How the premium-rate regulator will target content producers

The premium rate phone regulator has published proposals whichwould make the companies behind premium services more accountablefor their actions. PhonepayPlus has said that all the companiesinvolved in a service should be responsible for its failings.

PhonepayPlus (PPP)'s regulatory attention has been focused onphone service providers in the past. There are the relatively fewcompanies that actually set up the mechanisms by which premium-rateservices are run, such as the numbers and the technicalinfrastructure.

They are then paid by information providers, who use theinfrastructure to offer their competitions, quizzes, ringtones orother premium-rate services. Despite the fact that the content iscreated by information providers, PPP focuses its attention onservice providers.

In proposals for a new version of its code of practice for thepremium rate industry PPP has now said that it wants to make surethat all companies involved in a service are responsible forit.

"In practice … PhonepayPlus’ regulatory powers are focusedprimarily on the service provider," said the regulator's newproposals. "Currently the 11th Code allows for a breach to be'passed through' from a Service Provider to an InformationProvider, if PhonepayPlus is satisfied the IP has caused theindividual breaches and the IP accepts the pass-through."

"The majority of cases have both a service and informationprovider involved in the service – and so to some extent thebreaches," it said. "We believe the new Code should facilitate thetargeting of as many companies in a value chain as have beeninvolved in causing consumer harm."

The change will mean that information providers are far morelikely to be in receipt of fines, suspensions and other regulatoryactions, PPP's proposals said.

"In practice, this could mean that the breaches of the outcomesset out in Section 2 of this document are more likely to betargeted at information providers, who most often own the contentof the service and directly promote it," it said. "Although serviceproviders … who are also acting as an information provider wouldstill be found culpable in the same way."

The change is contained in a set of proposals which are intendedto be the basis for consultation on what should be in theregulator's next code of practice, the 12th. A PPP spokeswoman saidthat this is a pre-consultation exercise through which theregulator wants to hear the views of industry.

The proposals still emphasise, though, the responsibility of thecompanies which help information providers reach the public.

"Those further up the value chain who provide a service to theIP at the end of the chain…we would expect to undertake areasonable degree of due diligence, monitoring, and control inrelation to their clients if this approach is to work. If they donot, then we feel it is right they should be held in breach of theCode as regards a systemic failing of compliance, and sufferpenalties where appropriate," the proposals said.

"Ultimately the possession of a connection to a phone-paidservice is a fundamental benefit to all those who share revenuefrom it," it said. "So where a connection is sub-contracted to aclient, we would expect the party which has subcontracted it todeliver the following outcomes: due diligence; reasonable RiskAssessment and Control; timely and effective co-operation withPhonepayPlus in the event of investigations."

In order to keep track of information providers and others whomight engage in repeat offending with rule-breaking services, PPPhas proposed a mandatory registration process which would result ina database of all operating firms.

"It would facilitate due diligence and risk management if all[service providers] and [information providers]…were required toregister with an appropriate body which understands the market andhas the integrity and independence that such a scheme willrequire," the PPP said. "Such an approach would also support ourproposals to distribute enforcement of the Code along thevalue-chain and away from the near exclusive enforcement that thecurrent Code places on Service Providers."