Extending Premium Rate Services Regulation to 087 Numbers

Statement published 05|02|09

Summary

NTS calls combine the call routing features of non-geographic numbers with a payment mechanism

1.1 Number Translation Services (NTS) calls are calls to 08 numbers (NTS numbers), though as explained later in the document, there are a few exceptions.

1.2 NTS numbers are examples of non-geographic numbers in that the number dialled does not relate to a specific geographic location, but instead relates to a particular service. At a technical level, the NTS number dialled by a caller is translated by the network to a geographic number to deliver the call to its destination. Often, the translation is provided in conjunction with other call routing services that help businesses answer calls more efficiently. These include distribution of calls between multiple sites, routing calls according to the callers location, recorded announcements and emergency call routing to an alternative location in event of a fire or flood etc.

1.3 Another important aspect of NTS calls is that they are generally charged at higher rates than ordinary calls and (with the exception of Freephone calls) the service provider who uses the number may receive a share of the call charge to help pay for the service supplied. Alternatively a share of the call charge may be used to pay for the call routing services mentioned above.

After a major review we decided to commence the process of extending PRS regulation to calls to the most expensive 08 numbers

1.4 In April 2006 we concluded a major review of our policy about NTS^(-1-) and announced a package of measures designed to improve consumer protection, pricing transparency and to address some industry problems that led to disputes that Ofcom was often called upon to resolve.

1.5 To improve consumer protection and pricing transparency for calls to the most expensive 08 numbers we proposed to extend Premium Rate Services (PRS) regulation to all the 08 number ranges that are charged above 5p per minute for BT customers (excluding the 0870 range which was the subject of another proposal) thereby bringing those ranges within the remit of the PRS regulator PhonepayPlus^(-2-). The relevant ranges are the 0871, 0872 and 0873 ranges. For ease, we have used the term 087 Numbers in this document to refer to the 087 number ranges excluding 0870.

PhonepayPlus decided to adapt its Code of Practice to make it more suitable for the types of services that are typically provided on 087 Numbers

1.6 PhonepayPlus subsequently conducted its own consultation on the code of practice it should apply to the regulation of 087 Numbers. PhonepayPlus concluded that the current PhonepayPlus Code of Practice (11th Edition) for Premium Rate Services (the Code) would be suitable for 087 Numbers if it interpreted certain provisions of the Code in a different way for 087 Numbers and if it used the flexibility provided within the Code to exempt some types of services from specific requirements when provided on 087 Numbers. PhonepayPlus set out its interpretation of the Code for 087 Numbers in a document called the Statement of Application^(-3-).

In May 2008 we published a second consultation on our proposal to extend Premium Rate Services regulation

1.7 After PhonepayPlus had concluded its consultation, we published a further consultation in May 2008 (the Consultation ^(-4-)) setting out detailed proposals and the legal notification required to extend PRS regulation to 087 Numbers. For consistency we also proposed to reduce the price threshold for PRS regulation on 09 numbers to the same level (i.e. 09 number ranges that are charged above 5p per minute (for BT customers) would be subject to PRS regulation rather than those ranges charged above 10p per minute (for BT customers) as at present).

We received 27 responses to our consultation

1.8 We received 27 responses to our consultation, 12 from consumers, 11 from communications providers and related organisations, and 4 from businesses and related organisations.

1.9 Stakeholder views on our proposals were polarised. Consumers thought the proposals did not go far enough to address their concerns and those involved in the provision of services on 087 Numbers regarded them as too intrusive.

1.10 Most consumer respondents argued that Ofcom should implement additional measures to reduce the price of calls to 087 Numbers such as retail price regulation or a requirement for users of 087 Numbers to publish a geographic number. Others were critical of the rules proposed by PhonepayPlus for 087 Numbers which were regarded as weaker than those applied to 09 numbers. Several consumer respondents also criticised Ofcom for taking insufficient notice of consumer concerns about 08 numbers.

