How the premium-rate regulator will target content producers

PhonepayPlus (PPP)'s regulatory attention has been focused on phone service providers in the past. There are the relatively few companies that actually set up the mechanisms by which premium-rate services are run, such as the numbers and the technical infrastructure.

They are then paid by information providers, who use the infrastructure to offer their competitions, quizzes, ringtones or other premium-rate services. Despite the fact that the content is created by information providers, PPP focuses its attention on service providers.

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

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

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

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

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

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

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

"Those further up the value chain who provide a service to the IP at the end of the chain…we would expect to undertake a reasonable degree of due diligence, monitoring, and control in relation to their clients if this approach is to work. If they do not, then we feel it is right they should be held in breach of the Code as regards a systemic failing of compliance, and suffer penalties where appropriate," the proposals said.

"Ultimately the possession of a connection to a phone-paid service is a fundamental benefit to all those who share revenue from it," it said. "So where a connection is sub-contracted to a client, we would expect the party which has subcontracted it to deliver the following outcomes: due diligence; reasonable Risk Assessment and Control; timely and effective co-operation with PhonepayPlus in the event of investigations."

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

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