Out-Law News | 31 May 2006 | 11:17 am | 4 min. read
During the last 18 months there have been a number of high profile cases surrounding misleadingly-advertised premium-rate competitions and ringtone subscription clubs. However, in each of the cases where ICSTIS (the Independent Committee for the Supervision of Standards of Telephone Information Services) has taken action, it has been the connectivity partner which has been investigated and fined, rather than the provider of the service itself.
There are around 30 connectivity partners in the UK serving hundreds of content providers. The problem for the connectivity partners, which act as technology intermediaries, is that they take responsibility for the services of the content providers, often without knowing the nature of the content or the trustworthiness of the provider.
Now one of the biggest intermediaries, WIN plc, is campaigning for reform.
Sally Weatherall, the head of WIN's legal department, explained that the company enters into a contract with each client that includes an indemnity. But she points out that that does not eliminate WIN's risk when ICSTIS can levy fines as high as £250,000 per complaint. Companies like WIN do not want fines. Nor do they want their names tarnished.
Weatherall says that clients generate up to two million transactions every day over WIN's network. But often the first time that WIN and its rival connectivity partners (such as mBlox, Opera and MX Telecom) recognise that rules have been broken is when a consumer or the regulator registers a complaint.
When they do, ICSTIS names and fines a company like WIN, which can usually pay the fine out of revenues received from a mobile operator such as Vodafone or Orange and destined for onward transmission to the client. In addition to taking its service fee (on average four pence per transaction), WIN can also hold back the value of a fine, provided there are sufficient funds. Any shortfall must be paid by WIN and it has to hope that its client can and will honour the indemnity.
By adjudicating against and punishing connectivity providers for the breaches incurred by content providers, WIN argues that ICSTIS is failing in its duty of protecting consumers from dubious services, and allowing rogue providers to hide behind a cloak of anonymity.
And when connectivity partners disconnect content providers operating rogue services, there is nothing to stop them moving on to another connectivity provider who is oblivious to an unscrupulous past. "We're limited in the due diligence we can perform," said Weatherall. "Google searches and Dunn & Bradstreet reports don't always tell you the whole story."
WIN fears that mobile content services run the risk of being pigeon-holed with dialler and other premium rate rip-offs, thus threatening the huge potential of the sector.
The company is calling for all content providers to be registered with ICSTIS, together with a record of all of their previous regulatory breaches in an easily searchable database on the regulator’s website. While ICSTIS have made some moves towards naming the rogue content provider the adjudications still state that the connectivity provider rather than the content provider is the culprit and liable under the Code. WIN describes this approach as absurd.
WIN’s recommendation, therefore, is that the system goes one step further by explicitly naming the content provider and holding them out as being liable for the service that the content provider markets and provides to consumers – this would better protect both consumers, connectivity providers and the industry as a whole by allowing easy identification of persistent offenders.
Ben King, Marketing Manager at WIN, said: "Whilst network operators and connectivity providers are taking their responsibilities towards consumers extremely seriously, there is little we can do proactively to prevent rogue services from operating over our networks because it’s almost impossible to identify them until consumers begin to complain."
He said that the current framework lets rogue providers "hide behind a cloak of anonymity, while connectivity providers bear the financial burden and negative PR that accompanies adjudication."
A simple database or ‘blacklist’ of offenders would help everyone in the delivery chain, says King, protecting consumers by giving those in the chain absolute visibility. "Without such steps the huge potential growth of the mobile content industry could be under serious threat," he warned.
WIN also argues that the current regulatory framework in mobile content is too complicated – with content providers having to adhere to several lengthy and complex codes of practice from both network providers and regulators. King says that many providers of legitimate content services are unintentionally breaking the rules as a result. Again, this risks stifling the growth of the industry for reputable content providers looking to market their services.
As a result it has launched a guide to operating premium rate services, aiming to educate mobile content providers on who the regulators are, what codes they administer, how their codes are enforced and by which major regulations content providers must abide. The guide is available on request from www.winplc.com.
An ICSTIS spokesperson welcomed the guide from WIN but said some of the company's other concerns have been addressed already or are being addressed.
Media and publications officer Kate Belson explained that the content provider will be named in adjudication reports when its identity has been provided by the connectivity partner – once ICSTIS has spoken to the named party to check that it was indeed the content provider. If the content provider is unnamed or fails to respond to ICSTIS, the connectivity partner is named. Belson added that the facility to search adjudications by the name of a content provider will be available soon at the ICSTIS website.
"We expect our service providers to do due diligence because it's important for consumers to feel confident when using premium-rate services," said Belson.