Précis On 2 July 2012, Ofcom confirmed its proposals for regulation of premium rate services

What? Premium rate services (“PRS’s”) can offer content, products, facilities or services. They can be offered via fixed or mobile phones, computer or interactive digital TV, or fax, and are charged to customers’ telephone bills. These services are regulated because they carry a potential risk of consumer harm (for example, where the PRS involves inappropriate or offensive content, appeal to children, or can only be assessed in terms of quality at the point of consumption). They also tend to cost more than a regular phone call or text message.

PRS’s are regulated by Ofcom in accordance with section 120 of the Communications Act 2003. Some also fall within the scope of, and so are also subject to, the PRS Condition (which requires communications providers to comply with the PhonepayPlus Code of Practice and directions given by PhonepayPlus).

So what? Ofcom reviewed the relevant legislation in 2009 and set out an analytical framework that could be used to determine whether a particular PRS should be subject to PRS regulation due to the potential risk of consumer harm. Following requests from mobile communications providers, Ofcom applied the same framework to determine whether fixed and mobile portal content services and PRS’s bought using Payforit services should be regulated.

Complaints received by PhonepayPlus that relate to these mobile services have increased due to companies misusing promotional SMS messages and marketing lists and failing to provide sufficient information about the costs and conditions of the service, including subscriptions.

Ofcom has now used this framework to assess various types of PRS and has reached the following conclusions.

Own portal services

These are PRS’s where customers access on-demand content provided by fixed communications providers (for example, on-demand TV) or mobile communications providers (for example, games). Ofcom has decided that these should be removed from the scope of the PRS Condition as there is more limited risk of consumer harm occurring, and so regulation would not be justified.

Payforit services

Payforit is a payment mechanism for wireless application protocol (“WAP”) and web users, which allows the purchase of services from third-party providers. Ofcom has decided that these should remain within the scope of the PRS Condition but PhonepayPlus will be asked to consider how to regulate these services proportionately, given the reduced potential for consumer harm in comparison with other forms of PRS.

In order to give effect to the above, the scope of the PRS Condition has been modified to explicitly exclude own portal services, but to include a service delivered by means of an electronic communications service and charged by means of a payment mechanism (other than own portal services). The modification of the PRS Condition will be effective from 1 September 2012.