Premium Rate Renaissance

Like so many of the contemporary crop of technological advances Premium Rate Services (PRS) were born in the 1980s. However, unlike advancements such as the internet and mobile phones PRS took off straight away and began bringing in large revenues almost immediately. PRS include, amongst others, SMS and Phone voting or contests, Directory Enquiries, SMS and Phone payments, premium phone lines. Usually the user is charged via their home or mobile telephone service provider, depending on the service charges range from 10p per call or text up to nearly £2 a minute and in some cases, such as weekly ringtone services, much more. Despite the costs these services are well used, according to PhonePayPlus (PPP) over 38% of the UK public, roughly 20 million people, have used a phone-pay service at one time or another.

Through most of its early life most people saw PRS as a by-word for adult services, not only did this change in the early-2000s but it changed drastically. Broadcasting companies hit on the idea that PRS could be used for audience participation, now commonly known as Participation TV, and before long audiences were texting into their favourite shows in the millions. Big Brother UK made very successful use of PRS staging public votes week after week for the duration of its eleven series. SMS voting was heavily used in the earlier series but axed in favour of phone voting in 2007 after claiming the mobile phone operators could not process the votes fast enough for it to be suitably efficient for the programme, perhaps a forewarning of things to come. Since the rise of Participation TV, along with other services, PRS is now worth over £800m per year in the UK according to PPP. This sudden increase in uses for and usage of PRS lead to a widespread blurring and misunderstanding of its regulations. In turn, this led to a period of roughly 18 months, starting in mid-2006, in which numerous ‘scandals’ emerged relating to programmes and their use of PRS. Because of the number of complaints that seemed to be flooding in an inquiry was launched in these scandals headed by BBC Trustee and former Ofcom chair of Ofcom’s Broadcasting Review Committee Richard Ayre. In 2007 The findings of the Ayre Inquiry were released, the report found that a clear understanding of obligations towards viewers who used PRS, and further regulatory intervention were the key aspects that needed to be instilled within the industry. To this end, the inquiry recommended that broadcasters be wholly responsible for PRS compliance just as they are for broadcast content.

The fines handed out in relation to these wrongdoings were mostly handed out in 2008 with ITV bearing the majority. They were fined £5.68m for a string of transgressions relating to premium rate phone and text services, the largest fine ever handed out by Ofcom. The largest single fine was £3m and was handed out to Ant and Dec’s Saturday Night Takeaway for offences such as choosing competition winners based on their location and their suitability to be on television. Amongst the other shows fined were BBC’s Blue Peter, Channel 4’s Richard & Judy and Deal or No Deal, and ITV’s GMTV. This period did much harm to the public image of PRS and it looked to be on an irreversible downturn. However, Edward Boddington, Association for Interactive Media and Entertainment (AIME) chairman and CEO of Harvest Media Group, has been observing PRS renaissance, “The reintroduction began in 2010 with high-profile TV programmes such as The X-Factor and Strictly Come Dancing re-launching PRS.” In addition to this increased usage AIME reported that complaints to PhonePayPlus have dropped 75% since Q3 2009. This revival has come about by means of self-regulation and hard work from PPP evidenced in their recently published 12^th edition of the code of practice for the PRS industry. In an assertive move PPP will regulate all parts of the PRS value-chain, claiming that this will aid in the battle to regulate what it calls the ‘minority of providers’ who are responsible for muddying the name of the whole industry. PPP also claim that this code of practice is flexible enough to allow for new and innovative uses of PRS to succeed within the market; they identified social networking as the largest area of growth for PRS, with the value of purchasing digital goods for social media sites growing 400% to £8.1m in 2010.

The future for PRS without doubt involves a steady increase of services related to participation TV programmes but the real area of growth looks to be in the social media market, particularly smartphone based. As smartphones increasingly become the hub to people’s social and commercial worlds their uses and use as a channel for PRS will start to become the key area of the market.