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icstis

The Independent Committee for the Supervision of Standards of Telephone Information Services ACTIVITY REPORT 2002 ......

CSTIS, the Independent Committee for the ISupervision of Standards of Telephone Information Services, is the regulatory body for all premium rate telecommunications services. We are non-profit making and VISION, MISSION & VALUES CONTENTSThe table below shows the comprise nine remunerated part-time Chairman’s Statement 2 Committee members, supported by a full- time Secretariat. The Committee 4 Our vision We regulate services in their entirety – their Director’s Report 6 As the regulator for premium rate services, our vision is that content, promotion and overall operation – anyone can use these services with absolute confidence. 2002 – The Year In Figures 8 through our Code of Practice. We investigate The ICSTIS Helpline complaints, and have the power to fine ICSTIS And Complaints Our mission companies and bar access to services if the In pursuit of our vision, we create a Code of Practice that sets Text Message Complaints Soar 12 ABOUT US Code is breached. We can also bar the appropriate standards for the promotion, content and overall The SMS Guideline 13 individual(s) behind a company from running operation of premium rate services, taking account of any other premium rate services under any Prior Permissions 14 those who may be especially vulnerable, particularly children. company name on any telephone network Copy Advice And Guidance 15 We advise providers of premium rate services on compliance for a defined period. with our Code. If they do not comply, we promptly enforce 2002/2003 – A Quarterly Snapshot 16 its provisions to minimise any consumer harm caused. The ICSTIS Forum 20 So that we can continue to protect and inform ICSTIS Network Operators Committee 20 consumers faced with constantly changing technology, we The Communications Bill 22 regularly review our standards, consulting widely to obtain WHAT ARE PREMIUM RATE SERVICES? a cross-section of opinion. Ofcom 23 The Code of Practice 24 Our values ICSTIS Guidelines 25 In carrying out our mission, we are committed mechanisms to ensure that consistency remium rate services offer some form of Services are advertised on either . Directory Enquiry Services 26 content, product or service that is charged 090 dialling codes or, in the case of text to the following values: . co-operative engagement with the constantly P . Keeping An Eye On New Technology 26 to users’ telephone bills and are accessible by services, on four or five digit short access . staying aware of, and responsive to, the changing premium rate industry as the best ICSTIS Literature 28 phone (fixed and mobile), fax, PC or codes followed by a descriptive key word ways in which consumers, or particular sets of . means of securing its support for our work interactive TV. Typical services include TV (for example, 82828 VOTE or 62626 CHAT). consumers, may be vulnerable when using . working with legislators and other regulators to Consumer Protection In 2003 28 premium rate services and striving to ensure ensure that those who influence the operation votelines, scratchcards, technical helplines, In some instances, such as interactive Adjudicator’s Report 2002 30 phone chat, mobile ringtone and logo TV where viewers make ‘calls’ using their that they receive the necessary protection of premium rate services fully understand and Accounts – Year Ending 31/12/02 32 . independence at all times from the sector, support our work downloads, fax polls, horoscopes, sports remote controls, the premium rate number . results lines and interactive TV games. may not be shown. Premium rate charging companies or individuals that we regulate or . maintaining our understanding of relevant that fund our work technological developments so that our Services currently vary in cost from 10 pence may also be available on international . per call to £1.50 per minute, with the money dialling codes beginning ‘00’. . openness, fairness, even-handedness and regulation remains targeted, proportionate paid by users for services shared between the In addition, we regulate the new impartiality when dealing with any . and allows innovation and investment telephone company carrying the service and Directory Enquiry (DQ) services – offered on individual or company involved in the . being accessible to consumers and helping the organisation providing the content. 118 numbers – that were introduced in provision of premium rate services them understand how premium rate services . consistency when making decisions and work so that they can better protect themselves Approximately 30,000 services are in December 2002 following Oftel’s decision . operation at any one time, generating to open up the DQ services market to imposing sanctions relating to non-compliance . acknowledging the important contribution estimated revenue of almost £1 billion in 2002. competition. with our Code of Practice, and having in place made by all members of the organisation.

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codes and conventionally-dialled 090 numbers. We recognise that new rules are not the answer to every situation and regulators. We want to continue the dialogue Its success, however, depends on the trust and hope, through a series of industry partnerships, to do more to help we have through our ICSTIS Forum meetings, confidence that consumers have in paying for ‘ the bilateral sessions with representative consumers make informed choices and, consequentially, to remove content in this way. bodies, company visits, trade events and Innovation and investment by businesses regulatory controls where these may no longer be necessary workshops. We are continually looking at ways offer the public new services and new ways of in which we can most effectively listen and paying for them but problems arise when risen by 43 per cent to 11,572. This is the by legislation that ensures that’ we have the learn from our partners. technology develops faster than public highest annual level of complaints in our support necessary to enable us to do our Just as 2002 was another eventful year, understanding and when it delivers things that history. While the increase is low in proportion work effectively. 2003 is proving to be the same. I am deeply are not universally desirable. Technological to the overall growth in use of premium rate With the end of network licensing, the indebted to my current Committee colleagues advances allowing easy and widespread use of payments, no increase can be a cause for Government decided that the co-regulatory for their commitment and enthusiasm, and to premium rate charging are paralleled by the celebration. New forms of spam marketing, relationship should be based on an Ofcom Andrew Millard and Sir John Bailey who left considerable scope for abuse of consumers by most obviously text messaging, e-mails and power to recognise a regulator and Code of the Committee in 2002. Andrew helped to those who set out to deceive consumers for a faxes, allow promotions to be sent to millions Practice, and to set limited obligations on build our understanding of the premium rate quick and ill-gotten profit and who are willing of people overnight. This so-called ‘marketing’ network operators to support these sector, while Sir John was, in many ways, the to offend, spam and ‘scam’ to this end. is often indiscriminate, and the content is all arrangements. We are grateful to the heart and soul of the Committee through his Mobile telephony is an important area as far too often deceptive and inappropriate to Government for bringing this forward in the work, firstly as the Adjudicator and then as as premium rate charging is concerned. those it reaches, including millions of children Communications Bill, and are glad that these Chair of our Finance and General Purposes Today’s handsets can carry visual content as with mobile phones. arrangements have broad backing from Sub-Committee. well as text, while video streaming will be As well as dealing with complaints about industry and consumer groups and cross- I must also thank Julian Farrand, the CHAIRMAN’S STATEMENT available to the mass market soon. This offers services, we play a key role in handling public bench support in Parliament. current Adjudicator, and everyone in the wonderful potential for consumers – and enquiries. Our helpline dealt with almost The main aim has been continuity in terms Secretariat for the way in which they have 2002 was another year of change for the communications sector, for premium rate businesses. It must not be wrecked by rogue 110,000 calls in 2002, giving advice, among of regulatory coverage and of the broad managed to deal with the increasing volume charging as a payment mechanism and for ICSTIS as a regulator. We have had to conduct and the uncontrolled promotion and other things, on premium rate charging on the responsibilities of network operators and of work with professionalism and good spirits learn new definitions and new concepts, but there are two words which I believe run delivery of sex, gambling or other services Internet and on digital television – two areas service providers. We aim to show that this throughout. through all that we are doing and all that is happening around us: trust and confidence. inappropriate to and unwanted by many in the of widespread consumer misunderstanding. approach is the best way of delivering population. Indeed, consumer information, education regulation, where it is necessary, in an efficient This is not something that we, other and empowerment remain central to our and effective way. e aim to set and enforce appropriate rate payments for their income – chat and regulators, network operators or Government plans for 2003. It is important to us that we remain as open Wstandards in our Code of Practice, work certain competition services come to mind. agencies can deal with in isolation. However, We recognise that new rules are not the and accessible as possible. We want to build with businesses to ensure compliance with For many others, however, premium rate is by using targeted, proportionate and effective answer to every situation and hope, through a on our relationship with network operators, these, and do all we can to ensure that the simply one part of the total picture in terms of enforcement, and a real focus on informing series of industry partnerships, to do more to consumer bodies, Government and other Sir Peter North CBE QC public has the information and understanding income and customer interaction. This is most and assisting consumers, we can achieve high help consumers make informed choices and, necessary to make informed decisions. This is obviously the case with broadcasters but it is and sustainable levels of public trust and consequentially, to remove regulatory controls the message at the heart of our new ‘Vision, also true of charities, PC manufacturers and a confidence. where these may no longer be necessary. BIOGRAPHICAL DETAILS Mission and Values’ statement featured in large part of the print media. All of these issues are evident from our Premium rate regulation is directly affected Sir Peter North CBE QC is the Principal of Jesus College, Oxford, and was Vice-Chancellor of this Report. Speaking last year, a Nokia spokesman said: statistics for 2003. Premium rate charging is by new telecommunications framework, the University from 1993-97. He is a lawyer by profession and is an Honorary QC. He has been I refer to premium rate charging as a “Premium rate charging is a ubiquitous model increasing across the board. With liberalisation licensing and data protection legislation, as actively involved in law reform in this country and abroad since serving as a Law Commissioner ‘payment mechanism’. This may seem self- for transactions and a necessary part of the of the Directory Enquiry services market and its well as by new e-commerce laws and plans to from 1976-84. He has chaired a number of major policy reviews on behalf of government, evident but this description, rather than mix, no matter what other billing methods may use of premium rate based charges, total consolidate communications regulation into a the most recent of which was the Independent Review of Parades and Marches in Northern referring to a ‘premium rate industry’, reflects a emerge.” This statement seems even more revenue for premium rate services had risen single body, Ofcom. We share the view that Ireland which resulted in the Public Processions (Northern Ireland) Act 1998. From 1985-88, shift seen over the last two years. There are still valid today, with premium rate charging using at the end of 2002 to almost £1 billion. premium rate regulation should continue to Sir Peter also led the review of Road Traffic Law in the UK. sectors that depend exclusively on premium digital reverse-path technology, mobile short At the same time, complaint levels have operate on a co-regulatory basis, underpinned

