Communications Regulation (Premium Rate Services and Electronic Communications Infrastructure) Bill 2009: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

I am pleased to bring this important Bill before the Seanad for its consideration. The primary purpose of the Bill is to transfer the function of regulating premium rate services from Regtel to the Commission for Communications Regulation, ComReg. During its passage through the other House, I introduced an important amendment to the Bill that changed it from one dealing solely with premium rate service regulation to one that also provides for the installation of electronic communications infrastructure in public roads. I will provide more detail on this amendment later.

The Bill itself is the result of a departmental review of the regulation of premium rate services in Ireland that involved consultation with Regtel, ComReg, the Attorney General's office, key market players and other stakeholders in the sector. I initiated this review following a significant increase in complaints from the public concerning premium rate services, particularly subscription services. Following the review, I decided that the regulatory function should be transferred from Regtel, a non-statutory limited private company, to the Commission for Communications Regulation, ComReg, by way of an extension of ComReg's functions under the Communications Regulation Acts. This will ensure that an effective regulatory regime backed up with strong enforcement powers is established and is also in accordance with Government policy on agency rationalisation.

The Bill was broadly welcomed in the other House and I was happy to take on board some amendments proposed by Deputies on the opposite side which strengthened the provisions in the Bill on refunds to users by service providers who are in breach of the conditions of their licences.

The premium rate services sector, in tandem with developments in communications technology and platform delivery generally, is a growing and evolving sector. The regulator of the sector must always be up to speed with current developments to ensure that all types of premium rate services and new services, which may be offered in the future and which may give rise to consumer harm, are effectively regulated. In this regard the premium rate service providers themselves must continuously strive to maintain the highest standards and best practice in the content and promotion of their services and to rid the sector of those service providers whose sharp practices have brought the sector into disrepute. The service providers were fully consulted during the preparation of the Bill and, I am pleased to say, have broadly welcomed its provisions.

The consumer interest is paramount and unless that interest is protected, confidence in the sector will not be restored. The Bill provides the necessary statutory powers to establish a robust regulatory regime that will, when implemented, remove the rogue elements from the sector and restore consumer confidence in it.

Before going into the main provisions of the Bill, I offer Senators some background on 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 charged to a consumer's telephone account by the network operator. The prices charged are at a premium rate compared with the cost of a normal telephone call. These services, accessed by means of a specific telephone number prefix, include information and entertainment services such as weather forecasts, traffic news, sports results and so on.

Premium rate services are distinctly different from standard telephone services in many respects. The main features that set them apart and warrant more regulatory intervention to protect consumers include issues relating to content, price and transparency. Many premium rate services such as weather forecasts, traffic reports or sports results, although typically more expensive than ordinary telephone communications, only require light regulation. Other forms of content offered over telephone networks, such as adult chat lines, require tighter regulation because of the risk of minors accessing them. The content of a service must also not be such that it facilitates or encourages anything 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 telephone is used by a child or other user unaware of the potential to generate telephone bills.

A further reason for regulation and an area that gives rise to the vast majority of complaints in Ireland and elsewhere is the lack of transparency in respect of subscription services offered by a small but significant group of providers. In many cases, consumers who believed they had engaged in a one-off transaction found that they had inadvertently agreed to subscribe to a premium rate service, whereby they would subsequently receive content over their telephone line or mobile and were charged for this service. This problem has been most prevalent where consumers enter competitions of some sort and may not realise that they have signed up to an ongoing subscription service thus incurring substantial costs.

According to Regtel's annual report for the financial year ended 31 March 2009, there are approximately 129 service providers offering premium rate services over the networks of 13 operators. Between 2001 and 2008 annual revenue grew from €31 million to €95 million, an increase of more than 200%. This declined to €80 million in the last financial year, reflecting the overall decline in economic activity. Clearly, this is a dynamic market that provides significant returns for service providers and network operators. The premium rate services market is currently regulated by Regtel by means of a code of practice to which all service providers are required to adhere.

Regtel is funded by a levy on the premium rate service providers and the network operators that provide users with access to those premium rate services under a contract with the service providers. This is essentially a self-regulation model. 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 new regulatory framework aims to address any issues that may arise in the provision of premium rate services. It replaces the current self-regulatory system, based on contractual arrangements between Regtel and service providers, with a licensing regime backed up by effective enforcement powers. The involvement of the service providers 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. To maintain this level of engagement with the service providers in the regulation of the sector, the Bill provides that a code of practice drawn up by ComReg, in consultation with the service providers and other interested parties, will remain an integral part of the new regulatory regime.

Following enactment of the Bill, consumer confidence in the sector will be enhanced and the sector will enjoy further development and growth. The transfer of the regulatory functions 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 service providers. I have also made provision in the Bill for the transfer of the staff of 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 an appropriate emergency direction to an undertaking that provides wholesale access to its network for another operator. This will facilitate the provision of an alternative service for those affected customers and provide continuity of access for the emergency services.