1.11 There was some support for our proposals amongst Communications Providers (CPs), businesses and related organisations, however, most did not support the proposals. Most of these respondents thought that the consumer protection and pricing transparency problems did not warrant the proposed extension of PRS Regulation. Most also thought the Code was not fully suitable for the types of service that use 087 Numbers. Nevertheless, most respondents conceded that PhonepayPlus interpretation of the Code for 087 Numbers (as set out in the Statement of Application) had addressed some of their concerns about certain aspects of the Code, improving its suitability for services operating on 087 Numbers.

We have revised parts of our impact assessment in response to stakeholder comments

1.12 In response to stakeholder comments we have made several changes to our impact assessment. These changes include new estimates for some of the setup costs that we did not quantify in the Consultation and a revision to our estimates of the potential benefits of improved pricing transparency.

1.13 It was not practicable to quantify all of the setup costs that stakeholders would incur as a result of our proposals, however our new cost estimates address the previously un-quantified impacts that we consider would be significant.

1.14 Our revised estimate for the one-off setup costs that we could quantify is 66m to 121m is higher than we estimated in the Consultation, mainly due to the addition of the new cost estimates for impacts that we had previously taken into account qualitatively.

1.15 Following these revisions, we remain of the view that the benefits associated with our proposals would exceed the costs and that the proposals would deliver a substantial net benefit.

Following consideration of the consultation responses we have decided to proceed with these proposals

1.16 Following consideration of the responses and the revisions to our impact assessment we have decided to confirm our proposals. We think they provide a reasonable balance between the overriding goal of furthering consumer interests and our duty to consider avoiding unduly burdensome regulation.

1.17 We acknowledge that some respondents would prefer Ofcom to take additional steps to limit or bring an end to revenue sharing on 08 numbers. These views echo the responses to our 2005 consultation^(-5-) on 08 numbers. After considering these views in our April 2006 statement, we concluded that ending revenue-sharing on all 08 numbers would be highly disruptive and would be likely to have a negative effect on service availability. On this basis we concluded it would not be in the best interests of consumers, businesses or communications providers. We still think this was the right conclusion and that we should extend PRS regulation in order to improve pricing transparency and consumer protection.

1.18 In the light of stakeholder comments we have redrafted the modification to the PRS Condition to ensure that the modification has the intended effect and also to provide further clarity. The changes:

• limit the scope of the extension of PRS regulation to 087 Numbers and 09 numbers as intended (as originally drafted other types of PRS such as premium mobile SMS could also have been made subject to this change in PRS regulation); and
• provide greater clarity about the meaning of the pricing references in the PRS Condition.

1.19 This document contains a legal notification of the modification to the PRS Condition and:

• a summary of the consultation responses and our comments;
• a summary of the Impact Assessment that we published in the Consultation and details of changes we have made to it in response to stakeholders comments; and
• a review of the modification in light of the relevant legal tests.

PhonepayPlus will start regulating these ranges in 1 August 2009

1.20 In view of stakeholder representations about the implementation period prior to the commencement of PhonepayPlus regulation we have decided to extend the implementation period from 3 months to 6 months.

1.21 The modification to the PRS Condition will take effect on 1 August 2009.

1.22 Organisations offering PRS services on 0871, 0872, 0873 numbers and 09 numbers that are charged at more than 5p per minute and up to 10p (for BT customers) will therefore be subject to the PRS regulation from 1 August 2009.

1.23 Calls to 0870 numbers are subject to separate proposals and will not be subject to PRS regulation (see paragraph 2.25 for details).

Footnotes:

  1.- See paragraph 2.9 for details.

  2.- Until October 2007 PhonepayPlus was called ICSTIS (independent Committee for the Supervision of Standards of the Telephone Information Services).

  3.-http://www.phonepayplus.org.uk/pdfs_news/0871_Services_StatementOfApplication.pdf

  4.- Extending Premium Rate Services Regulation to 087 Numbers, published 2 May 2008, http://www.ofcom.org.uk/consult/condocs/087prs/prscondoc.pdf

  5.- See paragraph 2.9 for details.

The full document is available below