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5 THE COMMITTEE

.. 2 ..1 Simon Armson has been employed by The Committee consists of nine remunerated part-time members who have no active involvement Officer of the ITV Telethon. He also has a the Samaritans since 1984 and has been the in the premium rate industry. The current Chairman of the Committee is Sir Peter North CBE QC. background in consumer affairs journalism. Chief Executive since 1989. He was Chair of The full Committee meets approximately once every month to discuss issues and policy, and .. the Telephone Helplines Group from 1992-96 is supported in its work by a range of sub-groups, each responsible for advising it on areas that ..7 Elizabeth Stallibrass was a trade union and saw its successful development into the require more in-depth and specialist analysis. official for a number of years before becoming 6 Telephone Helplines Association. He also The Complaints Panel meets at least every fortnight to adjudicate on complaints received by the involved in the field of consumer protection. chaired the BBC Radio Helpline Advisory Secretariat and to consider applications from service providers wanting to run services that require This led to her appointment, in 1990, as Group from 1995-98. In 1996 he became prior permission. The Consumer Sub-Committee focuses on issues relating to consumers and their regional manager for the energy industry the UK representative of the International use of premium rate services across all platforms, while the Finance and General Purposes regulator, now Ofgem, where she stayed for Association for Suicide Prevention and in Sub-Committee is responsible for overseeing expenditure and presenting ICSTIS’ annual budget. some 10 years. She was closely involved with 2001 was elected to the Institute’s Executive .. both its economic regulatory role and Committee. In addition, he became a ..3 Nicholas Higham has been a partner in as Editor of Channel 4 News and board developing a customer protection regime. Trustee of ChildLine in 1999 and was the City law firm of Denton Wilde Sapte for the member of ITN. She is a member of the Radio She has since worked as a freelance consultant 8 4 appointed a Mental Health Act Commissioner past 12 years, during which time he has led the Authority, the Human Fertilization and in the energy sector, and is currently a member in late 2002. firm’s telecommunications and technology Embryology Authority, the Regulatory of the regional Postwatch committee, practices. He also has extensive experience of Decisions Committee of the Financial Services representing the interests of postal service .. ..2 Baroness Joyce Gould of Potternewton intellectual property law, data protection and Authority, the Criminal Injuries Compensation users, and the Rail Passengers Committee, has been politically active for many years e-commerce. Appeal Panel, and was recently appointed as representing the interests of rail users. and has held several posts at a national level .. Deputy Chairman of the Ofcom Content .. within the Labour Party, including Director of ..4 Kate Markus is a barrister specialising in Board. ..8 Mary Symes worked in the legal public law. Previously, she was Senior Legal departments of two major industrial companies Organisation from 1985-93. In 1993 she .. entered the House of Lords and became an Adviser at Brent Community Law Centre and ..6 Joe Simpson is Managing Director of after training as a barrister. Following a family Opposition Whip and Spokesperson on the was Chair of the Law Centres Federation. She BCS, a media consultancy business. Previously career break, she was involved in project 3 Citizen’s Charter (1994-96) and on Women is Chair of the Public Law Project and a former Media & National Programme Director for the management and fund-raising activities for (1996-97). Since 1997 she has been a member of the Legal Aid Board. She is also a New Millennium Experience Company, he has both charities and businesses, as well as Government Whip in the House of Lords and part-time Employment Tribunal Chairman. also worked for BBC Worldwide, DTN and the working for the Citizens Advice Bureaux. She is also a non-executive director of Queen Victoria works closely with the Leader of the House. .. World Learning Network, where he planned She is also a deputy chairman in the Lords, ..5 Sara Nathan has had a wide range of their educational strategies, and as Chief Hospital NHS Trust and Moat Housing Group. and an active member of several All-Party experience in both the broadcasting and Parliamentary Groups and Labour Party regulatory worlds, firstly with BBC Television Thank You: Sir John Bailey and Andrew Millard left the Committee in 2002. Backbench Groups. and then BBC Radio, culminating with a period The Committee is very grateful to them both for their significant contributions to its work.

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efore joining ICSTIS I worked at the the Ofcom-designate bodies and industry behind a problem may vary, the level of Alongside the rogue services that we target, we have seen thousands of BCabinet Office developing the Better on this issue so successfully. co-operation in dealing with it will differ and fun, useful and compliant services. We have sought to be proportionate in Regulation Task Force’s philosophy that We were also able to re-introduce multi-party the scale of harm caused will make a big ‘ regulation should be based on the principles chat services for adults. Years ago, these caused difference. our responses, imposing tough sanctions where wilful harm is evident of transparency, proportionality, consistency major problems involving unauthorised calls There were real problems in 2002 with or agreeing corrective action where possible when this is not the case and accountability. How relevant were these and high bills. However, through a mix of spend services promoted on an unsolicited basis. It is to our work in 2002? caps, bonds and improved technology, we felt hardly surprising that promotions sent out in DTI on new rules for dealing with complaints Our administrative burden has also’ We published a new, less prescriptive able to allow them to operate again for the their millions result in high levels of complaints involving cross-border services, but acted grown. We are upgrading our IT facilities and Code of Practice, with supporting Guidelines first time in 10 years. to us. I am sure too that there are a large ourselves using emergency powers to bar two databases, and managing relationships with a showing how it might be interpreted. By mid- I am grateful for the way our Permissions number of angry complainants who failed to harmful services based on the Continent. growing number of networks. I would take the year, we had started consultation on Code Team handled this and for their efforts in the find or get through to us, or who, if on pre-pay Alongside the rogue services that we target, opportunity to point out that our operating A year ago I wrote about amendments relating to how sexual regulation of the liberalised Directory Enquiry mobile phones, had little idea of who to we have seen thousands of fun, useful and costs actually fell in 2002 in real terms. living in “interesting times”. entertainment services could be advertised, services market. I hope that those working with complain to and no phone bill to produce to compliant services. Where necessary, we have However, I would be concerned over the I didn’t know the half of it! given that many promotions for such services us felt that we listened and were able to come be able to back up their complaints. been able to sort out operational difficulties longer term if budgets fell in areas that were In his Statement, Sir Peter North would be consistent with the context of up with answers that were proportionate to Some of the services promoted in this way and minor Code breaches informally. In all this, critical to our effectiveness. We need the highlights a number of changes many mid-shelf and other publications. individual services yet consistent with our were seriously harmful – corrupt Internet we have sought to be proportionate in our Committee to be out meeting the industry, and their implications for ICSTIS. We worked hard on managing the transition overall approach. diallers promoted by spam e-mails resulting in responses, acting without hesitation and we need the necessary IT, and we need I would like to look at some necessitated by the creation of Ofcom. Paul Consistency in enforcement work is difficult bills of hundreds or thousands of pounds, and imposing tough sanctions where wilful harm is trained personnel to deal with cases specific trends and at how some Whiteing, Suhail Bhat and others deserve to achieve and not always apparent to outside intrusive text messages sent to children by evident, or agreeing corrective action where professionally and in a timely manner. These of our services have developed credit for managing relations with the observers. Individual cases may be very different people soliciting costly return calls. We also possible when this is not the case. are all things we are addressing in 2003. to meet new demands. Department of Trade and Industry (DTI), although seemingly similar. The degree of intent saw fax polling services sent to places of We have also worked to improve our I hope I have described an organisation employment despite being of no apparent service to the public and reduce operational which is not afraid of change and which tries relevance to the businesses concerned. costs. We added a consumer-focused section to listen. I think we do pretty well in living up DIRECTOR’S REPORT We have acted decisively to stamp out to our website, and upgraded our helpline to the Better Regulation Task Force’s such practice. In the case of rogue Internet technology and recruited more staff. We have principles, but I am in no doubt of the need diallers, we have barred and fined individual been working with BT and other networks to for yet more change if this is to remain true. operations. We have taken similar action see if phone bills can more clearly explain In thanking colleagues and Committee against the operator of a series of misleading premium rate traffic. members, and all those in the industry who direct mail ‘competition’ services. There is a Forth Bridge aspect to this: every have worked with us, I am not having an As for SMS promotions, we are talking with time we improve understanding of one service ‘Oscar’ moment. The people who benefit from the mobile networks about stopping spam type or technology, another one comes along all this work are the public – people who we messaging and the premium rate calls it creating further consumer confusion. The hope can, in Sir Peter North’s words, use is intended to generate, and have raised the charging to a phone bill for ‘red button’ premium rate services with trust and issue directly with the terminating networks interactive TV services charged at a premium confidence. most involved in this activity. We have also rate is a case in point. used emergency procedures, bars and fines of While the vast majority of such services up to £50,000 against the service providers operate without problems, there is clearly a responsible to end this malpractice. very low level of awareness among consumers Our complaints procedures were affected about how these services are charged for. We last year by the E-Commerce Directive. As receive thousands of calls each month on this a result, we removed our prior permission subject. Our helpline and high bills staff are requirement for Internet services using unsung heroes dealing with confused premium rate charging. We worked with the consumers. George Kidd

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he UK premium rate industry continued mobile termination basis. More and more Tto thrive in 2002, consolidating its position businesses – including broadcasters, as arguably the largest and most stable market publishers and public sector bodies – are of its kind in the world, with estimated annual entering the industry and using text revenue nearing the £1 billion mark for the messaging as a way of communicating with first time. potential customers. From fixed lines alone, an estimated 584 Official figures for the size and value of the million call minutes were spent on premium premium rate SMS sector are not yet available, rate services during the year, generating but reliable industry estimates, based on the , Oftel approximate revenue of £520 million. Some premium rate SMS market accounting for further 36 million call minutes were spent on seven per cent of the overall SMS market, premium rate services from mobile phones, indicate that approximately £96 million in generating estimated revenue of £88 million.* revenue was generated in 2002 from some With almost 50 million UK mobile 1.1 billion text messages. 2002 – THE YEAR IN FIGURES On top of this can be added the UK

Market Information Update subscribers by the end of 2002, we also saw huge growth in the range of premium rate Directory Enquiry services sector – worth £260

*Source: *Source: SMS on offer, on both a mobile origination and million in 2002 – and now regulated by us.

