Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


Memorandum submitted by the Chairman of ICSTIS

  I write in response to your invitation for evidence for a new inquiry in the communications field.

  ICSTIS is the independent regulatory body responsible for premium rate charging in the United Kingdom. This organisation is "underpinned" by a Licence Condition attached by Oftel to UK network operators.

  Premium rate charging is now widely used across the communications field—on the internet, on interactive television and through "reverse SMS" (text messaging) as well as on conventional and mobile telephony. I attach a paper summarising our key messages and statistics but would like in this letter to highlight a smaller number of issues which I think are directly relevant to the Committee's present inquiry as set out in your terms of reference.

  Market and technological developments are not standing still waiting for the main Communication Bill to pass. Charging for content is now common practice on television, the internet and across different forms of telephony—perhaps most obviously and significantly with mobile telephony. Premium rate charging to your telephone account is now used as a form of micro and mini payment for a host of entertainment and information services: everything from passport services hotline to adult internet content to Big Brother and Who Wants to be a Millionaire. These services are predominantly "virtual"—provided on a national or international basis from a single location, possibly anywhere in the world. Regulatory effectiveness varies. Broadcast regulators and ICSTIS have expertise in dealing with services rather than products and this is one feature of our unique regulatory model. This is explained in more detail in the attached paper but is based on universal contractual support underpinned by the Oftel/OFCOM Licence Condition, an independent Committee, published Codes and a consequential ability to impose meaningful sanctions and to act in extremes with Stop Now powers which have effect on the same day.

  Consumer trust, understanding and confidence is going to be key to the take-up of new technologies and a willingness to transact by new means on new platforms. The real challenge for all involved lies in building consumer understanding, trust and confidence. When only 4 per cent of the public in a MORI Poll understood that it was possible conceptually to make a premium rate payment on the internet and when digital television is considered too complicated a product to operate we're going to have difficulties in building this trust and confidence—even if we do not have to deal with those who would abuse that trust. There are two specific areas which ICSTIS believe the Committee would find it useful to address.


  We question whether enough strategic thinking is taking place over consumer services in the communications field in the round. ICSTIS handles as many enquiries (120,000 plus) and complaints (10,000 or so) as leading bodies going into OFCOM. Outside of OFCOM we have the ASA, BBFC, ICSTIS and the Internet Watch Foundation. It is now proposed that a separate Telecommunications Ombudsman be established, preferably on a non-statutory basis, to meet our EU obligations. There are obvious issues over how these various bodies interrelate, are supervised and base their respective principals (when it comes to content regulation). There must be a question for industry over how all this is to be funded—particularly once the OFCOM costs become clear. And from the consumer side there must be questions over the challenges in getting simple clear assistance without delays, duplication or regulatory "black holes".


  There are serious issues to be addressed in the communications field around the package of the telecommunications and E-Commerce Directives agreed or currently before member states. These directly affect the consumers of communication services and, again, cannot wait for a Communications Bill. This, in part, is the drive for a Telecommunications Ombudsman.

  More immediately we have the implementation of the E-Commerce Directive. This is before DTI Ministers at present. ICSTIS deals with a range of services on the Internet which use premium rate charging. There are a considerable number of "adult" services offering increasingly sexually explicit material. Some of this content is unacceptable and arguably illegal. It could certainly be considered likely to cause grave and widespread offence and as such can be dealt with under our Code of Practice. Our regulatory arrangements deal also with those services which deceive premium rate customers in terms of pricing, conditions or through some form of technological trickery—for example leaving high-payment dialers running without the consumers knowledge. It is worth bearing in mind that these services are now readily accessible on the Internet through digital television and will in due course be available on 3G mobile handsets.

  Our regulatory model allows us to deal quickly and effectively with these consumer harms when payment is via a UK premium rate number—wherever the service provider is based. The E-Commerce Directive may put this protection at risk if jurisdiction for internet content falls to the member state of operation of the service provider—even if the service is only offered in the UK market and the charging mechanism is through a UK premium rate number issued by Oftel. If this is the case it will be important that the implementing regulations maximise the UK's legitimate ability to act in this area to deal with consumer deception and material which is grossly unacceptable in UK market. If this protection is lost there has to be a serious question over the wider impact on consumer trust in premium charging, in digital television and in new bridging technologies such as 3G mobile telephones and "palm" devices.

  ICSTIS has been making representations to the DTI over the terms of their implementing regulations and over the extent, if necessary, to which authority can be delegated sensibly to bodies such as ICSTIS to continue to provide meaningful consumer protection.

  There are equally important if less contentious issues around telecommunications data protection law. We're already seeing cases of very low cost "spamming" of premium rate numbers and other services to mobile phone owners across the UK. We have the same thing with internet content spammed to net and digital TV users. We do not hesitate in acting when services involving premium charging are offered or operated improperly. But it has to be for the DTI and the Office of the Information Commissioner to establish and implement the policies relating to unsolicited promotions when the technology exists to send out millions of these almost overnight.

  I hope that the attachment give a clear picture of ICSTIS and that this letter strikes a cord in terms of the Committee's current interests. We would be happy to provide supplemental information or attend an oral briefing if this would be helpful.

14 December 2001

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