Providing citizens and consumers with improved information about Number Translation Services and Premium Rate Services

Consultation Summary

Section 1 - Summary

1.1 Ofcom’s (the Office of Communications) principal duty, in carrying out its functions, is to further the interest of citizens in relation to communications matters and to further the interests of consumers in relevant markets, where appropriate, by promoting 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 adverse consequences of competition if they arise.

1.2 This consultation sets out Ofcom’s proposals for modifications to General Condition 14 on code of practice and Dispute Resolution (GC 14), issued under section 45 of the Communications Act 2003 (“the Act”) in relation to two matters. Firstly it deals with the recommendations in the Ofcom report to the Department of Trade & Industry (‘DTI’), “The Regulation of Premium Rate Services”, issued on 9 December 2004 (‘the Ofcom report’). The review was triggered by growing concern over the problem of ‘rogue’ internet diallers and other such problem services, and the extent to which the current regulatory regime was able to deal effectively with problems of this kind.

1.3 During the course of the review, Ofcom identified a number of problems with the current regulation of Premium Rate Services (‘PRS’), and our report made a number of detailed recommendations which, it was anticipated, would significantly reduce the scope for consumer detriment and restore consumer confidence in the PRS industry.

1.4 One such recommendation concerned the current arrangements for dealing with consumer enquiries regarding PRS which, in Ofcom’s view, were no longer sustainable, and did not provide an adequate basis for consumer protection. As noted in the Ofcom report and set out in this explanatory memorandum, the scope for consumer detriment arising from PRS was considerable, and consumers would be better able to protect themselves if they were well informed.

1.5 Ofcom therefore recommended that Originating Communications Providers (‘OCPs’), assisted by Terminating Communications Providers (‘TCPs’), should take on more responsibility for handling general PRS enquiries and for dealing with number check queries. Ofcom also recommended that this should be achieved by amending the obligations on OCPs under GC 14 and related guidance to require OCPs to produce a code of practice which would include the provision of practical information relating to the nature of PRS, and their costs and availability to consumers, e.g. information regarding call barring facilities, number checking etc.

1.6 The second matter to which this consultation relates is Number Translation Services (‘NTS’). NTS calls are calls to numbers identified in the National Telephone Numbering Plan (‘the Plan’) as Special Service numbers (broadly, numbers that start with 08 or 09). Ofcom has also taken this opportunity to further modify GC 14 in relation to existing obligations under GC 10 relating to the Transparency and Publication of Information (specifically GC10.2(d)(ii)) in so far as those obligations relate to NTS calls. This follows further research into consumer awareness of the prices of calls to 08 NTS numbers arising out of comments received to Ofcom’s first NTS consultation, as part of its ongoing NTS Framework Review, entitled “NTS: options for the future”, issued on 22 October 2004 . The results of this research are discussed in more detail in Section 2 of this consultation and revealed very low levels of consumer knowledge about the prices charged by OCPs for calls to 084 and 087 numbers. This is exacerbated by the lack of visibility of NTS call prices in OCPs published price lists.

1.7 The modification to GC 14 for NTS calls requires fixed and mobile OCPs to modify their codes of practice to ensure NTS call prices are given greater prominence in published price lists and in promotional material for different service packages, so that they are not hidden. The information provided should include clear statements of whether or not discount schemes apply to NTS calls.

Consultation

1.8 Ofcom is inviting written views and comments by 5pm on 6 December 2005, on the Notification and proposed modifications to GC 14 on code of practice and Dispute Resolution, which is set out at Annex 5, which set out for NTS and PRS:

• the obligation to establish and maintain codes of practice in accordance with guidelines on the provision of information and dealing with enquiries, and to comply with the provisions of those codes;
• the obligation to provide codes of practice on request, and free of charge, to customers.

1.9 Details of how to respond on each of these issues can be found in Annex 1.

1.10 Ofcom will give careful consideration to all comments received during the consultation period, and in light of the comments received may give effect to the proposals set out in this document, with or without modification, by publication of a Notification and explanatory statement. Ofcom expects to publish the Notification and explanatory statement in the spring of 2006.