THE ICSTIS HELPLINE

. . We operate a free helpline – 0800 500 212 – he widespread use of premium rate handling around 20,000 calls each month – phone bills. These discussions have been . Premium Rate Enquiries . Out of Remit Calls for consumers with queries or complaints Tcharging on mobile phones, the nearly a quarter of a million calls a year. promising and we are confident that more 5,368 calls on average each month related 664 calls on average each month concerned Internet and interactive TV, combined with We also invested in a new automated consumer-friendly information will appear to queries about call charges, premium rate matters that fell outside our remit, such as about premium rate services. Growing low awareness among consumers of how telephone system to give callers much more on bills later in 2003. dialling codes, international numbers on bills national and local rate numbers. Callers consumer demand for information and many of these newer services actually work information relating to their queries. For . and general information about the premium are directed to the relevant organisations. advice about premium rate services has example, callers can now enter a premium . Complaints rate industry. These general enquiries also and are paid for, has undoubtedly been a . seen the number of calls handled by major factor behind this increase. rate number and be told the nature of the An average of 192 calls each month in 2002 include straightforward number checks . Fax Referrals our operators leap from 54,000 This total, however, does not tell the whole service without having to speak to an involved complaints under the Code of where the operator automatically knows the An average of 61 calls each month were in 1999 to 107,534 in 2002. story as many callers simply fail to get through operator. Practice about specific premium rate services premium rate service in question. received from people wanting to remove to an operator because of the constantly high We also added a new section to our and/or their promotions. All complaints are . their contact details from fax mailing lists. call levels. To address this surge in demand website, detailing the 30 or so most recently logged and investigated, with callers advised . Premium Rate Number Checks Callers are directed to the Fax Preference and to try to ensure that as many callers as and commonly queried premium rate of progress and the outcome by letter or An average of 2,676 calls each month were Service registration line. possible are connected to the helpline, much numbers and the services behind them, telephone. We also received calls from bill- from bill-payers enquiring about specific work was carried out during the year to enabling consumers to check numbers payers with high bills generated as a result UK and international telephone numbers. improve the service offered. instantly without having to call the helpline. of calls made to premium rate services. If Operators can check specific numbers while Additional operators were recruited and In addition, we have been in discussions apparently unauthorised calls to live the caller is connected, advise of the nature extra lines installed to increase our call- with a number of telephone networks about entertainment services or virtual chat services of the services operating on those numbers handling capacity. Figures for the first months the limited information about premium have taken place, callers are advised of the and give service provider contact details if of 2003 suggest that the system is now rate services given to consumers on their relevant claims procedure. appropriate.

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HOW MANY COMPLAINTS DID WE RESOLVE IN 2002?

2002 2001 Total complaints resolved 11,552* 7,214 ICSTIS AND COMPLAINTS Requiring investigation: Complaints – no breaches raised following investigation 2,502 1,172 Complaints about high bills involving premium rate services 2,574 1,745 . We received 11,572 complaints in 2002, he number of complaints remains Our statistics clearly back this up. . Complainants and their views Complaints not upheld by the Committee following investigation 52 25 relatively low given the growing number Complaints about services promoted by text about our service a rise of 43 per cent on the previous T Complaints upheld informally following investigation 173 234 year and the highest annual level of of services available to consumers, the message, for example, increased almost We are committed to improving the way in Complaints upheld formally following investigation 3,326 1,537 complaints received in our 17-year history. millions of calls made to services each year eight-fold in 2002 to 1,210. Typical concerns which we deal with complaints. We aim to Over 98 per cent of the complaints and the overall growth of the industry. included the unsolicited nature of the ensure that all complaints are processed Not requiring investigation: However, the increase in complaints is messages, the misleading descriptions of received came from members of the public. efficiently and are fully considered, and that Complaints – no case to answer under the Code 844 1,104 worrying. what was being offered, and either inaccurate complainants are kept informed of progress Complaints – not within remit 813 601 The principle reason for the surge in or a complete lack of pricing information. throughout. complaints has undoubtedly been the Further information about text message Our Quality of Service Questionnaire is General complaints about premium rate services 619 452 emergence of new forms of unsolicited (or promotions and complaints in 2002 can be an essential tool in helping us to continue Technical difficulties 492 256 spam) marketing, particularly text messaging. found on pages 12-13. to improve the quality of service we provide. Removal of contact details from fax mailing lists 157 88

Text, e-mail and fax technology enable Unsolicited e-mail promotions also caused It enables us to test public opinion of our in 2002 *11,572 complaints received promotions to be sent to millions of people serious consumer harm throughout the year. complaints-handling processes, with overnight. Such so-called ‘marketing’ is often Almost 1,200 complaints were received from responses helping us to identify what works indiscriminate, and the content is all too often members of the public about a series of well and areas where improvements may be deceptive and inappropriate to those it spam e-mails that tricked them into necessary. WHAT ARE COMPLAINTS ABOUT? WHAT TYPES OF SERVICE reaches, especially, in the case of text unknowingly activating a premium rate Feedback in 2002 was very encouraging. The table below shows the main reasons CAUSE COMPLAINTS? messages, children. Internet dialler. One individual was found to 68 per cent of respondents were very satisfied for complaints received in 2002: be involved with all of the companies with the outcome of the investigations into The table below shows the types of service 2002 2001 VOLUME OF COMPLAINTS RECEIVED (LAST 5 YEARS) responsible, and he was subsequently named their complaints, while 82 per cent of which attracted most complaints in 2002: and barred from operating any premium rate respondents found our level of service to be Inadequate pricing 235 699 12 ...... 2002 2001 ...... services for three years. either good or excellent. 11 ...... Misleading information 258 365 ...... Adult entertainment 2,547 1,113 10 ...... Failure to supply requested ...... What sanctions did we impose in 2002? Fax 1,260 994 9 ...... information 176 30 ...... We imposed fines totalling £1,054,000 on 8 ...... Competitions 1,214 1,172 ...... 174 occasions in 2002, while bars on access Inadequate contact details 156 224 7 ...... were imposed on 120 occasions. Under our Text message 1,210 159 6 ...... No prior permission 119 57 000s ...... ‘associated individual’ provisions, which Information 315 328 5 ...... Pricing prominence 113 184 ...... enable us to name an individual and bar him 4 ...... Ringtones and logos 271 375 ...... or her from running or being associated with Thank you very much for dealing Inappropriate promotion 92 88 3 ...... Dating 268 113 ...... a company operating premium rate services Unreasonable delay 92 93 2 ...... with this matter so efficiently. I ...... for a defined period, we ‘named’ and barred ‘ Live conversation 146 104 1 ...... am delighted such an organisation Non-fulfilment of competition ...... two individuals from the premium rate 0 ...... prizes 88 74 Consumer credit 142 443 industry in 2002, bringing the total number can deal so effectively with such 1998 1999 2000 2001 2002 Legality 69 110 Data capture 128 62 barred at the end of the year to six. complaints 10 ’ 11 ......

