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Premium rate messaging set for regulation overhaul

Ofcom kicks off 'first principles' review

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Ofcom has begun a "first principles" review of premium rate service (PRS) regulation in a move that could change the way premium rate phone and text services are regulated.

ICSTIS (Independent Committee for the Supervision of Standards of the Telephone Information Services) currently regulates premium rate telephone services and receives its authority from Ofcom, which delegates the work to it. Though withdrawing that authority from ICSTIS is not thought likely, Ofcom has stressed that it is conducting a fundamental review that will look at the very basis of Ofcom and ICTSIS's co-regulation.

"In light of increasing convergence in the communications sector and the growth of PRS as a micro-payment mechanism, Ofcom considers that the time is right for a first principles examination of the role, structure and application of regulation in this area," said Ofcom.

"Ofcom undertook a review of the effectiveness of the PRS regulatory regime in 2004," it said. "That review identified a number of problems with the regime, and while Ofcom did not believe it necessary at that stage to move away from the current self and co-regulatory approach, it developed and subsequently implemented a package of recommendations to improve the effectiveness of PRS regulation within the existing framework."

ICSTIS says it does not believe that it will be stripped of its regulatory role. "It's not a review of ICSTIS, it's a review of what ICSTIS regulates and how it is regulated," said ICSTIS spokesman Rob Dwight. "Ofcom just asked us to take on the regulation of 0871 numbers from January 2008 so it would seem illogical for them to ask us to take it on if they didn't want ICSTIS to carry on regulating everything else."

One element of regulation which Ofcom says it will look at is whether or not the regulator's activities should be more focused on just the rule breaking companies. "In Ofcom's terms of reference it looks at the allocation of resources in terms of our activity," said Dwight. "We think resources should be concentrated on the parts of the market that cause the greatest harm. We have always said that we should concentrate on the small parts of the market that cause harm and leave the other people alone, apply a light touch regulation to them."

Premium rate number scams often emerge and ICSTIS rules on them and publishes its decisions. It can levy significant fines on the technical service providers who register with ICSTIS, and the service providers must then recoup that cost from the content providers behind the actual service.

Ofcom said the review was partly instigated by the fact that premium rate numbers are used more than ever as a payment mechanism for all sorts of goods or services. In these cases customer are asked to phone a very expensive phone line for a fixed amount of time in order to pay for goods or services.

"Premium rate has been a payment system for 20 years since it was first introduced in 1986. For small sums like £1.50 people don't want to get their debit cards out," said Dwight, who recognised that this was a growing trend. "The growth in it being used as a payment system is a sign of success and of the stability of the regulation for the last 20 years."

Ofcom will investigate whether PRS prices are clear; what action consumers who feel they have been ripped off can take; the flexibility of regulation; how many types of firms are covered by regulation; the feasibility of a service provider registration scheme, and whether there is too much overlap between ICSTIS's work and that of other regulators.

See:

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