PRS Scope Review Presentation to the Industry Liaison Panel

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PRS Scope ReviewPresentation to the Industry
Liaison Panel

• 19 May 2009

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Overview of structure of the document
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• Proposals
• Discusses a number of proposals to improve
  current regulatory regime
• Ofcom actions
• Request PP to look into / implement certain
  proposals.

• Analytical framework
• Used to assess PRS to determine whether there is
  a need for specific PRS regulation by looking at
• PRS value chains
• Characteristics of PRS
• How characteristics can lead to concerns and
  harm
• Analysis of a number of new and old PRS services

• Market developments
• Sets out reasons why now is a good time to
  analyse PRS and the regulatory framework in
  place, and assess whether it is still fit for
  purpose.
• Gives an overview of market developments over
  the past years, and their impact on the PRS
  market.

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Market developments

• Main reasons for specific PRS
• regulation stated in the past
• Lack of customer control over expenditure and,
  consequently, the risk of possible disconnection.
  
• Securing the application of adequate standards to
  PRS and promotions.
• Ensure adequate price transparency so that
  consumer can make informed decision.

• Relevant market developments and
• their implications
• Concern about running up high bills and risk of
  disconnection of landline less of an issue with
  increased mobile and especially prepaid usage.
• Increased mobile phone ownership amongst children
  gives rise to specific issues.
• General decrease in transparency due to increase
  in number ranges on which PRS can be provided and
  the tariffs of PRS services.
• A number of the new PRS number ranges cannot be
  barred by consumers.

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Analytical framework

• Supply-side characteristics
• Complex and fragmented value chain
• Large number of suppliers active at different
  points in the chain
• PRS supplier rarely bills customer and
• Low entry and exit barriers.

• Potential consumer detriment
• Can consumer make informed decision at time of
  purchase?
• Does consumer have redress when problems arise?
• Consumers refrain from using PRS.

Different types of potential harm are discussed,
where available, underpinned by research and
examples.

• Demand-side characteristics
• Experience good
• Billsupply separation,
• Billed by OCP
• Low price
• Impulse purchase
• Content issues and
• Appeal to children.

Conclusion There is potential for negative
outcomes and hence consumer harm. We therefore
believe there is a need for a specific PRS
regulatory regime.
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Application of the analytical framework

• In the document we apply the analytical framework
  to a number of old and new PRS
• Mobile call to 09 horoscope
• Reverse-billed SMS ring-tone subscription
• Payforit (purchase of a game)
• On-portal purchase of football goals
• 0800 mumdad
• The aim of this approach is to
• Agree with stakeholders that we identified the
  correct characteristics of PRS and have drawn the
  right conclusions regarding the potential for
  harm
• Based on these characteristics we will assess
  with stakeholders whether current regulatory
  framework is fit for purpose
• Communications Act
• PRS Condition and
• PhonepayPlus Code of Practice.
• Please note that this is a policy discussion of
  the services, not Ofcoms legal interpretation of
  the Communications Act as to whether a service is
  PRS or not.

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Proposals to improve current framework

• General theme Current PRS regulatory regime
  functioning quite well. Some improvements can be
  made though.
• Improvements grouped in three areas

• Empowering suppliers to act responsibly
• Centralised registration scheme and/or database
• Analyse current availability and functionality
  of call barring facilities

• Facilitating effective consumer redress
• Expand the PP number checker
• PP to examine introducing formal complaints
  procedures for SPs and IPs

• Facilitating consumers to make informed
  decisions
• Study into introducing pre-call announcements
• Introduce new transparency obligations for PRS
  advertisements

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Planning and next steps

• Consultation closes on 24 July 2009 Ofcom open
  to holding workshops and bilateral sessions
• Ofcom will subsequently issue a Statement
  summarising submissions and outlining next steps
• PhonepayPlus may examine several issues in more
  detail, with a view to incorporating aspects in
  the 12th Code (e.g. number checker, registration
  scheme etc)
• Ofcom may issue further, more specific,
  consultations later this year (pre-call
  announcements, call-barring etc)
• Ofcom will take account of submissions when
  considering revision of PRS General Condition,
  and possible submission to BERR on change to
  Communications Act 2003.