Last year saw a huge increase in the number of complaints to trading standards‘ offices about the promotion of premium rate numbers by unsolicited SMS. Trading standards professionals, working closely with ICSTIS, have been able to close down many of these services and help consumers who have been duped. We have also been working with ICSTIS to educate consumers about these services, culminating in 2002 with National Consumer Week and a concerted TEXT MESSAGE COMPLAINTS SOAR Typical concerns with these services called ‘secret admirers’. Assuming the campaign by both bodies to raise awareness of the pitfalls of certain services. included the unsolicited nature of the messages to be genuine, recipients called promotional text messages, the misleading only to be asked to give the mobile numbers I very much look forward to continuing this important work in 2003 y the end of 2002, there were almost 50 descriptions of what was being offered, and of five people who they thought might ‘fancy’ RON GAINSFORD – CHIEF EXECUTIVE, TRADING STANDARDS INSTITUTE Bmillion UK mobile subscribers. According either inaccurate or a complete lack of pricing them. Contrary to what the messages had ’ to the Mobile Data Association, 16.8 billion information. In all 36 cases, we imposed fines, promised, they were never told the identity of chargeable text messages were sent in 2002, ranging from £300 to £50,000, on the their supposed ‘secret admirers’. a figure predicted to rise to 20 billion by the companies responsible, while bars on access As a result, we imposed fines of up to THE SMS GUIDELINE end of 2003. were imposed on 15 occasions. £10,000 on nine companies after receiving With such a huge potential customer base In many of these cases, mobile users were over 230 complaints about these misleading and with text messaging established as an lured into calling the advertised numbers ‘text flirt’ services and the inappropriate way ollowing detailed consultation, an ICSTIS A revised Guideline was therefore everyday form of communication (over 70 per having been informed that they had won a in which they had been promoted. FGuideline addressing the emergence of issued for consultation at our SMS Seminar cent of mobile users now send text messages), ‘cash prize’ or ‘award’. But more often than reverse-billed premium rate Short Message in December 2002. Areas covered in the . Services (SMS) took effect on 20 May 2002. consultation included: the premium rate industry has not been slow not, these prizes and awards turned out to . Reverse-billed text message services . to embrace the technology to the full by be discount vouchers, redeemable only The other 10 text message cases investigated Its introduction typified how we work with . the scope of the Guideline – it now developing an ever-increasing range of subject to certain terms and conditions that during the year involved reverse-billed SMS, the industry in formulating targeted and covered all premium rate SMS and not proportionate regulation while allowing just reverse-billed services imaginative and innovative services. had not been disclosed up front. where promotional messages are sent to . However, our complaints figures for 2002 In one such case, we fined text message firm mobile users and recipients respond by service providers to operate services within . greater explanation of the types of show that, unlike the vast majority of service Moby Monkey £50,000 and barred access to its sending back text messages of their own as a consistent regulatory framework. message considered to be instructive Areas covered in the Guideline included: . the requirement to send users an providers who run services in a legitimate “£500 Mystery Award” service after receiving instructed. This response, charged at a . and responsible manner, several companies more than 200 complaints. The company’s standard rate, will trigger the start of the . the definition of reverse-billed premium instruction message informing them rate SMS how to unsubscribe from services deliberately abused public trust in text promotional messages urged recipients to call premium rate service. Participants then . . messaging purely to make money with no a premium rate number in order to claim their receive a series of premium rate messages . responsibility for Code compliance . the definition of text chat services . pricing information requirements . the need for more stringent age regard for consumers whatsoever. “mystery award”. The award turned out to be in return – with typical charges ranging from . We have raised the issue with the Office of holiday discount vouchers with stringent terms 25 pence to £1.50 per message received. . text chat and contact/dating SMS and verification checks for services of an the Information Commissioner, Oftel, the and conditions attached. Concerns with these services included the the need for prior permission adult nature. . children’s services mobile networks and those terminating As well as being seriously misleading, the unsolicited and often misleading nature of . networks engaged in this activity. service had been promoted inappropriately, the promotional messages, a lack of pricing . inappropriate and unsolicited promotions. Having received helpful responses from with many messages received by children or by networks, aggregators, gateway companies, . information, no indication of the number of . Text message promotions for 090 numbers some mobile users repeatedly (in one case, as messages likely to be received and unclear Even in the few months since the Guideline other regulators, consumer organisations Complaints about services promoted by text many as 40 times in one day). instructions on how to unsubscribe from came into effect, there have been significant and others, we are carrying out a second message increased almost eight-fold in 2002 In other cases, mobile users were misled by services. In the 10 cases investigated, we developments in the SMS sector, in terms of consultation on the proposed new Guideline, to 1,210. Of the 46 cases handled, 36 involved phrases such as “I fancy you… to find out who imposed fines, ranging from £300 to £10,000, the types of service being operated and the with a view to publishing a final version in the sending of unsolicited messages to mobile I am, call…” into calling premium rate on nine companies, while bars on access manner in which they are being promoted. June 2003. users urging them to call 090 numbers. numbers to find out the identity of their so- were imposed on three occasions.

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Certain categories of premium rate service may not be provided unless we have granted prior permission to the service provider in the form of a certificate. The permissions process enables the Committee to place appropriate restrictions, such as a maximum call cost, on services that have been found COPY ADVICE AND GUIDANCE to pose a greater risk of consumer harm.

To help service providers fully understand the requirements of the Code of Practice and PRIOR PERMISSIONS . advice, and counselling services straightforward applications to be dealt so prevent potential future problems, we offer a free copy advice and guidance service. . 100 for reverse-billed SMS text chat with quickly – where such applications are Advice is given on a wide range of matters – from setting up a new service or the and contact/dating complete, a permission certificate can usually . appropriateness of certain promotional methods to the positioning of pricing information he categories of service which currently monitor the introduction and development . 5 from service providers wishing to take be issued within 10 days. within an advertisement or the specific wording to be used in a script. Trequire prior permission are: of new types of service. Typical examples of part in the trial of multi-party chat services. A further 25 per cent were processed We also receive numerous enquiries from advertising departments and publishers who . live conversation such services include reverse-billed SMS text through the new registration system. This is . have been approached to carry advertisements, and will comment on the acceptability . consumer credit chat and contact/dating, mobile originating At the time of writing, 30 companies have also available for certain categories of service, . of these in terms of Code compliance. . any service charged at more than £1.00 SMS text chat and contact/dating, and the been granted permission to operate services including technical support and certain types In addition to the informal guidance given by the Secretariat on a day-to-day basis, per minute and which can cost more recently introduced 118 DQ services. All three in the newly liberalised DQ services market. of advice service, and enables us to issue a we received 253 formal written requests for copy advice in 2002, 165 of which (65 per cent) . than £20.00 in total categories have therefore been added to Of the 826 applications received in 2002, permission certificate within seven days. were dealt with on the same day. . reverse-billed SMS offering text chat the list of services that require our prior 585 (71 per cent) were granted permission. We intend to build on the success of the and/or contact/dating permission to operate. . 232 applications were abandoned during registration system in 2003 by making it . mobile originating SMS offering text chat As a result of the implementation of processing by applicants who were unable or available for more categories of service, and/or contact/dating the Electronic Commerce (EC Directive) unwilling to meet our requirements. thereby allowing our resources to be focused We will also be reviewing the existing I was most impressed . Directory Enquiry (DQ) services Regulations that came into force in August . Only three applications (less than 1 per cent on applications for services that pose a greater Guideline for consumer credit services in 2003, by the speed of . pay-for-product services that can cost 2002, the prior permission requirement of those received) were rejected by the risk of consumer harm. and updating it to clarify the checks and ‘ processing and . more than £20.00 in total for online sexual entertainment services Committee because the nature of the services As well as processing applications for procedures involved in the processing of . any services charged at more than £1.50 was withdrawn. proposed made it likely that breaches of the permission, we actively monitor services to applications for such services. In addition, the competence per minute (at the time of writing, no such We received 826 applications for prior Code would occur. At the time of writing, six assess the effectiveness of conditions imposed we will continue to develop our understanding of the staff in tariff is available). permission in 2002. These included: . applications are ongoing with issues during the permissions process. Monitoring of the technologies behind new services, and handling queries . 336 for services offering technical support outstanding. programmes in 2002 focused on SMS text chat will continue to work with the industry in As well as helping to regulate those services . for computer-related products Nearly 40 per cent of all applications in and contact/dating, and the new 118 DQ considering the possible introduction of that pose a greater risk of consumer harm, the . 105 for live information and advice 2002 were processed through the fast-track services. Monitoring of both these categories higher tariffs and any conditions that may ’ permissions process enables us to control and services, including legal and financial procedure. This enables relatively of service will continue in 2003. need to be imposed.

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2002/2003 – A QUARTERLY SNAPSHOT

. JANUARY – MARCH 2002 .Inappropriate Fax Promotions millions of homes, that were seriously show that awareness of 090 dialling codes enables us to merge our existing General phones, interactive TV and the Internet, . Following continued complaints, we issue a misleading and appeared to prey on the is low, as is trust of services and their and Live Services Codes of Practice into one we issue a new Guideline to help ensure . Prior Permissions warning about the inappropriate promotion vulnerable and elderly. As a result, he is promotions. Positive attitudes towards single Code. Following formal recognition by that consumers are not misled about the We introduce changes to our prior of services by unsolicited faxes to businesses. barred from running or being associated with services do, however, exist under the surface, the Director General of Telecommunications, total cost of playing or the chances of permissions processes following ‘consumer The Committee also warns that it will take any company operating premium rate direct and recent use of services has grown by the new Ninth Edition of the Code comes winning premium rate competitions. harm testing’ of those service categories that the problem of undue encouragement of mail competitions for three years. nearly 40 per cent since 1998, fuelled by into force on 25 March 2002. The Guideline makes specific reference currently require prior permission. The total unauthorised use into account when greater use among 15-24 year olds. to competitions aimed at children, as well . cost thresholds for certain categories of considering complaints from businesses. . MORI Research . Competition Services as those promoted by direct mail, both service are increased and the prior We host a series of seminars with interested . . New Merged Code Of Practice Following a high number of complaints of which warrant particular care. permission requirement for others is .Colin Butler parties to discuss the findings of research Oftel’s amendment to network licences, about competition services and the arrival removed. The changes allow us to focus We take action against Colin Butler, the carried out on our behalf by MORI. The extending the definition of “controlled” of services on new platforms, such as mobile more attention on those services that pose individual behind a series of direct mail results of the research into attitudes towards premium rate services to cover all services a higher risk of consumer harm. ‘competition’ promotions, sent to tens of and awareness of premium rate services generally regarded as being premium rate,