I also introduced an amendment on Committee Stage in the Dáil to Part 5 of the principal Act. In its existing format, Part 5 of the principal Act provides for local authorities to grant consent to telecommunications operators to open public roads for the establishment of underground communications infrastructure. Under the principal Act, local authorities are the sole consent giving authority in this regard for local, regional, national roads and motorways. The amendment designates the National Roads Authority, NRA, as the authority for national roads, including motorways. This will enable the authority to make available to network operators access to ducting on such roads and to facilitate the roll-out of high speed broadband networks in the regions. There is significant ducting on national roads and motorways that has the potential to be used by network operators. By using existing assets, operators could make significant savings in the roll-out of fibre connections to the regions. Since the National Roads Authority has responsibility for the planning and supervision of such motorways, it makes sense that it should grant consent to road openings for network operators. It is also beneficial for operators to have a single point of contact in dealing with multiple local authorities.

This amendment was the subject of discussions with the Department of Transport and the Attorney General's office and the changes aim to strike a balance between the need to encourage and facilitate greater investment in broadband roll-out while ensuring our road network is managed well. I believe these changes will greatly streamline the process for getting access to ducting running along national roads and motorways. Furthermore, the changes are also in line with the policy goals already established in respect of a one-stop-shop aimed at pulling together the disparate pieces of State-owned ducting infrastructure into a more cohesive, seamless and cost-effective network.

I refer to the text of the Bill, which is divided into three parts. Part 1 provides for the Short Title and the collective citation. Part 2 provides for the regulation of premium rate services and Part 3 provides for infrastructure sharing on public roads and for the issuing of emergency directions to wholesale network operators. Section 3 provides the necessary definitions for the purposes of the Bill. The key definitions are those of "premium rate service" and "premium rate service provider". The definition of a premium rate service in the Bill is necessarily broad 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 defines a premium rate service as a service having certain characteristics. As I outlined, premium rate services include services such as information and entertainment services that are provided primarily over fixed and mobile telecommunications networks.

Broadcasting services are specifically excluded from the definition because such services are regulated by the Broadcasting Authority of Ireland under broadcasting legislation and do not constitute a premium rate service as ordinarily perceived. For example, broadcast services such as pay per view could, if not specifically excluded, come within the scope of the definition. However, where a premium rate service such as a competition or chat line service is advertised or promoted by means of a broadcasting service, that premium rate service will be regulated under the provisions of the Bill.

Section 5 amends section 10 of the principal Act to provide for the commission to have the additional function of regulating premium rate services, the primary purpose of the Bill. Sections 6 and 7 provide for the licensing of premium rate services, the terms and conditions that may be attached to a licence, including the basis and circumstances upon which refunds may be made to end users, and the information that premium rate service providers shall provide for ComReg upon request. The requirement under section 6 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 in specific circumstances, including where the applicant has been convicted of an offence under sections 12 or 13 of the Bill in the previous five years for operating an unlicensed service or for overcharging for a service, or under regulation 13 of the Data Protection and Privacy Regulations 2003, which relates to sending an unsolicited communication for direct marketing purposes, namely, spam. This new licensing regime is designed such 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. Certain types of premium rate services will be subject to tighter regulation than others. Accordingly, ComReg will be able to specify different conditions for different types of service in an objective and proportionate manner.

Sections 8 to 10 provide the enforcement powers that ComReg may apply against non-compliant service providers. Under section 8, 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.

Section 9 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 require the provider to remedy any non-compliance or breach within a specified period and refund any charges imposed on users in respect of any service connected with the non-compliance or breach. Where a premium rate service provider has failed to comply with or remedy the breach within the time period specified, ComReg may, having notified the licence holder of its intention and 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 will take effect upon notification. Section 11 provides that a service provider which is 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 its notification.

Sections 12 and 13, respectively, provide for offences relating to the provision of unlicensed premium rate services and for overcharging for services or charging for services not supplied. Section 13 also provides for the court, on the application to it by the commission following a conviction, to make orders revoking the licence and prohibiting the licensee from reapplying for a new licence, either permanently or for a fixed time, and to repay to end users any charges wrongfully imposed on them.

The enforcement provisions in the Bill are designed to give ComReg maximum effectiveness in deterring non-compliant service providers from operating in the market. They provide a mechanism, whereby a licence may be amended, suspended or revoked, depending on the nature of non-compliance with the conditions of the licence. It is important for the sector as a whole that the minority of service providers which are responsible for the large number of complaints from consumers should be subject to dissuasive sanctions. The vast majority of service providers which are compliant need have no fear of these provisions. On the contrary, they have welcomed them as an effective response to those service providers which are bringing the whole sector into disrepute and undermining public confidence in it.

As I stated, the involvement of the sector in maintaining high standards through a code of practice is an important element of effective regulation. Section 15 of the Bill provides for the preparation and publication of a code of practice by ComReg following consultation with interested parties and other relevant statutory bodies. Apart from consultation with service providers, 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 will result in a sanction being imposed.

