Conor Lenihan (Dublin South West, Fianna Fail)

It would make my work as a Minister of State a lot easier.

I am pleased to present the Communications Regulation (Premium Rate Services) Bill 2009 for the consideration of the House. This Bill is an important part of the Government's legislative programme and when enacted will transfer the regulation of premium rate services from the current regulator, RegTel, to the Commission for Communications Regulation, ComReg, and provide for more effective regulation of the sector in the interest of consumer protection, which is its primary purpose.

The Bill is the result of a review of the regulation of premium rate services in Ireland involving consultation between officials of my Department, RegTel, ComReg, the Attorney General's office, key market players and other stakeholders in the industry. The Minister of Communications, Energy and Natural Resources, Deputy Eamon Ryan, initiated the review following a significant increase in complaints from the public concerning premium rate services, particularly subscription services, and concerns raised by the Attorney General about the current statutory basis for the regulation of this sector. Following the review, the Minister decided that the regulatory function should be transferred to ComReg by way of an extension of its functions under the Communications Regulation Acts. This will ensure that an effective regulatory regime is established in accordance with Government policy on agency rationalisation.

Before going into the main provisions of the Bill, I would like to set out for Deputies the background to the premium rate sector in Ireland and the rationale for the Bill. Premium rate services are content services provided primarily over fixed line and mobile telecommunications networks that are charged to a consumer's telephone account by his or her network operator at a price which exceeds the cost of communications carriage alone, that is, the cost of a normal telephone call. These services, which are accessed by means of a specific telephone number prefix, include information and entertainment services such as directory inquiries, weather forecasts, traffic news, sports results, chat lines and horoscopes, and services such as competitions, mobile ring tones and logo downloads.

The premium rate services market is currently regulated by RegTel, an independent and limited private company, by means of a code of practice produced by RegTel to which all service providers are required to adhere. RegTel is funded by a levy on the service providers and network operators that carry premium rate services. This is essentially an industry self-regulation model. There are approximately 370 service providers offering premium rate services over the networks of 12 operators. Between 2001 and 2007 annual revenue grew from €31 million to €95 million, an increase of over 200%. Given the current difficult economic climate, revenue for the current year is likely to decline to about €80 million. Clearly, this is a dynamic market which provides significant returns to service providers and network operators.

While the vast majority of service providers operate within RegTel's code of practice, a small number of non-compliant providers bring the sector into disrepute. The poor experiences of consumers at the hands of these non-compliant service providers in recent years have undermined confidence in the regulation of the sector and, according to the network operators, is impacting on the take-up of services in the Irish market. It is widely believed that if the sector was effectively regulated, consumer confidence and demand for services offered would increase.

Premium rate services are distinctly different in many respects from standard telephone services. The main features that set them apart and warrant more regulatory intervention in order to protect consumers are issues relating to the supply chain, content, price and transparency. As the premium rate service consumer is in contract only with his or her telephone network operator, he or she has to pay that network operator for the premium rate service, which usually originates with a premium rate service provider and may even be delivered through intermediaries. The length of the supply chain between the originating premium rate service provider and the consumer is a factor in determining the need for regulation.

Many premium rate services such as weather forecasts, traffic reports or sports results, although typically more expensive than ordinary telephone communications, require only light regulation. Other forms of content offered over telephone networks, such as adult chat lines, require tighter regulation because of the risk that minors may access them. The content of a service must not be such that it facilitates or encourages anything that is unlawful. Prices for certain types of premium rate services can result in substantial charges on a telephone bill or pre-pay card if the consumer is not vigilant or if the phone is used by a child or other user who is unaware of the potential to generate telephone bills that can cause surprise and distress.

A further reason for regulation, and an area that gives rise to the vast majority of complaints both in Ireland and elsewhere, is the lack of transparency in relation to subscription services offered by a small but significant group of providers. In many cases, consumers who thought they were engaging in a one-off transaction have found that they inadvertently agreed to subscribe to a premium rate service whereby they receive subsequent content over their phone line or mobile and are charged for this service on an ongoing basis. This problem has been most prevalent where consumers enter competitions without realising that they have signed up to an ongoing subscription service which incurs substantial costs.