. . APRIL – JUNE 2002 online, while service providers will be able . ICSTIS At The House of Lords . 2001 Activity Report Our Activity Report for 2001 shows that the . to take advantage of the enhanced online We hold a House of Lords conference, . SMS Guideline And Workshop application forms. The site also allows our chaired by Lord Currie of Marylebone (now premium rate industry doubled in turnover to We publish a draft Guideline for premium literature to be downloaded instantaneously, Chairman of Ofcom), on the Government’s an estimated £600 million during the year, rate reverse-billed SMS, outlining how the as well as enabling users to be notified draft Communications Bill and the need for while complaints about services rose by a Committee is likely to interpret the Code electronically when new material is added. Government not to ignore consumers. third to just over 8,000. The Report also highlights how premium rate charging has when considering complaints about such . Delegates include members of both Houses services. We also hold a workshop to discuss . Sir Peter North Reappointed of Parliament, key personnel in Whitehall, now spread across fixed and mobile the proposed Guideline and the ways in Sir Peter North is reappointed as Chairman fellow regulators, consumer bodies, network telephony, conventional, digital and which it can be adapted. Following of ICSTIS for a further three years. Looking operators, service providers, broadcasters interactive TV, and the Internet. consultation, the final Guideline takes ahead to his next term of office, Sir Peter and the media. . effect on 20 May 2002. says: “I am pleased to take on a further term Speakers include Sir Christopher Bland, . First ICSTIS Forum We hold the first meeting of the new ICSTIS . as Chairman of ICSTIS. We will continue our Chairman of BT, Gavin Darby, Chief . www.icstis.org.uk effective and distinctive approach to Operating Officer of Vodafone, Patricia Forum, which has superseded the ICSTIS We re-launch our new-look website, which regulation in the premium rate sector. The Hodgson, Chief Executive of the Industry Committee. The event, which was features improved navigation enabling users core features of our system of regulation – Independent Television Commission, attended by a wide range of interested to complain online and obtain the independence, flexibility and accessibility – David Edmonds, Director General of parties, focused on premium rate SMS information they require quickly and easily. will be key to maintaining real protection for Telecommunications at Oftel, and James developments and the Government’s review For the first time, consumers with complaints consumers and the future success of the Purnell MP, together with ICSTIS Chairman of, and proposed changes to, gambling about services will be able to register them premium rate industry.” Sir Peter North. legislation. continued overleaf

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. . JULY – SEPTEMBER 2002 .‘Text Flirt’ Alert the Committee sees distinct differences . £50,000 Fine For Text Message Firm . New E-Commerce Regulations automatically without users’ knowledge. We fine service provider Moby Monkey The Electronic Commerce (EC Directive) Spanish-based company Greenock are fined . Following 200 complaints about misleading between ‘top’ and ‘middle shelf’ publications, .All Change For Directory Enquiry Services ‘text flirt’ services and the inappropriate way and the forms of promotion common to each £50,000 and bar access to its “£500 Mystery Regulations 2002 come into effect in August. £75,000 and German-based company Following Oftel’s decision to liberalise the in which they were promoted, we impose type of publication. The Committee therefore Award” service following serious breaches of As a result, the requirement to obtain our prior Premium Call GmbH £50,000, while access market for Directory Enquiry (DQ) services fines and bars against five companies, and believes it possible to apply a contextual the Code. ICSTIS Director George Kidd says permission for online sexual entertainment to both services is barred for two years. within the UK, Oftel and we agree that these warn service providers that future similar cases approach to ‘non-top shelf’ publications. that the sanctions imposed will warn other services is removed but we advise the industry . new services, which will operate on specially- may attract more severe sanctions. service providers that misleading consumers that this change does not mean that the .Anthony Chappell designated 118 dialling codes, will be . New Committee Members in such a way is totally unacceptable. Committee is any less concerned about the We take action against Anthony Chappell, the regulated under our Code. .‘Top Shelf’ Rule Consultation Sara Nathan and Nicholas Higham are promotion, accessibility or content of such individual behind a host of ‘front companies’ . To ensure that all prospective DQ service Following consultation on our ‘top shelf’ appointed as new ICSTIS Committee . IARN Handbook services and remind them that all services sending unsolicited e-mail promotions that providers understand their responsibilities rule, which relates to the promotion of sexual members, replacing Sir John Bailey and The International Audiotex Regulators must continue to comply with our Code. connected users to premium rate dialler under the Code, we issue for consultation entertainment services, we finalise proposed Andrew Millard. Sara has a wide range of Network (IARN), of which we are a leading We subsequently take action, under the software without their knowledge. The e-mails a draft ‘best practice’ Guideline. At the amendments to our Code. These are experience in both the broadcasting and member, publishes a handbook setting out Directive’s ‘cases of urgency’ provisions, caused hundreds of complaints and left many same time, we issue a draft formal notice presented to Oftel, who will issue a draft regulatory worlds, while Nicholas has a wealth the fundamental principles of premium rate against two European service providers recipients with bills of thousands of pounds. of our intention to require all DQ services determination for statutory consultation. of experience of the legal and regulatory services regulation that are applied by its following numerous complaints about As a result, he is barred from running or being to obtain our prior permission before they While remaining strongly committed to frameworks applicable across the members, irrespective of their differing websites that referred to sexual acts involving associated with any company operating can operate. preventing children accessing sexual material, communications industry. national regulatory frameworks. children and dialler software that downloaded premium rate services for three years.

. . OCTOBER – DECEMBER 2002 . Text Message Promotions .Adult Services Rules Change .SMS Seminar And Revised Guideline JANUARY – MARCH 2003 And The Need For Full Information Following a period of statutory consultation, We host a second SMS-dedicated event that . . www.icstis.org.uk/consumer We see marked growth in the number of Oftel agrees the amendments proposed by focuses on the legal position concerning the . Code of Practice Review We add a new section to our website to enquiries and complaints received about us relating to the sexual entertainment sending of unsolicited text messages and Following a series of important EU Directives and the ongoing passage of the Government’s help consumers with queries about calls premium rate services promoted by text services provisions in our Code. As a result, new developments in mobile content. At the Communications Bill, work takes place on drafting a new Code that will replicate the made to premium rate services listed on their message. Although acknowledging that the amended provisions, including those same time, we issue a revised version of our wording and definitions contained in the Bill. The main changes proposed relate to the phone bills. With many bills sent out up to such promotions are subject to constraints relating to the promotion of such services existing SMS Guideline for consultation. Code’s scope, terms of reference and definitions, and key legislative and funding changes. The proposed new Guideline takes account three months after calls have actually been on space, we warn the industry that and those designed to keep children off . made, our helpline currently receives consumers need to be given all of the services, take effect on 9 December 2002, of significant developments in the SMS sector, . ICSTIS Forum thousands of calls each month from information necessary for them to be able as does a revised version of our Sexual including the growing range of services now We hold the third ICSTIS Forum in March. The keynote speaker is Millie Banerjee of the consumers wanting to identify the services to make informed decisions. Entertainment Services Guideline. being offered and the manner in which they Ofcom Content Board, who discussed the Board’s role and the implications for the premium behind the premium rate numbers detailed are being promoted. rate industry. Other speakers include Clare Gilbert, of mobile operator 3, who spoke about . . new mobile technology, content and convergence, and Adam Strange, of broadcaster Five, on their bills. ICSTIS Forum 118 DQ Services Start . The new section, under the Your Phone We hold the second ICSTIS Forum in Liberalisation of the UK DQ services market .Bond Encashment who provided insight into the use of premium rate charging from a television perspective. For the second time since the Compensation Bill section of the site, lists the 30 or so most November. The event features a presentation takes place on 10 December 2002. All service . recently and commonly queried premium rate on the growing use of premium rate charging providers allocated 118 numbers by Oftel Scheme for live entertainment services was . Second Consultation On SMS Guideline numbers handled by our helpline and the for ‘participation TV’, and also includes are free to start running services from this set up under new rules in 1998, we encash We issue a revised version of our SMS Guideline for a second period of consultation. services behind them, enabling consumers sessions on our planned work in 2003, work date, subject to them having obtained a service provider’s bond in order to settle Although our initial proposals were generally well received, several respondents raised to check numbers instantly without having on the next Code and key pieces of the necessary prior permission to operate 12 outstanding claims for compensation a number of supplementary issues, such as the feasibility of a universal ‘stop’ command, to call the helpline. legislation likely to affect the industry. from us. totalling just over £6,000. which the Committee believes should be consulted upon in their own right.

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saw the launch of the ICSTIS Forum, a new event 2002 designed to help us keep abreast of industry developments likely to affect companies operating services across a wide range of platforms and us in determining appropriate regulations for services using premium rate charging as a form of payment mechanism. Two such Forums were held in 2002 – one in June and one in November. Both events were very well attended by a cross-section of delegates representing telephone networks, service providers and a range of other parties with particular interest in the premium rate industry. Items on the agenda were topical, with presentations ranging from text-to-TV services to the possible impact of new gambling legislation. We are extremely grateful to all those who gave their time to give such stimulating presentations to attendees. The Forums also enabled us to update delegates on a host of ongoing issues and initiatives, ranging from the new Guidelines for premium rate SMS and Directory Enquiry services to the changes envisaged for the industry resulting from implementation of the Communications Act in THE ICSTIS FORUM 2003 and the consequential creation of Ofcom.

