Last week, the European Commission organised two workshops, to discuss possible ways forward to achieve a single EU market, or at least cross-border availability, of premium-rate telephone services and freephone services in the Member States. T-REGS attended the workshops.

As regards premium-rate services, the Commission engaged consultants to formulate recommendations. In the area of freephone services, presentations were made by industry representatives. Both subjects were avidly discussed by workshop participants.

The consultants engaged by the Commission estimate that a market of €0,5bn to €1bn/year could exist for EU-wide premium rate services, i.e. 10-15% of the combined existing national markets for premium-rate services. They indicated that the realization of this market potential is severely hampered by divergent national regulations (telecommunications, e-commerce, direct marketing, taxation, etc.), and formulated the following general recommendations:

1) The European institutions should consider issuing a new Directive, building on the intentions contained in the eCommerce Directive, but tailored to premium-rate (telephone based) services. A key feature would be to apply the 'country of origin principle' to all premium-rate services, i.e. the regulatory framework of the country from which the service is supplied would be applicable in all cases. Another key principle would be to enshrine in the directive a limitation of the liability of network operators and platform providers.

2) Official clarification should be provided about the way in which the Distance Selling Directive is to be applied to premium-rate services.

3) A list of unfair practices directly related to premium-rate services should be established, and possibly attached to the new 'Premium-Rate Services Directive'.

4) Official clarification should be provided about how Value-Added Tax (VAT) rules apply to international (cross-border) premium-rate services.

5) Technical standardization initiatives may be warranted, specifically the creation of a superset of SS#7 signaling to enable the exchange of charging and taxation information. The consultants also recommended to separate, at the wholesale level, the charges for conveyance of traffic and the charges designed to remunerate the content providers.

Specific recommendations included:

1) Setting-up single authorities in all Member States, to be fully in charge of premium-rate services; establishing minimum requirements for monitoring and sanctions (by these authorities); and instituting procedures for cross-border complaint handling.

2) Developing a code of conduct for EU-wide / cross-border premium-rate services, detailing the actions to be taken (by operators) in specific difficult circumstances.

3) Adopting a system of 'payment freezing' (as is being formally proposed in the United Kingdom).

4) Making call-barring available for cross-border premium-rate services, and allowing the 'recipient country' authority to block access under specified conditions.

5) Clarifying the information requirements towards consumers, especially regarding retail tariffs, content types, and the identity of the content provider).

6) Giving consideration to including 'specific markets related to premium-rate services', in particular third party billing, in the set of relevant markets susceptible to ex-ante regulation.

It is fair to state that the consultants' proposals and recommendations were met with substantial skepticism on the part of the workshop participants, both from the telecommunications industry (especially mobile network operators) and in particular from the National Regulatory Authorities of Germany (RegTP), Austria (RTR), the United Kingdom (ICSTIS) and Belgium (BIPT).

Operators and regulators expressed doubts as to whether there is a sizeable market for cross-border premium-rate services, and openly questioned whether the risks (of abuses) and costs (of regulation and regulatory supervision) would not outweigh the benefits. The German RegTP stated its opposition to the application of the 'country of origin principle', on the grounds that it would undermine the painstakingly introduced national regulations (e.g. retail tariff announcement, maximum call duration, etc.). RegTP also expressed serious concerns about the effective functioning of cross-border complaint handling.

For further information on industry responses, please contact Yves Blondeel.

The Workshop was closed with an invitation from the European Commission to comment on the consultants' report by 18 June 2005, and with a statement that the Commission would reflect on the issues, and would consider taking certain initiatives as part of the review of the EU regulatory framework for electronic communications, which is due to be undertaken in 2006.

Freephone services

The workshop on freephone services focused on free of charge accessibility of UIFN numbers and national freephone numbers across borders within the EU.

T-REGS Note: It is a well-known fact that UIFN numbers and some national freephone numbers are not accessible from abroad, or that access is subject to additional charges to end-users on certain networks, for instance airtime charges for calls made from mobile phones.

There was considerable debate.

Vodafone, which was one of the presenting parties, made it very clear that it favours cross-border access, and favours genuinely free access for its end-users whenever possible, but that it wishes to be remunerated for the network costs it incurs (by the freephone number holder or, if impossible, by the Vodafone end-user). T-Mobile endorsed this position. SNT, a Dutch call centre operator (part of the KPN group) stated that it seeks free access for the end-user, but prefers paid-for access to no access at all.

Representatives of end-users (INTUG and EuropeDirect) disagreed, and insisted that access should be free of charge for the end-user in all cases, as any other approach would undermine or negate their marketing proposition.

The German RegTP was adamant that freephone calls should genuinely be free to the end-user, and its representative indicated that German legislation will shortly be modified to enforce this. The French ARCEP suggested that consideration could be given to a shared-cost model, and stated that an internationally agreed number range actually exists for this: 00808.

The European Commission noted that the industry appears to be seeking to maintain the status-quo, with some added transparency towards end-users, and repeatedly asked workshop participants whether there would be ways to achieve genuinely free cross-border freephone access without having to resort to the adoption new EU legislation. At the end of the workshop, the European Commission representative concluded that it appears that a legislative initiative would be the only way of resolving the issues.

For further information on industry responses, please contact Yves Blondeel.

The draft final report produced by the consultants on EU-wide cross-border premium-rate services can be accessed by clicking here.

The discussion paper on freephone services in Europe can be accessed by clicking here.