The new regulatory framework proposed in this Bill aims to address any issues that may arise in regard to the provision of premium rate services, particularly in the areas of supply chain, content, pricing and transparency. The Bill proposes a licensing regime backed up by effective enforcement powers. This will ensure that the consumers of such services are protected from the unscrupulous practices of a small number of providers who until now have been able to exploit weaknesses in the current regulatory regime. It replaces the current self-regulatory regime based on contractual arrangements between RegTel and service providers with a more robust licensing regime backed up with effective enforcement measures.

Enforcement is a key element of effective regulation and appropriate remedies and sanctions are vital to secure regulatory compliance. It is in this context that the enforcement proposals in this Bill have been drafted. Involving the industry in enforcing proper standards is an important element of effective regulation. I acknowledge that the majority of companies operating in the sector are reputable and through various initiatives have played an important part in maintaining high standards.

In order to maintain this level of engagement with the industry in the regulation of the sector, the Bill provides that a code of practice drawn up by ComReg in consultation with all interested parties will remain an integral part of the new regulatory regime. The industry was fully consulted during the preparation of the Bill and I am happy to say that it strongly welcomed its provisions. I believe that following its enactment consumer confidence will be enhanced and the sector will enjoy further development and growth. The transfer of the regulatory function to ComReg will not impose any charge on public funds as provision is made in the Bill for the costs of regulation to be funded by a levy on the industry, as is the case at present. Provision is also made in the Bill for the transfer of staff from RegTel to ComReg, thus ensuring that the valuable expertise built up by RegTel over the years is retained and that no existing staff member suffers any loss as a result of the transfer of function.

Apart from the regulation of premium rate services, the Bill makes provision for ComReg to issue appropriate emergency directions to operators with a view to minimising customer disruption and providing continuity of access to emergency services in the event of an operator exiting the market. Current legislation does not enable ComReg to take action to restore a telephone service within an appropriate timeframe in such cases and this provision will address this deficiency.

The Minister also intends to introduce an amendment on Committee Stage to Part 5 of the principal Act, designating the National Roads Authority as a road authority for the purposes of that Act, to facilitate the installation of next generation infrastructure. This provision will facilitate the roll-out of fibre optic throughout the country to provide additional broadband backhaul connectivity to those areas of the country that require it.

I now turn to the text of the Bill itself. As an explanatory memorandum on the Bill has been circulated, I do not propose to go into detail on each section but rather to highlight the main provisions of the Bill in the order they appear in the text.

Section 3 amends section 10 of the principal Act to provide for the commission to have the additional function of regulating premium rate services, which is the primary purpose of the Bill. Sections 4 and 5 provide for the licensing of services, the terms and conditions that may be attached to a licence and the information that premium rate service providers shall provide to ComReg upon request. This new licensing regime is designed so that ComReg may prescribe the type of service and service provider that will require a licence and will enable ComReg to vary the conditions that will apply to particular types of premium rate services.

The definition of premium rate service in the Bill is necessarily broad so as to capture not only existing types of services but also services that may be developed in the future as a result of developments in technology. It specifically excludes broadcast services, such as pay-per-view, which could, if not specifically excluded, come within the scope of the definition, as these are regulated by the Broadcasting Authority of Ireland.

Certain types of premium rate services will be subject to tighter regulation than others. For example, services such as weather forecasts, traffic news and other information type services will be subject to less stringent conditions than on-going subscription services, advice or chat services that may involve substantial charges on a phone bill or pre-pay card. Accordingly, ComReg will be able to specify different conditions for different types of service in an objective and proportionate manner.

Sections 6 to 8 provide the enforcement measures that ComReg may apply against non-compliant service providers. Under section 6, ComReg may apply to the High Court for the immediate suspension of a licence where it considers such suspension is necessary to protect users or potential users of premium rate services. This is an important provision as swift action by ComReg may be necessary to prevent the continuation of an offending service until further investigative and enforcement action is taken by ComReg.