ICSTIS NETWORK OPERATORS COMMITTEE

he ICSTIS Network Operators Committee consider and approve our annual budget, This is an ongoing project, with network Government has concluded that the most T (INOC), chaired by ICSTIS Chairman Sir to monitor income and expenditure against operators being updated on a regular basis. effective way to replicate the key elements of Peter North, continued to meet on a quarterly the budget, and to consider issues relating The Communications Bill, together with a our existing arrangements with network basis in 2002. Originally set up in 1996, to the development or regulation of the series of key EU Directives that will establish a operators is by moving these obligations into a membership of INOC is for those network premium rate industry. new framework for the regulation of electronic revised Code of Practice to be recognised by operators that carry premium rate traffic and All members are invited to attend the communications networks and services across new communications regulator Ofcom. have committed to our regulation by means quarterly meetings, which are held at our Europe, has also featured prominently on As well as leading to a substantial of a contractual agreement. offices, and the group continued to be a INOC’s agenda in early 2003. restructuring of our Code to reflect the new By the end of the year, the number of productive forum for discussion and update At present network operators are obliged, obligations that different parties involved in the network operators represented in the group during the year. through their licences issued by the provision of premium rate services will have to had risen to 57, reflecting the increased Policy issues debated by INOC in 2002 Department of Trade and Industry, to support both Ofcom and us, the changes will also have number of telephone companies entering included the development of new premium us as the body administering the Code of implications for the way in which our funding is the premium rate industry. This figure has rate services and tariffs, the E-Commerce Practice for premium rate services. This is done structured and funds are collected, but should continued to rise in the early part of 2003. Directive and the Government’s by way of a contract between individual have no material effect on our operational Full details of the network operator members Communications Bill. On the financial side, network operators and ICSTIS. costs or the costs of collection. Our proposals of INOC can be found on our website at members agreed our budget for 2003, with However, implementation of the in this area are included in a revised version of www.icstis.org.uk. additional funding being granted to assist with Authorisation Directive into UK law in 2003 will the Code that was published for consultation The group’s terms of reference are to improving the service offered by the helpline. necessitate changes to this arrangement. The in May 2003.

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THE COMMUNICATIONS BILL and funding that will enable us to continue to All parties in the debate valued our role, with With the Bill now being considered in the regulate those areas we have in the past – so John Greenway, Opposition spokesperson for House of Lords, we are confident that it will protecting consumers from rogue services and Culture, Media and Sport stating: “The work achieve the Government’s, and our, objective providing a framework within which the undertaken by ICSTIS – supervising, controlling of continuity of regulation. It is expected that was a busy year for ICSTIS in detail. Clauses relating specifically to premium industry can grow.” and taking necessary action against the the Report stage will be reached in June 2003, 2002 respect of the Government’s rate services were considered in January 2003. companies promoting such services when with Royal Assent expected to be given in Communications Bill, its subsequent creation Members of the Secretariat were present The main principles underpinning our appropriate – is extremely important.” the second half of the year. of communications ‘super-regulator’ Ofcom in at all of the relevant sessions, as a number of approach to the Bill’s provisions on premium 2003 and the all-round implications for the amendments to the clauses that related to .rate regulation were: regulation of premium rate services. premium rate services had been tabled to . the desire to maintain our ‘holistic’ approach Although not part of Ofcom, we will need deal with those areas where the legislation to effective regulation – we need to be able OFCOM to establish new relationships to replace those either did not appear to address areas of risk to deal with promotion and marketing, that currently exist with Oftel and the other or where it applied regulation where it was not concerns about service content (such as bodies merging to form Ofcom. We have necessary. At this stage, we worked closely offensiveness or illegality), the provision of ne of the major outcomes of the Bill’s enactment will be the creation of also been working very closely with the with the mobile networks to present the pricing information, call durations, and other Ocommunications ‘super-regulator’ Ofcom, which will be formed by the merger of Government to ensure that the current Government with a shared vision of what information designed to prevent services five existing statutory regulatory bodies – the Broadcasting Standards Commission, the arrangements that underpin the effectiveness the Bill should achieve. and promotions that mislead, misrepresent Independent Television Commission, Oftel, the Radio Authority and the Radiocommunications Agency. of our regulatory regime are re-created under At the time, ICSTIS Director George Kidd . or otherwise deceive consumers the Bill in an appropriate way. said: “We are pleased that the Minister of . the need to maintain the important role in For us, this means that the underpinning of our system of regulation will no longer At the time of writing, the Bill is still being State for E-Commerce, Stephen Timms, has effective regulation played by the telephone come from Oftel but Ofcom. We look forward to working with the new body, which will debated in the House of Lords. It has already agreed to take our amendments into networks when it is necessary to terminate be located just along the river from us on the South Bank. We are confident that this organisational change will not adversely affect how we undergone an extremely rigorous process of consideration for the Report stage of the Bill. . access to services and withhold revenues scrutiny, having been looked at firstly by a We are confident that, when redrafted, the . the need for legislation to be clear about continue to regulate premium rate services. Lord Currie, the Chairman of Ofcom, has Joint Committee of the Lords and Commons clauses will have the right form of words to the responsibilities of networks and about already visited our offices, and Ofcom staff seem impressed by the work we have done to date and are keen to ensure that we are capable of carrying on this work in the future. under the Chairmanship of Lord Puttnam, and achieve the goal everybody involved is . lines of accountability for their activities then by Standing Committee E in the looking for. That goal is to ensure continuity of . the need for legislation to be suitably future- We will continue our clear dialogue with Ofcom to ensure that its policies and practices, Commons who considered each clause in regulation by providing us with the powers proof – it should not limit the regulator’s particularly regarding media literacy, reflect developments across the whole communications ability to provide protection from sector. The Ofcom Content Board, in particular, has the potential to be an important bridge malpractice but should not apply regulation between Ofcom and existing non-statutory bodies like us with vast experience and an ICSTIS does an excellent job, and is a good model in areas or in ways in which it is unnecessary important role to play in communications regulation. of effective self-regulation without, until now, or excessive We appreciate the need to avoid regulatory overlap and contradiction. We plan . ‘ . the need for Ofcom’s reserve powers to Memoranda of Understanding with the Telecommunications Ombudsman and the Office any legislative support. We recognise the be consistent in terms of variety and of Fair Trading, and are working closely with the Advertising Standards Authority, the success of ICSTIS, and want to support magnitude if they are to be effective, Internet Watch Foundation and others to maximise regulatory benefit and minimise and strengthen its work and the need for Ofcom’s endorsement regulatory cost. STEPHEN TIMMS – MINISTER OF’ STATE FOR E-COMMERCE of the non-statutory regime to be clear. 22 23 ......

The proposals aim to ensure that: THE CODE OF PRACTICE . . we can continue to regulate premium rate ICSTIS GUIDELINES . service providers broadly as we do today . providers of electronic communications We strive to review the provisions in our Code of Practice each year. This enables networks will continue to support us by We publish guidance notes – ICSTIS 3 The Conduct Of Live Services us to ensure that the provisions remain relevant and applicable to the types of service providing information about service Guidelines – to help service providers 4 Live Counselling Services available, and to take account of any changes in national or European legislation. providers, barring access to services where understand how specific provisions in the 5 The Chatline Services Trial necessary and withholding revenue Code will be interpreted and applied by 6The ICSTIS Compensation Scheme payments to service providers when the Committee in relation to certain 7 Competition Services requested types of service. 8 Employment, Employment Information ork on the Ninth Edition of our Code ‘mid-shelf’ publications and newspapers At present network operators are obliged, . . providers of electronic communications Three new Guidelines were published And Business Opportunity Services of Practice culminated in its publication now carry content and advertisements of a through their licences issued by the W networks will be accountable to Ofcom (not in 2002 to cover the emergence of new 9Sex Advice Services in March 2002. Work on the next edition has sexual nature, while the ‘promotion’ of Department of Trade and Industry (DTI), to us) for the support they give us as the services or major changes in the regulation 10 Legal Advice Services continued apace in 2003 in response to the websites offering sexual content is likely to be support the body administering the Code of regulator of premium rate services. of existing ones: 11 Online Services Government’s Communications Bill and a through Internet search engines, not paid Practice for premium rate services. This is . . Reverse-Billed Premium Rate SMS 12 Pay-For-Product Services series of key EU Directives that will establish advertising. done by way of a contract between the Only the ‘first’ sections of the Code – those (currently under review) 13 Fundraising And Charitable a new framework for the regulation of The Committee remained fully committed relevant network operator and ICSTIS. . relating to definitions, scope and . Directory Enquiry Services (introduced Promotions electronic communications networks and to keeping adult content away from children However, the forthcoming implementation responsibilities – have been revised. New after liberalisation of the Directory 14 Consumer Credit Services services across Europe. and restricting truly explicit promotions to of the Authorisation Directive into UK law sections dealing with the responsibilities of Enquiry services market) 15 Betting Tipster Services those ‘top shelf’ publications in which they requires changes to this arrangement. The . . Electronic Communications Network Providers . The Contextual Rule – A Guide For 16 Virtual Chat Complaints Handling, . Sexual Entertainment Services would be in context. Government has concluded that the most (ECNPs) and funding have also been added. Service Providers (introduced following Investigation And Claims For As a result of our general consultation on the After wide consultation, the Committee effective way to replicate the key elements of The general provisions and those relating to amendments to the Code provisions Compensation Code in 2001, a number of respondents agreed a package of measures that permitted our existing arrangements with network specific types of service have not been relating to sexual entertainment services) 17 Unsolicited Promotions commented on the relevance of our existing suitably contextual advertising for services in operators is by moving these obligations into amended at this stage but we plan to consult 18 Fax Services ‘top shelf’ rule. This provision in the Code ’mid-shelf‘ publications but, at the same time, a revised Code to be recognised by Ofcom. on these later in 2003. 22 Guidelines are now available, free of 19 Practical Joke Services related to the advertising of sexual sought to reinforce the barriers to children This has led to a substantial restructuring of The changes required have implications charge, from the Secretariat or can be 20 Reverse-Billed Premium Rate SMS entertainment services and essentially calling such services on phones or by visiting our Code to reflect the new obligations that for the way in which our funding is structured accessed on our website: 21 Directory Enquiry (DQ) Services prohibited such services from being adult websites. These were incorporated into different parties involved in the provision of and funds collected. We have had clear legal 1Pricing Information 22 The Contextual Rule – A Guide For advertised in anything other than ‘top shelf’ the Code and took effect from 9 December premium rate services will have. advice that it would not be appropriate to 2 Prior Permission Service Providers publications. 2002. At the DTI’s request, we have therefore continue to operate on the basis of network The rule, which was first introduced in . drafted a revised version of our Code to take funding for regulatory work that relates 1994, was designed to prevent children from . Code Consultation account of the wording and definitions used in primarily to the content of services and their a simple form of levy almost identical in format regulatory cost, as a percentage of premium accessing sexual entertainment services and As stated earlier, we are currently consulting the Bill. The changes proposed aim to retain promotion, not the regulation of their to the one currently used with network rate activity, rather than an increase. The to prevent those not wishing to view the on a revised version of our Code in light of the the key elements of our existing regime; they conveyance. operators to fund us. changes make it even more important that advertising material for such services from Communications Bill and a series of key EU are not designed to expand our regulatory For this reason, we are planning to move to These changes need not affect the cost we have effective arrangements for consulting being exposed to it inadvertently. Directives that will be implemented into UK coverage or powers, nor should they increase a system based on service provider funding. of our regulation. We hope that the transition all stakeholders on our business plan and Times have, however, moved on. Many law during 2003. the cost of regulation. However, we are proposing to continue using can be made with a further decrease in supporting budget.

