The document discusses upcoming changes to the UK's Phone-paid Services Authority's 12th Code of Practice, including: 1) The code will move from rule-based to principle-based regulation and hold "Level 2 providers" directly responsible for services. 2) "Level 2 providers" (also called "merchant promoters") will need to register with the regulatory agency and could face fines up to £250,000 for non-compliance. 3) The changes aim to increase transparency and consumer protection in the premium phone services industry.

1. Mobile Innovation WIN’s approach Paul Swaddle 30 th October 2009 WIN plc & AIME PP+ 12th Code WIN Webinar

2. Preparing for the 12 th Code 6th July 2010 Sponsored by Success in Interactive Media

3. What is AIME? Association for Interactive Media and Entertainment THE trade association for phone-paid services industry Purpose? Create an environment of consumer confidence and trust within which our Members’ commerce can flourish Promote and represent the commercial interests of the UK Interactive Media & Entertainment Industry. Encourage and stimulate Industry growth. Achieve a favourable regulatory environment for members Facilitate communication & engagement throughout the value chain to deal with issues affecting member business

4. AIME Membership Only trade body with membership representing the whole Interactive Media value chain Members: 80+ Affiliates: 3,000+ base 90%+ UK Interactive Premium Traffic (fixed & mobile)

5. 12 th Code – At Consultation PhonepayPlus is currently consulting on changes to the Industry Code of Practice This will extend compliance responsibility down through the value chain to include “Level 2 Providers” Level 2 Providers defined as: “ The last contracted party in a PRS delivery chain who is responsible for the promotion, operation and content of the service” aka “Merchant Promoters”

6. 12 th Code – Old Wine, New Bottle? 11 th Code deconstructed into principles-based Code and detailed guidance notes PRS compliance responsibility throughout the value chain, with emphasis on the Merchant Promoter Registration Scheme Codified Customer Support standards Commitment from PhonepayPlus to use “Informal Procedure” more frequently for minor breaches Greater prescription around marketing opt in

7. Structure of the Code 12 th Code will change industry regulation from Rule based, to a Principle Based system Decision on whether Breach of Principles has occurred will be a ‘subjective test’ by Code Compliance Panel (CCP) AIME is pressing for ‘objective & transparent scoring system’

8. 12 th Code principles Legality Transparency Fairness Avoidance of Harm Privacy Complaint Handling For each principle there are a number of rules

9. Legality Outcome – “That premium rate services comply with the law”

10. Transparency and Pricing Outcome – “That consumers of premium rate services are fully and clearly informed of all information likely to influence the decision to purchase, including the cost, before any purchase is made” Rules include greater prominence of promoter's name.

11. Fairness Outcome – “That consumers of premium rate services are treated fairly and equitably ” Many detailed rules, some service-specific. AIME is trying to get these moved out to Guidance Notes

12. Privacy Outcome – “That premium rate services do not cause unreasonable invasion of consumers’ privacy”

13. Avoidance of harm Outcome – “That premium rate services do not cause harm or unreasonable offence to consumers or to the general public”

14. Complaint Handling Outcome – “That consumers are able to have complaints resolved quickly and easily by the Level 2 provider responsible for the service and that any redress is provided quickly and easily”.

15. New Responsibilities for Merchant Promoters In the proposed 12 th Code: All promoters (Level 2 providers) of phone paid content will be required to register with the regulatory agency PhonepayPlus Promoters will become directly accountable for the compliance of services from early 2011 Promoters will be liable for fines up to £250,000 per compliance breach

16. Registration of all in PRS value chain Network Operators and Level 1 Providers contract only with PhonepayPlus-registered parties All Level 2 providers must register before providing PRS. Failure to do so a serious breach. Registration must be renewed annually and PhonepayPlus will set a charge for each registration or annual renewal. (estimated at £100 per annum) Providers are responsible for ensuring the accuracy of their registered data

17. Registration details Proposed Information to Register: Business name; Companies House number (or foreign equivalent); Trading name(s); Previous name(s); Parent company/companies and their Companies House numbers (or equivalent); Previous parent company name(s); Nominated company director’s address; Company address for receiving written instructions and regulatory contact number; and Date of incorporation

18. Registration linked to improved Number Checker, and greater onus on customer care PPP proposes a mandatory requirement that the name of the party responsible for customer service and a non-premium rate number for complaints is registered on the ‘number checker’ PPP proposes that Level 2 providers may choose to share the following additional information on a voluntary basis: Service name; Service category; Price; and Directions for enquiry

19. Strict compliance with PECR and ICO rules Marketing Data Collection: Paragraph 3.6.2 “Services which involve the collection of personal information, such as names, addresses and phone numbers (which includes the collection of Calling Line Identification (CLI) or caller display information), must make clear to consumers the purpose for which the information is required and may be used in the future . Personal data may not be processed in any way unless the consumer has consented to that particular form of processing (e.g storing of personal data, sharing with third parties, marketing)” PPP propose to extend these requirements from Network operators to also include Level 1 and 2 providers

20. 30 day rule extended PPP propose to extend the compulsory “30-day” withhold rule to all parties in the delivery chain, which would prevent any provider from paying out in advance of receiving any payment themselves.

21. Return of Informal Procedure Informal Procedure to be renamed ‘Track 1’ Minor breaches to be dealt with by way of a timed action plan Parties taken through Track 1 will not be made public AIME working on a transparent ‘Triage System’ to ensure uniform process

22. New Sanctions Additional Sanctions : A requirement to provide automatic refunds to all consumers (as opposed to just those who had complained to PhonepayPlus); and A requirement to undertake and implement a compliance audit (at the party’s own expense) by a third party of PhonepayPlus’ choosing

23. Most Common Compliance Issues Failure to Confirm Opt-in/ Unsolicited Billing Missing, Inaccurate, or Unclear Pricing Pricing and numbering must be together Subscription or multi billed SMS must be stated Unsolicited Marketing Messages Data must be fresh and from similar promotion Question remains over Web Opt-in compliance

24. PP+ support Guidance notes for specific services as per 11th Code! not compulsory, but... Compliance advice Not binding. Often OTT

25. Ensuring compliance Greater scrutiny of past adjudications necessary to ensure compliance Interpretation of principles can be aided by: Industry Guidance Notes and Compliance Updates AIME Compliance Advice Team Analysis of Tribunal Rulings

26. Next Steps If you are using someone else’s app platform, ensure that they carry responsibility for the compliant operation of the service Document and hold records of PRS activity. Things could get bumpy as the CCP starts to establish new precedents Join AIME, the PRS trade body with real clout and make your voice heard.

27. Benefits of Joining AIME Representation Initiatives Best practice Regulatory affairs Policy (customer care, complaint resolution, code of ethics) Networking K&N Events Debates Working Groups & member meetings Information & education Industry news & regulatory bulletins Research & reports (Payforit, M- commerce, industry stats) Industry success - case studies (e.g. Comic Relief campaign) Event sponsorship & speaking Guides (e.g. broadcast, psychic PTV, print) Events PR

28. Benefits of Joining AIME Special 12 month Introductory Rate for Merchant Promoter Joining in the next 4 Weeks: £750 Reassurance of AIME’s Advice and Support Stay Informed and Influence as Policy Develops To join or request further details: Email: [email_address] Call: 08445 828 828

29. Thank You Any questions on this presentation or any other aspects of WIN’s services please contact us or your account manager. Paul Swaddle Head of Customer Marketing [email_address] 07967389566 www.twitter.com/winplc Sally Weatherall Strategic Brief Limited [email_address] 07789 901066