Effective date

1.11 Subject to the outcome of the consultation, Ofcom proposes that the requirement upon OCPs who originate calls to NTS and PRS to establish, maintain and comply, under set guidelines, with codes of practice on the provision of information and dealing with enquiries and to comply with the provisions of those codes, will take effect one month from the date of publication of the Notification and explanatory statement.

Section 2 - Introduction

PRS and the current regulatory regime

2.1 PRS offer some form of content, product or service via fixed and mobile telecoms lines. These may be accessed as conventional voice services or using SMS text, fixed-line telephones, PCs (eg via e-mails, the internet and bulletin boards), mobile phone or interactive digital TV. Services include TV voting lines, competitions, scratchcards, adult entertainment, chat lines, business information services, technical helplines, mobile phone ringtones and game downloads, horoscopes and interactive TV games.

2.2 UK-based PRS telephone numbers are typically prefixed by ‘09’ although similar, and in some cases identical, services are increasingly being offered on numbers outside this range, including those prefixed by ‘08’ as well as access codes. In the case of mobile services, PRS can be accessed via short codes (usually starting with an ‘8’ or ‘6’) or via the phone’s screen menu without the need to dial a number. Directory enquiry services (on 118xxx) also fall within the definition of premium rate services for the purposes of the Act.

2.3 These services vary in cost typically between 10 pence per minute (ppm) or per call up to £1.50 per minute or per call (for BT customers). In most cases the bulk of the revenue from calls to such services goes to the SPs who are responsible for the content, product or services provided or who act as resellers or aggregators on behalf of a number of such providers. The SPs are responsible for compliance with the bulk of the obligations imposed by the code of practice. The remainder of the revenue is shared by: the consumer’s telephone company (the OCP, which receives a small fee for ‘origination’ of the phone call); and the telephone company that contracts with the SP and ‘terminates’ the call on behalf of the SP through the provision of network facilities (the TCP).

2.4 PRS are defined in section 120(7) of the Act which provides that a service is a premium rate service, if:

1. it is a service falling within subsection (8)*
2. there is a charge for the provision of the service;
3. the charge is required to be paid to a person providing an electronic communications service by means of which the service in question is provided; and
4. that charge is imposed in the form of a charge made by that person for the use of the electronic communications service.

The regulatory framework and PRS

2.5 A new regulatory framework for electronic communications networks and services entered into force on 25 July 2003. The framework is designed to create harmonised regulation across Europe, and is aimed at reducing entry barriers and fostering prospects for effective competition to the benefit of consumers.

2.6 The relevant statutory provisions governing the regulation of PRS are set out under sections 120 to 124 of the Act. The provisions provide Ofcom with the power to set conditions for the purpose of regulating the provision, content, promotion and marketing of PRS that bind the persons to whom they are applied. Any condition set under section 120 must comply with section 47 of the Act, i.e., it must be objectively justifiable, not unduly discriminatory, proportionate and transparent. It must also comply with the consultation and notification requirements in section 48 of the Act.

The role of Ofcom

2.7 Ofcom’s role in the premium rate regulatory regime is to provide statutory support to the work of ICSTIS for PRS. Ofcom has the power under section 120 of the Act to set conditions for the purpose of regulating the provision, content, promotion and marketing of ‘Controlled’ PRS that bind the persons to whom they are applied.

2.8 The PRS Condition which regulates the provision, content, promotion and marketing of PRS took effect from 29 December 2003. The effect of the PRS Condition is to bind each and every person falling within the definition of ‘Communications Provider’ as defined in the PRS Condition, to comply with:

1. directions given in accordance with an Approved Code by the Enforcement Authority and for the purpose of enforcing the provisions of the Approved Code;
2. if there is no Approved Code, the provisions of the order for the time being in force under section 122 of the Act.

