The imminent new 11th edition of the Code of Practice of the premium rate line regulator ICSTIS contains some notable changes from the previous version.
Topic: Telecoms
Who: Independent Committee for the Supervision of Standards of Telephone Information Services
Where: London
When: October 2006
What happened:
The Independent Committee for the Supervision of Standards of Telephone Information Services ("ICSTIS"), the independent body that regulates all premium rate services has finalised the draft eleventh Code of Practice ("new Code"). The new Code has been notified to the European Commission. Ofcom is expected to approve the new Code by the end of October 2006 and the new Code should come into force approximately two months after Ofcom approval.
The new version of the Code can be found at: – http://www.icstis.org.uk/pdfs_code/11thCode_final_draft.pdf. The new Code has been split into two parts and has been simplified, with more detailed provisions to appear in 'Help Notes'. The first part contains all the absolute requirements on service providers and network operators. The second part of the Code contains the necessary definition and administrative provisions. The proposed new version follows recent in-depth reviews of ICSTIS' existing rules and aims to ensure that consumers are protected in the light of technological change and an increase in the volume and types of premium rate subscription services that are available nowadays. The main proposed amendments can be summarised as follows:
1. Who is a Network Operator?
The new Code contains a new definition of what constitutes a Network Operator ("NO"), to ensure all appropriate bodies conduct proper due diligence, (very prescriptive requirements) on service providers with which they contract and can bar access to services and withhold revenue where necessary. NO's will be considered all entities who require approval under Condition 11 of the General Conditions of Entitlement issued by Ofcom (such as those providing Publicly Available Telephone Services) and have a turnover exceeding £40 million, or those that have a direct network connection with such a company. The NO definition seeks to distinguish between those companies offering communications carriage and billing services (no physical network, but who bill the public direct) and those in an increasingly complex value chain who provide, bundle, aggregate or in any other way facilitate, or manage content. The only companies that will be considered to be NO's for the purposes of the new Code are those that are obliged to apply for approval or those that have a direct network connection (defined as a person that had provided the switching equipment) with such a company. There is also a VoIP provision which identifies the provider of the access facility as the NO.
2. Does the Code distinguish between large and small service providers?
According to 1.3, the new Code applies to all providers of Premium Rate Services ("PRS") in the UK, regardless of the likelihood of consumer harm arising. For example, arrangements with well known blue chip brand name service providers ("SP") are dealt with in the same way as arrangements with higher risk SP's (such as smaller SP's providing SMS promotions). The result is that provisions such as payment terms of 30 days will apply to arrangements with all SP's even though there is little or no risk of consumer harm when dealing with large brand name SP's.
3. Additional administrative obligations on NO's
NO's are subject to a number of onerous obligations under the Code. Not only is the NO required to provide details about itself, i.e. evidence that it meets the criteria to be classified as an NO, (which will be subject to compliance checks by ICSTIS and random checks thereafter), but it is now also required to assume certain responsibilities in relation to the SP's operating on its network. This provision marks the cornerstone of the new Code and should be in the forefront of the minds of all who are responsible for bringing on new SP's and maintaining relationships with existing SP's.
In particular, the NO is now required to take all reasonable steps to ensure that the details provided by the SP's are accurate and it must also take reasonable measures to satisfy itself that the SP's are complying with the Code (the NO's are responsible for bringing the Code to the SP's attention and for requesting a copy of the service provider registration form lodged with ICSTIS, as well as their acknowledgement of receipt by ICSTIS). Even though we do not yet have any clarification on what taking 'reasonable measures' entails, these requirements are likely to require some level of on-going monitoring of services using numbers/codes allocated by the NO. As part of NOs' responsibility in protecting consumers, NO's shall not make payments to SP's for at least 30 days after the use of the premium rate service to which the payments relate.
In terms of sanctions, NO's are responsible for any shortfall in payment of SP fines, administrative charges or shortfalls and any other non-compliance as a result of an NO's failure to comply with an ICSTIS direction or the 30-day rule.
Where an NO has failed to meet its obligations, the new Code, at section 9, allows ICSTIS to impose sanctions directly on the NO.
4. Information Providers ("IP")
In certain circumstances, ICSTIS may now pursue processes directly against IP's, so they must ensure compliance with the new Code.
5. General consumer protection driven provisions
There are a number of protective provisions that are designed to stop the consumer being misled and/or 'harmed'. Under the 10th edition, SP's must protect consumers from harmful or offensive material. Under the new Code, the inclusion of the word 'distress' extends the scope of this obligation. Similarly, prior permission is required for internet dialler services. An example of a measure to avoid the consumer being misled is that SPs must provide the "likely charge" for calls, which should cover the higher origination costs charged by some originating NOs for calls to PRS.
6. Promotions
More specifically, in the context of promotions, whether during advertising time or a TV programme, where costs can generally exceed £2.00 spoken pricing information must be provided in the form of a voiceover.
The direct contact details of the relevant SP or the IP must be provided so that the consumer can contact the SP or the IP without using PRS or otherwise having to incur unreasonable expense.
The treatment of "buy one get one free" offers has now been brought in line with the relating provisions of the CAP Code. Such offers will be allowed provided that the second premium rate product or service is of at least an equal value to the first and is supplied at no extra charge.
Where a 'STOP' command is used in a service, clear instructions on its use must be given, including the necessary information on the placing of 'STOP' within any message to be sent by the user. The SP must make no further charge once the consumer has made this command.