Section 7 provides that if ComReg finds, following an investigation, that a service provider has not complied with or has breached a condition of a licence, it shall notify the provider of its finding and shall require the provider to remedy any non-compliance within a specified period. The intention here is that such a remedy can include a refund by the provider to affected consumers as is provided for in the current code of practice. The procedure for making such refunds can be provided for in regulations to be made by ComReg specifying the terms and conditions to attach to a licence, which should clearly spell out the obligations imposed on the provider of the service on refunds.

Where a premium rate service provider has failed to comply with or remedy the breach within the time period specified under section 7, ComReg may, if it considers it appropriate to do so, and having notified the licence holder of its intention and having considered any representation made by the licence holder, revoke, amend or suspend for a period, the licence. If the failure to comply with a condition is considered by ComReg to be a serious breach, the revocation, amendment or suspension takes effect upon notification.

Section 9 provides that a service provider aggrieved by a decision of the Commission to refuse, suspend or revoke a licence has the right of appeal to the Circuit Court against the decision within seven days of notification of the decision. Sections 10 and 11 provide for offences relating to the provision of unlicensed premium rate services and for overcharging for services or charging for services not supplied. It also provides for the court, on the application to it by the commission following a conviction, to make an order revoking the licence and prohibiting the licensee from reapplying for a new licence, either permanently or for a fixed time.

These enforcement provisions are designed to give ComReg maximum effectiveness in deterring non-compliant service providers from operating in the market. The requirement that each service provider must apply for and hold a licence covering the services it provides is significant. It enables ComReg to refuse to grant a licence under specific circumstances or, if granted, to specify the conditions that attach to any particular licence. It also provides a mechanism whereby a licence may be amended, suspended or revoked, depending on the nature of any non-compliance with the conditions of the licence.

It is important for the industry as a whole that the small number of service providers that are responsible for the large number of complaints from consumers are subject to dissuasive sanctions and, if necessary, may have their licences suspended or revoked. The vast majority of service providers who are compliant need have no fear of these provisions. On the contrary, they have welcomed the proposed provisions as an effective response to those who are bringing the whole sector into disrepute and undermining public confidence in the industry.

As I stated earlier, the involvement of the sector itself in maintaining high standards through a code of practice is an important element of effective regulation. Section 13 of the Bill provides for the preparation and publication of a code of practice by ComReg following consultation with interested parties and with other statutory bodies. Apart from consultation with service providers and other stakeholders in the industry, this would include consultation with bodies such as the Broadcasting Authority of Ireland, which has statutory responsibility for broadcast content, a medium through which many premium rate services are advertised, and the National Consumer Agency, which has overall responsibility for protecting consumer interests. In this way, a consistent approach by the relevant statutory bodies in both consumer protection and content related regulation will be ensured. Compliance with the code of practice will be a condition of a licence and, consequently, non-compliance with its provisions may result in a sanction being imposed.

The Bill also provides, under section 16, for the transfer of staff currently employed by Regtel to ComReg on the same pay and conditions to which they were entitled while in the service of Regtel, subject to the consent of the Minister and the Minister for Finance. This will provide ComReg with the expertise and resources necessary to enable it to carry out its new function effectively from the outset.

In order to minimise customer disruption and to ensure continuity of access to emergency services, section 18 provides that ComReg may issue an emergency direction to an operator providing wholesale access to another operator, in the event of the exit from the market of that other operator. Deputies may recall that a situation arose in 2006 where an operator informed its customers that it was no longer in a position to provide them with a service. While ComReg played a significant role in mediating a solution that allowed those customers to switch to an alternative service provider, it had no statutory basis on which to do so. This provision rectifies that situation.

The Bill is an important measure in contributing to the effective regulation of premium rate services in Ireland. The proposals it contains are measured and proportionate responses to the challenges that will face ComReg in establishing effective regulation of these services and protecting the users of those services. I am confident that the provisions contained in it will result in greater consumer protection and confidence and growth in the industry.

Apart from the amendment to Part 5 of the Principal Act, to which I referred earlier, and any amendments of a technical legal nature that may be agreed in conjunction with the Attorney General's office, I do not intend to introduce any substantive amendments to the Bill on Committee Stage. I look forward to hearing the views of the Members of this House and their assistance in facilitating its early passage into law. I commend the Bill to the House.

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