2.9 Ofcom’s powers, as defined under the PRS Condition, only relate to those services which are defined as ‘Controlled’ PRS. Controlled PRS are defined more narrowly than PRS, and means PRS where the charge or rate for the call is more than 10 pence per minute other than Chatline Services which are automatically included. For the purpose of this document, references to PRS will mean Controlled PRS only.

2.10 In the event of an apparent failure to comply with an ICSTIS Direction amounting to a breach of the PRS Condition Ofcom’s general powers of enforcement under its powers in sections 94 – 96 of the Act will apply.

The role of ICSTIS

2.11 ICSTIS is responsible for the preparation and enforcement of its code of practice. The current version (Tenth Edition, as amended) of the code of practice was approved for the purposes of sections 120 and 121, and is available on the ICSTIS website. The code of practice applies to all PRS which are accessed by a UK consumer or are provided by SPs in the UK.

2.12 The code of practice is primarily targeted at the actions of the SPs and it is their responsibility to ensure that the content and promotion of all their PRS (whether produced by themselves or by their content and information providers) comply with all relevant provisions of the code of practice.

2.13 ICSTIS has a range of sanctions that it can impose on a SP that breaches the code of practice according to the seriousness with which it regards the breach. These range from obtaining assurances about future behaviour and instructing refunds to be offered to imposing fines, barring access to services and prohibiting certain 'named' individuals from operating services for a set period.

2.14 Although their responsibilities are more limited the code of practice also places a number of general requirements and specific obligations on TCPs to assist in the enforcement of ICSTIS’ decisions by carrying out directions given by ICSTIS. These may include directions to cease dealing with particular businesses or individuals, to block access to certain numbers or services and to withhold payments to SPs in respect of particular services. Where there is evidence of non-compliance with an ICSTIS direction by a TCP, this will represent a potential breach of the PRS Condition, and ICSTIS will notify Ofcom that it considers that the relevant provider has contravened the terms of the condition.

The NTS regime

What are NTS?

2.15 NTS calls are calls to numbers identified in the Plan as Special Service numbers (broadly, numbers that start with 08 or 09). In addition, NTS includes calls to the legacy 0500 Freephone numbers, which, whilst still in use, are not listed in the Plan as they are no longer available for new allocations. Calls to 0844 04 numbers for Surftime internet access services and calls to 0808 99 numbers for FRIACO are not included. For the purposes of this document, references to NTS will mean calls to 08 numbers only.

2.16 NTS (and PRS) 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.

2.17 Services offered using NTS numbers are similar to PRS except that prices range from free to caller up to a maximum of 10ppm (from a BT landline). Types of services include information services, some technical helplines, access to telephone banking, sales and customer service lines and dial-up pay-as-you-go Internet services.

2.18 Because of the lower prices charged for NTS calls generally the scope for consumer detriment from making long calls and from fraudulent activity is generally considered less of an issue but we do recognise that consumers can nevertheless accrue high phone bills over a billing cycle where frequent use of lower priced services is involved.

2.19 In common with PRS, NTS calls being non-geographic offer significant advantages to providers of services especially those who operate from multiple locations. NTS intelligent routing facilities combined with increasingly sophisticated Interactive Voice Response (IVR) systems enable calls to be switched between locations on demand, i.e. by the nature of the service required or by time of day or when routes to individual destinations become congested. Calls can be re-routed automatically so as to maintain levels of service to callers.

2.20 The costs of using these terminating services can also be offset by the share of the revenue from calls that some SPs receive. These incentives have prompted numbers of companies to switch from using geographic to NTS numbers for contact by consumers. The increased use of NTS numbers together with the ever decreasing link to geographic call prices has impacted on the transparency of prices for these call types.

The full document is available below.

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*A service falls within this section if its provision consists in:

1. the provision of the contents of communications transmitted by means of an electronic communications network; or
2. allowing the user of an electronic communications service to make use, by the making of a transmission by means of that service, of a facility made available to users of the electronic communications service.