Mobile Entertainment

At the beginning of June 2008, MEF’s EMEA chapter held a joint conference with the MDA and PhonepayPlus on regulation of premium mobile content services.

The main purpose was to provide a regulatory update for attendees, while also looking at future developments. A couple of introductory statistics from UK regulator PhonepayPlus highlighted both the challenges the sector faces, and also the huge untapped potential.

It revealed that 60 per cent of those that have tried a phone-paid service don’t return. And yet 69 per cent have never tried these services. Clearly, there’s plenty of room for improvement in terms of retaining customers and tempting new ones.

Things started to liven up during the legal panels on prize competitions and consumer policy. There was sniggering at some of the questions used to encourage people to enter a competition (‘What trees do apples grow on…’), but the laughing stopped when the Office of Fair Trading presented its take on new consumer policy legislation introduced to meet the requirements of the European directive on Unfair Commercial Practices.  

The new UK regulations came into force in May 2008. They specify a general ban on ‘unfair commercial practices’ among a blacklist of 31 outlawed practices. The MEF has already circulated a members’ briefing note, prepared by law firm Denton Wilde Sapte, summarising the key elements.

In serious cases, falling foul of this legislation could lead to criminal proceedings, including unlimited fines and up to two years’ imprisonment for company directors.

One outlawed practice, number 28, prohibits advertising to children or ‘a direct exhortation to children to buy advertised products or persuade their parents or other adults to buy advertised products for them.’

In other words: ‘Don’t target anyone under 18.’ Now, this has serious implications for the mobile entertainment industry. Clearly there are some services that are attractive to children. And there are already specific rules in place under the PhonepayPlus Code of Practice which regulate services aimed at under-18s. For example, there is a £3 maximum charge. The Code of Practice
appears to be in direct conflict with the Directive.

The OFT and local Trading Standards Authorities are the main enforcers of the regulations. However, they can also refer practices to PhonepayPlus to be dealt with under the Code. They can even refer them to the Advertising Standards Authority. Where remits overlap, two or more enforcers are expected to work together with a view to bringing one co-ordinated action.

Obviously, we are all in agreement about not misleading the consumer. As a basic right, they must have all relevant information available to them before they decide to purchase content. They have a right to consume products that are totally satisfactory and fit for purpose.

How the new policy regulation will work in practice, and whether 'double jeopardy' can be avoided, remains to be seen. However, what we are seeing is an increased focus on consumer protection, which may mean more vigorous scrutiny and enforcement in the short term. MEF certainly recommends that businesses assess whether their current practices may be deemed unfair under the new regulations.