3rd Aug 2010

AIME Board signals "cautious optimism" in response to PhonepayPlus 12th Code Consultation

As PhonepayPlus’ (PP+) 12th Code consultation period drew to a close at the end of July, the PRS and Telemedia industry is now braced for the proposed changes under the new Code to become implemented – probably around springtime 2011. According to PP+, the new approach to regulation will be more ‘fair and open’ and the 12th Code has been designed to work on the principles of shared responsibility, adoption of a service provider registration scheme and offer a more proportionate response to problems arising in the marketplace for consumers.

Chief amongst AIME’s concerns in its response to the 12th Code consultation is how the new changes will be managed by PP+ and how the changeover between the 11th and 12th Codes will be handled, however, as AIME Vice-Chairman, Jeremy Flynn says, there is a lot in the Code to be welcomed.

“There is an inherent recognition in the 12th Code that it has been designed with mobile in mind and it formally distributes responsibility for compliance throughout the value chain. Overall it represents a move away from prescriptive regulation towards proportionate responsibility. And PP+ should be congratulated for accepting this positive evolution,” says Flynn.

However, AIME has concerns over PP+’s attempts to create an “official”, organised value chain of registered companies by reclassifying all the businesses which take part in delivering a service onto a network – as level 1 and level 2 companies.

Although in the past, one of the industry’s main problems with regulation has been that no matter where a problem occurs in the value chain, it has been the service provider (aggregator) that was in the firing line.

“PP+ has gone a bit over the top in describing the levels,” Flynn says. “The service promoter, although closest to the consumer, will be level 2 and others are classed as level 1, including the aggregator. Every case will be different and will need analysis and this means more workload for the regulator and correspondingly higher costs for the industry.”

Sally Weatherall, legal advisor to the AIME board and Managing Director of Strategic Brief Limited also raises concerns with this element of the new Code. “A significant issue PP+ will face will be ascertaining where the fault actually lies. Sometimes there may be multiple parties to blame. So how will PP+ identify the fault and apportion responsibility? There will be a need to examine the facts of each case rather than forcing definitions on the supply chain. The facts should determine the liability, not the definition of the parties involved” she says.

Other complexities arise where corporations outsource their entire mobile services solution. In such cases a service provider may act in multiple roles of aggregator, content provider and promoting agent. Will the corporation be expected to register their details under the PP+ Registration Scheme? Will the corporation effectively be able to contract out of the direct liability intended under the new Code?

The new Code is ‘outcomes based’ which again suggests that the facts of individual scenarios must be investigated. It may be that outcomes were unforeseen by both PP+ and the industry, in which case the new Code will provide the flexibility to issue (in consultation with the industry) Guidance Notes which will prevent future harm without the need for fines. Finally, much of the Code application apparently relies on subjective interpretation. Says Weatherall, “It is hoped that PP+ will apply the Code objectively and transparently. Only in doing so will the consumers and industry have the requisite certainty and confidence in the services available.”

Many practicalities are as yet unanswered and this is perhaps to be expected at this early stage. However the intentions are supported. “If the new Code achieves nothing other than proportionate liability, where the actual party at fault is held responsible for the consumer harm suffered, then the Code will represent a significant advancement for the industry” Weatherall says.