The Bill also provides under section 18 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 my consent and that of the Minister for Finance. This will provide ComReg with the expertise and resources that will enable it to carry out its new functions effectively from day one.

In addition to the regulation of premium rate services, the Bill also contains provisions in relation to electronic communications infrastructure. Section 21 amends the principal Act to provide for roadworks relating to the installation of electronic communications infrastructure on public roads. As I mentioned, the main objective of this amendment is to facilitate the National Roads Authority in making available to network operators access to ducting on national roads and motorways. The amendment contains a number of provisions. First, the provision in the principal Act under which local authorities may grant consent to telecommunications operators for the opening of public roads and set conditions for such consent is to be extended to the NRA for all national roads. Local authorities will remain the consent-giving authority for local and regional roads.

Second, the amendment provides for the NRA to make a scheme, whereby it can impose charges for the use by network operators of ducts provided by a local authority or the NRA on national roads. This will be subject to the approval of the Minister for Transport following consultation with the Minister for Finance and the Minister for Communications, Energy and Natural Resources.

Third, under the principal Act, consent is not required for emergency roadworks but a network operator is required to notify the local authority as soon as practicable in advance of the commencement of the emergency roadworks. Under the amendment, consent for emergency roadworks is deemed to be granted. This is to facilitate a rapid response by network operators to fix faults. The amendment retains the current requirement for advance notification to the authority by the network operator but also allows for conditions to be imposed by an authority during the progress and after completion of the emergency roadworks. This will ensure such roadworks are carried out having regard to the safety of all road users and that the road in question is not left in a state of disrepair after the works are completed.

Fourth, section 55 of the principal Act provides that, where a road authority undertakes roadworks, it will pay to a network operator all reasonable costs incurred by the operator in relocating its infrastructure. The amendment includes a provision that the NRA will not incur any costs relating to the relocation of network operators' telecoms equipment in ducts on national roads that have been provided and made available by a local authority or the NRA.

Fifth, the amendment provides that a consent granted by a local authority or the NRA may contain specified conditions, without prejudice to any other conditions it may also set. These relate to any losses and liabilities that the NRA or local authority may incur from a third party which are caused by any act undertaken by the network operator; loss or damage to electronic communications infrastructure carried in ducts and the supervision of works to ensure compliance with any conditions contained in the consent. Although there are other consequential minor amendments included to update the legislation, the changes I have outlined are the most significant.

Section 22 of the Bill provides that, in order to minimise customer disruption and ensure continuity of access to emergency services, 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. Senators 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. Although ComReg played a significant role in mediating a solution that allowed those customers to switch to an alternative service provider, it had no statutory power which it could use to achieve this. This provision gives ComReg the necessary powers if such a situation were to arise in the future.

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 premium rate services and protecting the users of these services. I am confident that the Bill, when enacted, will result in greater consumer protection and promote confidence and growth in the premium rate services sector.

Apart from some minor amendments of a technical and drafting nature that have been 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 Members on the Bill and their assistance in facilitating its early passage into law. I commend the Bill to the House.

My party has been seeking this type of legislation for some time. In principle, we welcome the Bill and its objectives. There has been an enormous problem in this area for a number of years. Premium rates apply to traffic news, sports results, psychic, chat and horoscope services, as well as participating in various competitions on programmes such as "PlayTV". They involve the use of 1550 numbers in offering information services, etc. This obviously forms part of modern communications services and, as such, is not inherently wrong. We want to encourage the industry in Ireland and do not wish to regulate it to a level where it would not succeed. However, there have been abuses and wrongs. People have been duped; by merely accepting a text, they then received an entire sequence. They can be the recipients of unwanted material and enormous bills. Often the carrot may be concert tickets or alleged telephone credit. In many cases this is erroneous, but the prizes are attractive to vulnerable individuals. Young people are being codded, particularly young teenagers who run up exorbitant telephone bills.

Going through some of the aspects of the Bill, I take the Minister's point that in the case of sports results and news services, there is light regulation. There does not appear to be a huge difficulty in this regard, other than that one would want to see realistic pricing and the licensing of the providers of such services. The difficulty arises when it comes to participation in competitions. A number of such competitions are false. People are held on the telephone too long, they receive repeated messages and their bill runs up as they wait to give their answers to the competition. These lines are advertised in the national newspapers. There have been many questions concerning the programme "PlayTV" on TV3 in this regard.

Will the Senator move the adjournment of the debate until after Private Members' business? Is the Minister staying for the next debate?

No, I am due to leave at 5.30 p.m.

I propose that we adjourn the debate and suspend the sitting until 5.35 p.m. to give the Minister for the Environment, Heritage and Local Government, Deputy John Gormley, time to come to the House.

It is another wonderful example of the chaotic ordering of the business of Seanad Éireann. It is an illustration for my little thesis, if I needed it.

Is it agreed to suspend the sitting for five minutes? Agreed.

I am trying to be accommodating to give Senator Norris time to collect his thoughts, of which he has many.

Debate adjourned.
Sitting suspended at 5.30 p.m. and resumed at 5.35 p.m.