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Submitted by Mike Grenville on Mon, 17 Jul 2006 14:55 |
As ICSTIS ponders the future for premium rate
regulation, in the same way that consumers
turned against subscriptions with ongoing
charges, the same could happen with mobile
data unless operators fix it soon or there
will be serious damage to the whole mobile content industry.
"Premium rate SMS gave an answer to mobile operators as to how the content-enabling value of their network investment could be realised - a problem they had been thinking about for 10 years" said mBlox's Andrew Bud speaking at a Westminster eForum event last week titled 'Premium Rate Services in the future and the role of the regulator'. "With PSMS operators could let publishers and other media companies do the business while they kept 20-25% of the revenue" said Bud.
Learning The Lessons
"It is inevitable for an industry that is growing so fast that mistakes have been made" said Bud. "In 2005 the industry didn't get it right with the result that there was a major breakdown in public trust relating to subscription services. It taught the industry the value of consumer trust. The important thing is that lessons are being learned."
For example mobile operator 3 already charges for per-product and does not make an additional data download charge, although this sometimes costs the operator more than it earns from the product sale.
Train Crash Ahead?
However Bud warned that data airtime charges can lead to bills for consumers ten times what they were expecting to pay, leading to another breakdown of trust unless the industry fixes it. "The solution is wholesale data rates and the urgency with which operators other than Vodafone are addressing it is not great enough." According to Bud unless there is more transparency of mobile data pricing, the industry may only have until Spring 2007 to put its house in order. "Operator mobile data charges for rich media content are a train crash waiting to happen" said Bud.
"The beauty of Payforit is that it will be a much more trustworthy environment. As content moves from ringtones to full track mp3 downloads and mobile TV, the value in the transactions is increasing. Provided we don't have any more train wrecks this could become a significant industry" said Bud.
Kids Won't STOP
"Billing systems is an area for improvement" agreed George Kidd, Director, ICSTIS. "The more we inform and empower consumers the less we should need to do to regulate abuse. Consumers are spending 1.6bn through premium rate services and although we had 20,000 complaints, the number is down this year and I don't believe there is a systemic problem in the industry".
However Anna Fielder, Policy Consultant to the National Consumer Council emphasised that more needed to be done. "The potential detriment to kids as consumers is that they do not complain and it is often too late when they tell teachers and parents. The majority of kids are not tuned to the economic risk of new media. The connection between the regulation and consumers is very weak. The STOP command is still not widely known" said Fielder.
She pointed out that the ICSTIS web site has very little information for children, something that ICSTIS said is being addressed shortly.
The Wild East
"Compared to other countries, the UK has a strong regulatory environment" said Bud. Commenting on the impact of the announcement of regulation in China, Bud said "China has been like the wild west and many things have happened there that wouldn't be allowed here. In the USA tough codes were put in place for PSMS from the start benefiting from their experience with 900 lines. In the UK we have been able to make some mistakes that have resulted in learning rather than destroying the market in the process as may happen in China."
Self Regulation Or More Regulation
Julie Minns, Head of Content & Consumer Regulation, 3 spoke strongly against regulation saying that 3 believes "competition protects and industry can self regulate." She claimed that the "ICSTIS code isn't written in a way that would apply to many services on 3. For example customer bill information is available from the handset."
However Elaine Bentley, General Manager, BBC Audiocall pointed out that "There is a new scam on the block almost every week. Self regulation would only open up the floodgates for small companies to get in and make a quick buck and get out and damage the industry in the process. Some companies are not going to have the best interests of consumers to heart."
Bentley went further saying that "We need closer involvement from law enforcement agencies." While understanding the need for due process, she said "a big quick slaps sometimes by ICSTIS" would have a positive effect on the industry.
The PRS industry is a real success story" said Claudio Pollack, Director of Consumer Policy, Ofcom "and we want to encourage an innovative sector but consumers need to have trust. The Ofcom review is coming at exactly the right time and we are keen to get it right."
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