorded in compliance with PhonePay Plus.

This information above is a guideline example only. You should make sure you have the latest information from PhonepayPlus and make sure you are complying correctly at all times.

We can provide advice on these matters where required.

PhonepayPlus today published ‘Due Diligence Best Practice’, a document which provides practical help for Network Operators in fulfilling their due diligence responsibilities under the PhonepayPlus Code of Practice.

It has been developed by the PhonepayPlus Industry Liaison Panel (ILP), and complements PhonepayPlus’ existing Help Note on performing due diligence. It provides a generic template which Network Operators can use to collect the minimum information required to satisfy the due diligence obligation.

The 11th Edition of the Code of Practice introduced new due diligence requirements on Network Operators intended to ensure a higher level of compliance by the service providers with which they contract. These requirements have proved to be very successful in ensuring that PhonepayPlus can take quick and targeted action against the right parties.

A number of Network Operators have been found in breach of these requirements and have, as a result, been subject to fines and ordered to bring into line their procedures. This welcome and important work by the ILP will help Network Operators ensure they are compliant with regulation and represents a significant step forward for collaborative working between industry and regulator.

To view the full Statement, please visit www.phonepayplus.org.uk/news/consultation_papers/statementsfollowing.asp.
Click here to view the accompanying media release: www.phonepayplus.org.uk/news/media_releases/default.asp.

Bluewave Media is committed to providing responsible and compliant services. We can provide all our telephony and SMS customers with free advice and guidance on all compliance issues.