Ofcom cracks down on premium rate numbers

Damian Reece,City Editor
Friday 10 December 2004 01:00

Plans to clamp down on rogue operators of premium rate telephone numbers were announced yesterday by Ofcom, the telecoms regulator.

Premium rate numbers, which cost up to £1.50 a minute from the BT network, are typically used on television voting lines, adult services and chat lines, ring tone downloads and interactive television games.

The watchdog published proposals to tighten regulations that have allowed abuses to multiply. The move comes after a request by the Department of Trade and Industry to investigate the matter amid growing concern about fraudulent and misleading use of premium rate services, often involving numbers with the prefix 09.

Fines for companies that abuse premium rate services will be increased under Ofcom's proposals. The regulator has asked the DTI to consider increasing the maximum fine from £100,000 but stopped short of recommending the amount of a higher penalty.

One of the most common frauds affects dial-up internet users, who have in many cases discovered that the number they connect to has been covertly changed to a premium rate number, with the operator often based abroad, making recovery of lost funds difficult.

Stephen Carter, the chief executive of Ofcom, said: "There is a clear need for action here. These are necessary changes to ensure consumer confidence in the premium rate industry for the long term."

While the regulator is not proposing to stop the use of premium rate services, it is planning a tougher regime to police companies that generate revenue from the lines and for the telecoms operators that supply the necessary services. This will include changes to the Icstis code of practice, which applies to every company offering premium rate services in the UK. Icstis is a subsidiary regulator to Ofcom.

Presently consumers pay their telecoms operator, such as BT Retail or One.Tel for their calls. The telecoms operator in turn pays a number of different network providers to connect their customers' calls to the premium rate companies. These premium rate companies share the call revenues with the network providers. But in a major reform, Ofcom has decided that the network providers should not share revenues with the companies offering premium rate services for a period of 30 days. Freezing the revenues will give Icstis time to assess complaints.

The network providers will also face fines if they fail to comply with the code of practice, which includes a requirement to provide detailed information on the identity of companies offering premium rate services.

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