Memorandum submitted by the Chairman of
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 fieldon 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 telephonyperhaps
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 confidenceeven 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 fundedparticularly
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
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 trickeryfor 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 numberwherever 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 providereven 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
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