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Baroness Buscombe: Her Majesty's Opposition also object to the amendments. They are intended to clamp down on unscrupulous foreign premium rate service providers. We are absolutely in favour of that. However, in attempting to tackle the problem, the amendments cast the net across the whole of the premium rate services industry. The Government have acknowledged that that will expose United Kingdom mobile operators to further regulation, despite assurances that the Bill would not extend the scope of regulation in that area, but they believe that we should not mind that if the amendments are the only way to tackle the problem.

The UK mobile industry disagrees with the position adopted by the Government. No pre-legislative consultation was undertaken; the mobile industry was not consulted in any way about the amendments. That demonstrates the confused attitude that the Government have acquired over premium rate services regulation.

The effect of the amendments is to reverse the government amendment made on Report in the House of Commons, as agreed with the industry and with ICSTIS, and threatens to put in place a measure that is unworkable and impractical. The originating operator—that is, the network operator whose customer makes the call to the PRS provider—will be unable to exercise leverage over the PRS content provider to bring it into line with the ICSTIS code.

We believe that the Government should withdraw the amendments immediately and undertake consultation with the mobile industry on how effectively to tackle the problem of unscrupulous foreign PRS providers. The Government should not adopt a blanket approach that will extend the scope of regulation in the area of premium rate services. Indeed, we have heard that the Department of Trade and Industry Bill team this morning met the UK mobile operators, together with Cable & Wireless, to discuss the amendments. That is the first time that they have met the Government to discuss that whole area.

Unfortunately, there is no sign of the Government moving on the issue as a result of that meeting. Although we all agree that there is a problem with offshore

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premium rate service providers, we need more time for discussion and consultation on the issue. The premium rate service provisions are the part of the Bill least consulted on, as they were not in the draft Bill scrutinised by the Joint Committee. We urge the Government to rethink and withdraw the amendments, because they are not helpful to the industry or to the future working of the Bill.

Lord Phillips of Sudbury: I declare an interest, in that my firm has acted for ICSTIS since it was formed. I concur with what the noble Lord, Lord Baker, said about the success of ICSTIS during the years of its existence. When one considers that it is an entirely voluntary body, the success that it has achieved—which is now being followed in Europe, where ICSTIS is the model—says a great deal for both the flexibility and creativity of its functioning.

Although I agree with the noble Baroness, Lady Buscombe, that if there has been insufficient consultation with the mobile phone operators, that is an unhappy state of affairs, my sense is that Clauses 117 and 118 give discretionary powers to Ofcom in effect to underpin and support the work that ICSTIS is doing and has still to do.

The market that we are discussing here is enormous and is growing at a phenomenal rate. Premium rate calls constitute a market of more than 1 billion as it is, with a huge expansion in prospect. It is also worth noting—I am sure that many Members of the Committee are aware of it—that premium rates can be as high as 15 per 10 minutes of call. ICSTIS is bombarded with complaints—especially with regard to services provided from abroad, where bills often run into thousands of pounds. Telephone users are vulnerable to abuse of phones by children, relatives, neighbours and passers-by.

As I see it, the aim of the government amendments is to ensure that the conditions imposed by Ofcom under Clause 117, and hence the codes promulgated under Clause 118, regulating premium rate services, can deal effectively with those services on international numbers—that is the nub of it—to such places as Guyana. It is vital that, so far as possible, the regulatory arrangements do not allow regime shopping by those international providers—often, of course, of porn and the like—designed to circumvent the consumer safeguards that ICSTIS has so successfully provided hitherto.

ICSTIS is not a law unto itself; it is susceptible to judicial review. Many cases have been contemplated against it; a few have been brought; but none that the High Court has thought fit to uphold. So it is subject to the law of the land. Many premium rate services are intrinsically volatile and susceptible to abuse. It is partly because of that that consumers can be grievously misled by rogue services and providers.

The attempt to bring the intermediate links into that regulatory net is essential. Otherwise, frankly, I do not see how that rather fragile web of constraint can survive. But we must be confident that regulators—ICSTIS in this case—can act decisively with the UK

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networks to stop access to unacceptably harmful international services, even where the foreign network does not have a direct contractual relationship with the UK content providers, as is generally required under the original terms of the Bill.