7. Live services
Prior permission will not be required for all live services. This is on the basis that ICSTIS sees little point on imposing a prior permission requirement on live services that carry no greater risk than some non-live services. As such, the ICSTIS prior permission requirement will remain applicable for all live services subject to a published list of specified exceptions (e.g., technical support services and other services identified by ICSTIS as low risk).
ICSTIS currently operates a prior permission regime on all premium rate text chat services and directory enquiry services. In relation to text chat, the requirement for prior permission will be removed on the basis that specific requirements contained in prior permission certificates, such as the age restriction, are contained in the new Code. ICSTIS is proposing to remove the prior permission requirement on the same basis.
The new Code states that to participate in a chat service the user must be authorised and be 18. However, non adult text chat services can be offered to 16-17 age groups, provided advertising for these services is not targeted at under 16s. ICSTIS has also included the provision that for MMS and SMS services the STOP command must be available to all users.
The new Code has merged the requirements for both types of chat service (virtual chat services (including text chat), anything excluding live conversation. lSP's providing virtual chat and SMS and MMS chat services must pay reasonable and valid claims for refunds. This is on the basis that most users who complain are seeking a refund of money spent in taking part in the service.
8. Pay for product services
ICSTIS considers pay for product services to be those where the product/service is delivered either to a geographic address or by electronic means (e.g., ringtone download) and for which the call must be completed before the product/service will be delivered. The new Code separates subscription services and pay for product services (pay for product services do not include products received as part of a subscription service, but include physical and non-physical products (e.g. receipt for a bar code for presentation at a later time for car parking), which the user can receive and store and which are not primarily intended for use on the device). The pay for product section only applies to products bought as a single purchase, which would include all physical and electronic content such as an information alert and video. All products bought under a subscription are dealt with elsewhere in the Code, so single non-physical products such as ring tones and wallpapers have been excluded from the pay-for-product definition.
If a pay for product service can cost more than £5 the SP must keep records of the names and dispatch addresses of callers for a minimum of 6 months and the service must require an active confirmation from callers that they accept that their personal and delivery details will be retained and made available in the case of a claim for unauthorised use. In addition unless permission is specifically granted to the SP by ICSTIS, SP's must ensure that pay for product services do not cost more than £30, an introductory message is provided giving the likely cost of the service and how the service works, the service only takes place once to enable delivery of the product and as soon as the £30 limit has been reached there is automatic termination.
9. Procedures and sanctions
Complaint Investigation
Where a Code breach has been caused by an IP who accepts responsibility for the service and full responsibility for sanctions levied, ICSTIS can deal directly with the IP, where they think it is appropriate to do so. However, the SP will remain responsible for compliance if the IP fails to comply with any sanction imposed by ICSTIS. Where the ICSTIS Committee imposes a bar on services, ICSTIS will look to the SP to comply with the service bar direction.
Emergency Procedure (EP)
The ICSTIS Committee must give approval before the Secretariat can invoke an EP. In cases where the Secretariat has Committee approval for an EP and, within 10 days after the EP is invoked, other cases with substantially the same characteristics come to light, the Secretariat need not seek further approval from the ICSTIS Committee for those other similar cases. This means that the Secretariat in specific circumstances is empowered to invoke the EP without further Committee approval.
In some cases an SP may be able to rectify breaches immediately where a service is the subject of an EP. If an SP can take steps to make the service the subject of EP compliant with the Code then it should be possible for the SP, with the agreement of the ICSTIS Committee, to operate the amended service pending the outcome of the investigation. This would not restrict the Committee from imposing a sanction. SP's are therefore afforded the opportunity to apply to ICSTIS for an urgent review of the use of the EP and the new Code sets out the procedure to be followed at 8.4.3.
Refund
Where a refund is ordered as a sanction against an SP and if directed by ICSTIS, terminating NO's should make revenue withheld by them available to consumers for three months after adjudication. The retention obligation of the NO shall cease three months after the adjudication and any time period for appeal to the Independent Appeals Body or the conclusion of such appeal or, if sooner, when the retention has been fully expended.
The provisions have been re-drafted to clarify the order in which refunds are paid out,i.e. customer refunds, fines, administrative charges etc. ICSTIS also intend to issue a 'Help Note' to demonstrate how this will work in practice.
Review
Reviews are informal and require no legal representation. On reasonable grounds, ICSTIS may review determinations made in respect of applications for prior permission and adjudications and/or sanctions. An SP or applicant for prior permission may request such a review.
Oral Hearings
The Chairman of the hearing now has the power to give directions in every case to enable the hearing to happen quickly and fairly. This includes an express power to convene a conference for the purpose of providing directions if it is deemed necessary. Where it is reasonable to do so the Chairman has the power to strike out a case where a direction is not followed. The aim of the amendments was to minimise delay and costs to parties.
10. Appeals
The current ICSTIS proposal is to bring the grounds for appeal against oral hearings involving SPs and adjudications involving NOs in line with general public law procedure. Appeals may be made to the Independent Appeals Body ("IAB")on the following grounds:
– the disputed decision was based on error or fact;
– the disputed decision was wrong in law;
– ICSTIS exercised its discretion irrationally in reaching its decision.
11. Framework
The definitions have now been moved to this section of the new Code.
Why this matters:
It was as long ago as July 2005 that ICSTIS issued a consultation document seeking views on a new Code of Practice. The changes in format and approach make the Code more user friendly and the regulator has clearly made a significant effort to take into account the 29 public responses it received during the consultation period.