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istorically, ICSTIS has never regulated In a competitive new market – with new The main conditions set out in the Guideline purpose of the service – any other facilities Directory Enquiry (DQ) services – on H players, numbers and value-added services – .require all 118 DQ service providers to: must be ancillary to the main service. numbers such as 192 and 153 – even though we had to determine what rules, if any, should . obtain our permission before services they fell within the technical definition of a apply to ensure consumers could make can launch and be marketed As an additional consumer safeguard, we premium rate service. informed decisions about using DQ services. . ensure that all marketing material for prohibited the transfer of callers to certain In the early part of 2002, however, we In July 2002 we consulted on a proposed services includes clear call cost information; types of premium rate service, such as chat. agreed, at Oftel’s request, that the exemption Guideline, detailing certain recommended service providers must also state call costs The new 118 DQ services were launched on previously granted by the Director General of conditions of operation pertaining to this new arising from ‘call completion’ (i.e. being 10 December 2002, with parallel running for Telecommunications for the regulation by us of category of premium rate service. On the connected to the number requested) before the old numbers continuing until the following DQ services would not apply in a new market whole, our proposals were welcomed by the . any transfer takes place August. Going into 2003, we have started an for such services – to be offered on 118 industry and consumer groups, and, as a result, . use a recognised source of data for the extensive six-month monitoring programme to numbers – once the market was liberalised the Guideline was finalised and published on residential listings in their databases ensure that all providers of these new services DIRECTORY ENQUIRY SERVICES in late 2002. 1 October. . offer a full DQ service as the primary continue to comply with our rules.

KEEPING AN EYE ON NEW TECHNOLOGY

s detailed elsewhere, we have witnessed a range of new As new technologies, such as MMS and 3G, become more With the introduction and development A and innovative premium rate services being promoted in widely available, we fully expect to see further growth in the of an increasing range of new mobile increasingly imaginative ways over the last year. Reverse-billed number and types of service being offered to consumers as we ‘ services, it is vital that the regulator SMS, for example, have proved hugely popular, although not progress through 2003. MMS and 3G services, while still in their infancy, entirely free of problems, while there has been significant have obvious applications when coupled with premium rate charging – understands and learns about them before expansion in the interactive TV sector. video downloads, photo messaging, MMS texting and location data they are adopted on a wide scale. By doing Premium rate interactive TV services via the return path on services will all be rolled out and charged for via premium rate. this, they will not only be able to anticipate Such innovation and increased consumer choice is to be welcomed. digital television are undoubtedly growing in range and value. and prevent consumer concerns, but will also Our Code covers these services in terms of making sure that We are, however, already keeping a watchful eye on the proposed ensure that regulation remains proportionate consumers understand how much they will cost and what they content of many of these services. As the technology clearly lends itself receive in return. to services of an adult nature, we are working closely with the mobile and relevant to the industry. While the vast majority of such services operate without sector to address the potential risk of adult content being accessed by A well-informed regulator is also equipped problems, there is clearly a very low level of awareness among those for whom it is inappropriate. Progress in this area is already being to frame a Code that will not stifle the made, following the sector’s proposals regarding content rating and consumers about how these services are actually charged for. We innovation that is so vital to the premium rate receive thousands of enquiries each month from people who do access control mechanisms. industry. Talking to the industry and listening not make the connection between voting or playing games on We are ever mindful of the importance of learning all we can about their televisions and the premium rate charges that then appear new services – we need to understand the technologies used, the to what they have to say is the best way to on their phone bills. business models involved and, most importantly, the potential for achieve this. As part of our ongoing commitment to provide consumers with consumer harm that new services might pose in the hands of those who ICSTIS has done this very well in 2002, set out to deliberately deceive or exploit public unfamiliarity with new all the information they need to make informed choices, we are and we look forward to carrying on this working with the leading interactive TV broadcasters with a view to technology to their own advantage. Such in-depth knowledge will agreeing on-screen wording that will make consumers aware that enable us to protect consumers, where appropriate, while facilitating relationship in the coming year any premium rate costs will be charged to their phone bills. further healthy industry development. MIKE SHORT – CHAIRMAN, MOBILE DATA ASSOCIATION

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We publish a range of literature designed to inform and educate all parties with an interest – practical joke services . Premium Rate Services And You in the premium rate industry. All publications are available on our website at www.icstis.org.uk – reverse-billed premium rate SMS – A Guide For Consumers or may be obtained, free of charge, from the Secretariat. – Directory Enquiry (DQ) services A consumer guide to us and – the contextual rule – our work ICSTIS LITERATURE a guide for service providers . Premium Rate Services On The . Monthly Report Internet – A Guide For Consumers . Code of Practice – Ninth Edition – competition services News of current issues, together with A consumer guide to premium rate (March 2002 – Amended December 2002) – employment, employment information summaries of our latest adjudications access on the Internet The rules governing the industry and business opportunity services . . – sex advice services . Activity Report – 2002 . Premium Rate Dialling Codes . Guidelines – legal advice services Details of our work in 2002 And Call Charges Guidance notes on the Committee’s current – online services . Details of the current premium rate interpretation and application of provisions in – pay-for-product services . ICSTIS Briefing Notes numbering sub-structure and the the Code. Current Guidelines cover: – fundraising and charitable promotions A series of periodical factsheets covering range of tariffs available – pricing information – consumer credit services specific issues, such as the Communications . – prior permission – betting tipster services Bill, convergence and consumer protection . Recording Equipment Requirements Details of the specifications that service – the conduct of live services – virtual chat complaints handling, . – live counselling services investigation and claims for compensation . ICSTIS Forum Notes providers’ recording equipment should meet – the Chatline Services Trial – unsolicited promotions A series of ‘Latest News’ factsheets to and the contact details of those suppliers who – the ICSTIS Compensation Scheme – fax services accompany ICSTIS Forum events have play-back facilities at our offices

CONSUMER PROTECTION IN 2003

. oing into 2003, we are continuing to in premium rate as a charging mechanism. Information and education initiatives . working with the national and regional planned for 2003 include: print and broadcast media to raise Gbuild on our work protecting, educating Such consumer confidence and trust is . and empowering consumers. This work is vital, essential if new services and platforms are . getting information to consumers via children’s understanding of premium given the host of new consumer protection to succeed. Trading Standards and Citizens Advice rate services Bureaux . ensuring a joined-up approach to child challenges raised by the staggering pace of We want to involve all those with the skills . development within the premium rate industry. and ability to play a part in helping to educate . participating in National Consumer Week protection through collaboration with the We know from experience that there is consumers, so enabling them to help to highlight the potential risks of new Home Office, police, other Governmental real potential for harm when the pace of themselves, and are working hard with our . technologies agencies, other regulators and the technological development outstrips stakeholders – industry, consumer bodies, . publishing literature for libraries and industry consumer understanding. Many consumers the media, other regulators and Government other outlets . working with the Department for . have limited technical knowledge of how many – to help all those with an interest in consumer . working with fixed and mobile network Education and Skills, as well as the existing premium rate services, platforms or protection to meet their duties. operators to improve the information given British Educational Communications on bills about premium rate services and Technology Agency, to raise technologies work, let alone any planned By working with our stakeholders, we will . new ones. continue to move decisively towards our vision . working with broadcasters to improve the understanding in schools and colleges Informed consumers are less susceptible that all consumers can use premium rate on-screen information given to viewers of the cost and content issues involved to harm and can help to increase confidence services with absolute confidence. about premium rate interactive TV services in using premium rate services.

