ARCEP launches a broad consultation on value-added services and proposes ways to improve the functioning of this market to the benefit of consumers. It is considering "symmetrical regulation" of the value-added services market and proposes improvements for market players.

Paris, 23 November 2006

ARCEP is launching today a public consultation on the functioning of the value-added services (VAS) sector, also called "special services".

What are VAS?

These are services accessible via ten-digit numbers beginning with 08 (excluding 087), four-digit numbers beginning with 3 or 1, and ‘118’ numbers used for directory services. These numbers provide subscribers with access to all types of services from a fixed or mobile phone: pre-recorded information (e.g. weather forecasts), or personalised information (directory services, ticket sales, etc.), as well as dial-up Internet access. They are an important segment of the electronic communications market: according to ARCEP Observatory figures, VAS represented €650 million in revenues at the second quarter 2006.

This type of service cannot function or develop unless a climate of trust is established between the players providing these services and consumers. The VAS market is complex: currently, a large number of players interact on the value chain, there is a great disparity (or even opacity) in pricing, and deontological problems. As a result, there is a serious risk of customers becoming dissatisfied with these services.

The value chain can be illustrated as follows:

Many players participate in providing these services, from the originating operator, which provides telephone service, to the service provider, which uses the number for the content publisher. The service provider can also aggregate flows originating on all local loops, or outsource this activity to a so-called "collector" operator. Finally, there can be a carrier when the operator using the VAS number is physically unable to collect traffic from certain local loops.

Furthermore, these services have many unique characteristics. Unlike traditional interpersonal calls, the retail price of calls to VAS numbers is set jointly by the originating operator, which provides the telephone service, and the operator using the number chosen by the content publisher, which may also receive part of the remuneration.

- In its analysis, ARCEP observed the following difficulties:

• Increasing consumer dissatisfaction with understanding how the market operates, with understanding pricing and the ethical control of content available on VAS numbers

 

• Increasing numbers of players involved in providing these numbers, in particular because of the increase in the number of local loop operators offering telephone services, rendering the value chain even more complex

 

• The absence of an explicit obligation to route calls to all VAS numbers

 

• Invoicing and collection problems

 

In order to address these difficulties, ARCEP proposes two remedies:

• "symmetrical regulation" of inter-operator relations, subjects which are under its jurisdiction

 

• discussions on areas not directly under its jurisdiction

 

- The "symmetrical regulation" obligations proposed by ARCEP

ARCEP proposes that two types of obligation be implemented:

• an obligation of accessibility for VAS numbers imposed on operators present at each end of the value chain (i.e. the originating operators and the users of the VAS numbers), which must grant reasonable requests for access to the numbers under objective, transparent and non-discriminatory conditions, without prejudice to the right to cut off or suspend this right in the event of fraud or failure to respect deontological rules

 

• an invoicing obligation for the calls concerned, imposed on the originating operators, including the collection of outstanding payments, where appropriate. These operators must grant reasonable requests from other operators under objective and non-discriminatory conditions

 

These obligations apply to all operators, both fixed and mobile, independently of any market power, and therefore constitute symmetrical regulation. They are based on Articles L.34-8 III and D. 99-11 of the Code des Postes et des Communications Electroniques (CPCE) by virtue of which ARCEP may impose obligations on operators which "control access to end users" in order to "ensure […] that access is provided to services on other networks" and "interoperability of services". To the extent that the purpose of these obligations is to stipulate conditions of access and interconnection, they are also covered by the approval procedure of the Minister of Electronic Communications as per Article L. 36-6 of the CPCE.

As a result, before adopting the obligations it is proposing, ARCEP is required to hold a public consultation, notify its draft measure to the European Commission and other European regulators, and submit its decision to the Minister for approval.

- Other areas for improvement proposed in order to protect consumers

ARCEP is also proposing several topics for discussion concerning improvements which could be made on this sector in the interest of consumers.

The deontological control of content

The deontological control of content accessible from numbers under the national numbering plan is an indispensable tool for the protection of consumers, and a determining element for the development of this market. This control will be the responsibility of authorities other than ARCEP, such as the Conseil Supérieur de la Télématique and the Comité de la Télématique Anonyme (CST-CTA).

ARCEP wonders whether it might be necessary to update deontological recommendations in order to include new uses, and the technical and legal possibilities which operators now have to offer efficient filtering measures for their users, for example, by blocking access to certain services, similar to the parental control tools used on Internet.

Improving the clarity of pricing

ARCEP is also submitting for consultation two areas which it feels will improve the clarity of pricing for consumers:

• the promotion of a retail pricing scheme with the format "C+S" shared by all networks, both fixed and mobile. ARCEP considers that this type of scheme would be beneficial for consumers because it would identify the parties responsible for the various services rendered: the call, "component C" part, and the content service, "component S" part

 

• harmonisation of common scales of tariffs for the component "S"

 

These two topics of discussion aim to improve the clarity of pricing schemes and can be useful only if the players on this market organise themselves under self regulation, assisted by public authorities, if necessary.

These proposals aim to increase trust on the part of consumers and content publishers as regards the use of telephone networks as means for providing access to value-added services. They are not exhaustive. ARCEP invites all players concerned by these services, both consumers and operators, to comment on them and to propose any other measures they consider necessary.

Responses to this public consultation must be received by 5 January 2007.