As I said, some breaches of ICSTIS rules by overseas Internet services have resulted in avalanches of complaints. On the understanding that the amendments now under debate affecting call-originating networks are restricted to the circumstances that I described, and subject to the oversight of the High Court, which is not to be underestimated—indeed, that court would strike down any provisions by ICSTIS or by Ofcom that were unreasonable—I suggest that the amendments are not misconceived.

5 p.m.

Lord McNally: Judging by what has been said, it is clear that there are misgivings. In the past, I have given the Government Front Bench the assurance that noble Lords on this side would not divide during the Committee stage. However, that does not apply to government amendments which, if allowed to go through, would then be inserted in the Bill. I ask the Minister to consider whether it would be more prudent to withdraw the amendments at this stage, so as to allow for the consultation that both Front Benches on this side of the Committee have requested.

Lord McIntosh of Haringey: It is most interesting to hear the views of the mobile phone industry as expressed by noble Lords opposite—though more tactfully, perhaps I should say, as reflected by noble Lords opposite. It is not as if we had not heard about such concerns previously. But I must take seriously the comments just made by the noble Lord, Lord McNally. He is threatening rather than promising in his approach. Nevertheless, I shall not be tactless with him or, rather, I shall not be any more tactless than I have already been.

Let us start from where we are in agreement. We are in agreement that we do not want to regulate unnecessarily. We do not want to stifle the growth of the premium rate services industry, because it provides a valuable service; otherwise, we would be shutting it down rather than seeking to regulate it. I believe that we are in agreement that there is the potential for abuse here—indeed, there have been, and are, abuses, as outlined by the noble Lord, Lord Phillips.

Most premium rate services providers are honourable, but there are those who use the services to fleece the unsuspecting public, including children. Again, that is common ground. I believe also that we are in agreement that we do not want to leave loopholes in the legislation. There are loopholes here, especially with international providers. I did not hear any noble Lord express the view that we should not be seeking to achieve something of what these amendments seek to achieve.

We must decide where we are in disagreement, how far those disagreements are the result of misunderstanding, and how far the result of genuine disagreement. One

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misunderstanding needs to be dealt with at this point; namely, the suggestion that, somehow, what we are doing here is to reverse amendments made in another place. That is certainly not the case. I shall gladly write with both chapter and verse to all those who have taken part in the debate. We made amendments in another place, but those now before the Committee complement them. They do not contradict the amendments made in another place.

Then there is the issue of where we may be in disagreement; namely, the degree of regulation of originating operators. It is important to understand how the regulatory regime for premium rate services operates. As I said to the noble Lord, Lord Baker, when dealing with the previous amendment, the Bill provides the outer envelope of services that may be subject to regulation. But the code, or, in the absence of a code, an order made by Ofcom under Clause 119, coupled with the conditions to be made under Clause 117, will provide the detail of the regulatory regime.

Ofcom is already constrained when it comes to approving a code for regulating premium rate services. In accordance with Clause 118 (2)(d), (e), (f) and (g), Ofcom cannot approve a code unless it is satisfied that it is "objectively justifiable", that it does not discriminate unduly, that it is proportionate to its intended effect, and that it is "transparent". The latter are significant constraints. In my view, they are adequate and will provide the right balance to ensure that any code does not unnecessarily constrain innovation. Given the scope for abuse in this area, I do not believe that the Committee would feel comfortable with subjecting customers to new ways of ripping them off. I cannot imagine that any self-respecting, responsible network provider would object to being subject to regulation if it is the only entity in the United Kingdom capable of being regulated. I cannot believe anyone would say that we are prepared to do nothing to help protect customers from being exposed to unscrupulous PRS providers.

I stand four square behind the purpose of these amendments. I do not believe that there is any case to answer of the sort alleged. The only issue upon which I am prepared to give way is that of the alleged lack of consultation. I recognise that a meeting took place this morning, but that those who attended it were not able to influence the Government's thinking on the amendments. I also recognise that it is proper for us to consult. I am grateful for the implied undertaking from the Opposition parties that they will always do the same rather than force us to a vote—

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