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revised Compensation Scheme, The end of 2002 did, however, see the this type of service deal swiftly and I would just like to thank you Alaunched in 1998, replaced the original departure of four service providers from the responsibly with any claims made. very much for your help and one. Its main merit is the use of bonds, industry. In two cases, their bonds were I expect service providers to liaise ‘ guidance, and supplying us lodged by each of the 30 or so live encashed in order to pay outstanding regularly with the Secretariat on the status entertainment service providers as insurance claims for compensation against them. of claims to ensure that a tight rein is kept with the name of the company against likely claims for compensation When any service provider leaves the live on both existing and potential claims seen involved. I really didn’t think against their own services. The size of each entertainment services sector, their bonds, on high bills. This will help the Secretariat to that we would stand a chance service provider’s bond varies according to or what remains of them, will be retained by ensure that the bond levels set for chatline of any reimbursement, so individual circumstances and, after the first ICSTIS until 12 months after the date that service providers remain realistic but year of operation, the system rewards those they ceased to operate services. adequate. It is anticipated that a successful thank you again service providers with low levels of claims The Secretariat continued its programme chatlines trial will result in these services made against them by reducing the value of of both announced and unannounced visits being welcomed back into the premium ’ bond required. during 2002. The former are usually arranged rate industry on a permanent basis. During 2002, a total of 177 claims for in response to a particular issue that the On a final note, Sarah Payne left as Live compensation arising as a result of service provider would like to discuss. The Entertainment Services Officer in early 2003 unauthorised use of live entertainment latter are carried out by members of the after making a longstanding contribution to services were dealt with by the Secretariat. Secretariat, together with a technical the work of ICSTIS. I would like to welcome The total amount sought was £33,660.53, an consultant employed by ICSTIS, in order her successor, Joanne Cheeseborough, to average of £190.17 per claim. Only 11 claims to ensure that compliance with the Code the post and would urge all service providers were closed without any payment being of Practice is being maintained. to contact Joanne for guidance and advice ADJUDICATOR’S REPORT 2002 made. Both the number of claims for 2003 heralds the return of multi-party on claims when required. compensation, and the total amount chatlines – these are being re-introduced claimed, showed a welcome decrease on the on a trial basis and with a separate In my second year as Adjudicator I have witnessed the continued success previous year. Compensation Scheme. As chatlines were of the current ICSTIS Compensation Scheme. The Scheme, established in 1989 I have, however, remained concerned effectively banned by the Director General following a report by the Monopolies and Mergers Commission, is available to about the amount of time taken by some of Telecommunications in 1992 due to an help subscribers whose bills are affected by unauthorised calls to live premium service providers in dealing with claims. It is a unacceptably high level of unauthorised use, rate entertainment services, such as chat, tarot or psychic services. Such requirement of the Code of Practice that all it is imperative that service providers offering Profesor Julian Farrand QC services are not permitted by the Director General of Telecommunications claims are handled within one month of on the UK telephone network unless such a scheme is in operation. notification. I have therefore asked the Secretariat to ensure that this situation is BIOGRAPHICAL DETAILS monitored and, where appropriate, to enforce this requirement. Service providers PROFESSOR JULIAN FARRAND QC has a long and distinguished career in law, both should also note the importance of notifying as an academic and as a practitioner. He has held a number of important academic posts, the Secretariat of any action taken in the including Professor of Law at the Victoria University of Manchester between 1968 and course of dealing with claims. 1988, during the last five years of which he also served as a Law Commissioner. He is This said, I am pleased to report that I was also the author of a number of legal publications, some of which he continues to edit. not required to adjudicate on any case in Professor Farrand has also held a number of public appointments. He has sat on, and 2002 where the service provider refused to continues to chair, a number of tribunals and committees covering a wide range of topics. pay a claim and I believe that the industry In 1989, he was appointed as the Insurance Ombudsman and, after nearly six years in has demonstrated its commitment to this role, was appointed as the Pensions Ombudsman – a post which he held until the ensuring that valid claims for unauthorised end of August 2001. use of live services are settled.

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ACCOUNTS – YEAR ENDING 31/12/02 The ICSTIS Secretariat consists of 38 staff who carry out the day-to-day work of the organisation. HOW TO CONTACT US It handles the administration of complaints (including making recommendations on adjudications) .. and manages the free helpline. It also processes applications for prior permission and claims for COPY ADVICE AND ..1 The company is non-profit making. compensation, produces all company literature, and represents the organisation at industry and GENERAL ENQUIRIES INCOME 2001 Funds are received from the network external events. In addition, its responsibilities include financial management (including the Telephone: 020 7940 7474 Notes 2002 (£) 2001 (£) operators in order to match the expenditure drawing up of budgets), personnel management and general administration. Press Office: 020 7940 7408 incurred. The figures have been adjusted to Funds Received 1 1,911,937 2,015,506 Fax: 020 7940 7456 allow for timing differences in the receipt E-mail: [email protected] Interest Provided 19,961 20,483 of such funds. The company also receives Web: www.icstis.org.uk Total Income 1,931,898 2,035,989 fines and administrative charges from THE SECRETARIAT service providers found in breach of the MAKING A COMPLAINT OR EXPENDITURE Code. Director George Kidd Live Entertainment Services Officer AN ENQUIRY ABOUT A SERVICE .. Joanne Cheeseborough Free Helpline: 0800 500 212 Committee, Independent Appeals Body, ..2 The Committee, Independent Deputy Director Paul Whiteing E-mail: [email protected] Adjudicator and Secretariat Costs 2 1,454,784 1,531,304 Appeals Body, Adjudicator and Secretariat Information Officers Sharma Francis, Online: www.icstis.org.uk Personal Assistant to the Director and Office Overheads 3 160,127 150,934 costs are those costs attributable to Nazia Iqbal Alternatively, complainants may Chairman Dawn Walton supporting the Committee in its work of write to the Secretariat: Legal and Professional Fees 138,643 190,577 Claims Administrators Paula Bailey, regulating premium rate services, and the ICSTIS, Freepost WC5468, Accounting and Audit 16,833 18,500 COMPLAINTS DEPARTMENT: Janet Brown, Ed Plummer Adjudicator in administering the Live London SE1 2BR Investigations and Personnel Manager Other Costs 4 158,927 141,320 Services Compensation Fund. Catherine Gerosa EXTERNAL AFFAIRS AND POLICY . They include staff, accommodation, . It would be helpful to the investigation Total Expenditure 1,929,314 2,032,635 DEPARTMENT: relocation, office equipment, depreciation, Case Officers Shamita Kumar, Timothy Lowe, if the promotional material for the Profit Before Taxation 2,584 3,354 External Affairs Manager Richard Sullivan and the fees and expenses of Committee Lee Morris, Janet Newell, Ayo Omideyi, service, together with any other Taxation (2,584) (3,354) members, the Adjudicator and the Elizabeth Petch, Miranda Roberts, Media and PR Officer Rob Dwight relevant details, could be provided. Independent Appeals Body (IAB). PROFIT AFTER TAXATION 00 Craig Scantebury . Members of the IAB are employed by Policy Advisor Suhail Bhat . All complaints received will be Registered Office: ICSTIS Ltd, 4 Maguire Street, London SE1 2NQ Registration No. 2398515 England ICSTIS for administrative purposes only. Case Team Administrators acknowledged and all complainants External Affairs and Policy Administrator The IAB acts entirely independently of the Mark Bend, Liam Greany will be advised of the outcome. Charlotte Jordan company. ICSTIS cannot exercise any Customer Services Officers Una Farrell, . influence over the decisions made by FINANCE, IT AND ADMINISTRATION . The anonymity of all complainants will Stewart Gofford, Pamela Govind, Ola Obe, the IAB. DEPARTMENT: be preserved unless the Secretariat has Helen O’Brien, Lisa Roberts Finance Director Cathy Atkin express permission to the contrary. .. However, we may disclose whether the ..3Office overheads include telephone, APPLICATIONS DEPARTMENT: Finance Officer and Company Secretary complaint was made by a member of Internet and TV, postage and stationery, Investigations and Quality Manager Ann Fahy the public, the media, from within the publications, travel, entertainment and Judith Oliver general office expenses. industry or was generated internally. Office Administrator Darryl Medcalf Where appropriate, complainants Case Officers Andy Mitchell, .. will be given the contact details of the ..4Other costs include printing, Zarmeena Rashid, Mark Stocker IT Support Officer Xerxes Kazak communications and monitoring, relevant service provider to enable them to pursue complaints directly. research and policy, technical consultancy We are grateful to the following members of the Secretariat, who left in 2002/2003, for their and insurance. valuable work: Dominic Francis, Nicole Leary, Barbara Osubu and Sarah Payne

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icstis

The Independent Committee for the Supervision of Standards of Telephone Information Services

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