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Communications Bill

Part of the debate – in the House of Lords at 5:50 pm on 25th March 2003.

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Photo of Baroness Gould of Potternewton Baroness Gould of Potternewton Labour 5:50 pm, 25th March 2003

My Lords, like the noble Lord, Lord Addington, I shall comment more narrowly than many others. I wish to concentrate on clauses that have not yet been mentioned—Clauses 117 to 121. They are a small but important part of the Bill. The regulation of premium rate services is of crucial importance to consumers who suffer considerable distress when those services are misused. I declare an interest as a member of the Independent Committee for the Standards of Supervision for Telephone Information Services (ICSTIS). For the past 17 years, it has been the regulatory body responsible for premium rate services (PRS).

By way of background, PRS services are used by an increasingly cosmopolitan group of service providers. Services include voting on TV shows, competitions, chat and adult services, horoscope lines, Visa, government agency services, sport, weather and directory enquiries. PRS was the mechanism used for allocating tickets for the Golden Jubilee concerts at Buckingham Palace last year. PRS is also used for pay-to-play charges for game channels on digital television. Services can be accessed on land lines, mobile phones, interactive digital television and the Internet. At present, calls cost from 10p per call to £1.50 per minute. The money paid for calls is shared by the telephone companies carrying the service and the organisation providing the content.

ICSTIS is the largest co-regulatory body dealing with converged services in the communications field. It is funded by a levy on the industry and currently receives back-stop support from Oftel through telecom licences. Those licences place certain obligations on telephone companies when making available premium rate services.

ICSTIS regulates the content and promotion of services through its code of practice, which allows it to investigate complaints, to fine companies and to bar access to services. In 2002, ICSTIS dealt with 150,000 enquiries and investigated more than 10,000 complaints dealing with 99 per cent plus of all PRS complaints. As a result, it closed down around 100 services and levied fines totalling around £1 million. However, that should be set against a background of an industry that has tripled in value in three years to be worth nearly £1 billion. The UK PRS market is the largest in the world. It is now significant in its own right in the communications sector. Regulatory failure would be commercially significant.

I make those points, first, because there is a lack of knowledge about what PRS is, but, perhaps more importantly, to illustrate how crucial it is that the Bill continues to allow absolute protection for consumers using premium rate services.

The creation of Ofcom has implications for the regulation of premium rate services. Although not part of Ofcom, ICSTIS will need to establish new relationships to replace existing ones with Oftel and the other bodies merging to form Ofcom. It is crucial that the arrangements underpinning the effectiveness of ICSTIS's regulatory regime are recreated in the Bill. It is particularly important, because the means by which ICSTIS currently receives support from Oftel—through telephone licences—are being swept away under the Bill.

The Bill will affect ICSTIS in several ways, as defined in Clauses 117 to 121. Ofcom will assume statutory back-stop powers in case a network fails to fulfil its obligations to ICSTIS under the Bill. The Bill will also affect ICSTIS's funding and the definition of the stakeholders—networks and service providers—that it regulates. To ensure continuity of regulation, ICSTIS has worked with mobile phone companies in tabling amendments that received cross-party support in another place. It was encouraging to see that the Government took those amendments on board at Report stage.

So far, the amendments have ensured that the Bill maintains ICSTIS's holistic approach to effective regulation in so far as it deals with premium rate promotions, the marketing of services and the content of services. They have also ensured that the legislation maintains the important role in effective regulation played by the telephone companies when it is necessary to terminate access to services and to withhold revenues. However, the Bill requires further changes to ensure that their effectiveness is not undermined.

By parliamentary convention, the Bill is limited to activities undertaken in the UK by providers of premium rate services. However, many of the problems that ICSTIS deals with emanate from the global market-place. All too often, they involve services providing such material as child pornography, which must be dealt with speedily. Recently, ICSTIS had to stop the operation of Internet services in Spain and Germany using deeply offensive marketing and "corrupt" dialer technology designed, without doubt, to trap people into incurring bills of several hundred pounds. If the Bill and the supporting code of practice cannot address that, there is a serious threat that many providers of such services will simply, and at little cost, relocate outside the jurisdiction, thus creating grave consumer harm in a way that will be unregulated. That would damage the reputation of companies that provide useful services to the public.

The Bill is also designed to ensure that all companies in the value chain providing premium rate services are clear that ICSTIS regulates "service providers"—companies that contract with telephone companies for their numbers. But the system does not allow for regulatory evasion through the creation of intermediary bodies. All companies contracting telephone numbers from networks must remain under ICSTIS's authority if it is to continue to be effective. If the draft provisions appear not to achieve that, I hope that the Government will be ready to make any further necessary amendments.

A key focus of ICSTIS's work in 2003 will be increasing media literacy among consumers and those working with them. That means informing and empowering consumers so that they are better able to understand how premium rate services work on a variety of platforms and a range of devices—the Internet, digital interactive TV and mobile messaging services. ICSTIS wants consumers to know what to look for when deciding whether to use a premium rate service. It also wants them to know how to protect themselves and their families from unwarranted contact or harmful content by using call-barring or filtering devices.

An informed, confident consumer is the key to preventing consumer harm and increasing confidence in PRS as a billing mechanism. When the pace of technological development outstrips consumer knowledge there is potential for consumer harm. There must be concern over unauthorised use, serious, wilful consumer deception and the inappropriateness of some services, particularly sexual entertainment.

Child protection from consumer harm, inappropriate content and contact with strangers, especially through the Internet, is of particular concern. It is not easy to wrestle with the difficulties raised by the Internet dimension, but they must be faced. We must foresee a time when the analogue signal is turned off and practically every house in the country has a digital TV with Internet access. Such sets will soon find their way into children's bedrooms.

Because the future can be seen so clearly, we should also put the industry on notice that it should produce a code of practice, as with video on demand, to show how it intends to grapple with the child safety agenda raised by the ease of Internet access. I appreciate that the content board will have the responsibility of considering that area, as will the Home Office Internet task force on child protection. Child protection would benefit, if the sentiment were included in the Bill, and there may be amendments to that effect. We cannot let such an important matter slip out of sight.

It is important to the consumer that effective regulation be maintained and, where necessary, enhanced. As the Minister, Stephen Timms, said in Committee in another place,

"ICSTIS does an excellent job, and is a good model of effective self-regulation without, until now, any legislative support. We recognise the success of ICSTIS, and want to support and strengthen its work".—[Official Report, Commons Standing Committee E, 7/1/03; col. 321.]

To my noble friends on the Front Bench, I say that, bearing that in mind, I hope that the Government will ensure, by further amendments to the Bill, that we maintain the scope and general structure of a regulatory regime that has served consumers well in rapidly changing times.