T-Mobile UK one half of the UK’s largest Mobile Phone Network Everything Everywhere has been accused of “ripping off” three telecoms firms by tens of thousands of pounds by Premium Rate SMS supplier Richard Howard of Raptor SMS Ltd who’s small, one man band company along with two other firms have now suffered an under payment in excess of £45,000.00 in less than 6 months from T-Mobile UK who have yet to supply  any contractual, regulatory or legal reason for the retention of funds due on premium text services that T-Mobile users have been billed for.

“Because our popular text services have been running for some time without a single problem I emailed T-Mobile’s Billing & Settlement department on 27^th April advising them that a mistake had surely been made as I found it unlikely that there were over 5,000 fraudulent messages to our services which made up the majority of the traffic received from T-Mobile users. Senior Fraud Consultant Eileen Canty emailed me back confirming that they would investigate and get back to me”. Says Richard Howard of Raptor SMS Ltd who’s telecoms firm has suffered a with-hold of £15,465.48 via its supplier Tanla Solutions (UK) who T-Mobile pay with Tanla then passing the revenue on”.

Clawbacks on premium rate message monies are typical when a mobile network operator has suffered a bad debt such in the case where a compromised credit card was used to pay for calling credit or in cases where a post-pay contract sim was used to pay for a premium rate service but the owner of the account failed to pay their bill.Mobile networks take a margin for all premium text messages that they bill to their customers with typically premium sms provider receives around 60-75% of the total revenue and so on a service where a customer was billed £1.00 for a message around £0.62 + VAT would be passed on with the rest being the margin the mobile network takes and so T-Mobile have already made a significant margin on the £15,465.48 revenue that’s due to Raptor SMS Ltd via it’s supplier who T-Mobile pay.

“Then on 12^th May I was amazed to receive a reply from Eileen’s colleague Tracey Ebbitt stating that they were not going to share the outcome of their investigation and that my complaint lay with Tanla, even though Tanla cannot pay us unless they receive the revenue from T-Mobile. They failed again to give any contractual, legal or regulatory reason to me or Tanla for why they are continuing to retain the revenue nor has any proof of fraud in relation to their allegation that there were instances of credit card fraud on some of my, Xpress Telecom’s or the £31,780.24 of text revenue clawed back from Infinity Telecom Ltd. No proof of any fraud has been shown for 7 months now.”

Everything Everywhere has made no secret of it’s ambitious cost cutting plans to save £3.5 billion by 2014 and who’s first quarter results for showed that combined T-Mobile and Orange turnover was down 2.7% with its customer base declining 206,000 in the first quarter of 2011, the results were disappointing to many analysts.

“I believe I hit a nerve though, as Tracey’s email strongly advised me against making the issue public as she outlined that it was an issue between themselves and Tanla Solutions (UK) only. She also stated that they would vigorously defend the allegations I have made and reserve the right to take full legal action against me. I gave them the chance to put their side of the story forward against this release but they declined the opportunity.”This is in addition to the fact that they have already received payment from the top up of the sim cards in the first place. Richard Howard has confirmed that as yet not only do they appear to be refusing to pass the revenue on, to date they have not reimbursed the customers who texted into the service and so as it stands they are keeping the revenue on two fronts.

“I’m starting to think that our £47,245.72 has become revenue they’re trying to keep due to their bold cost cutting plans, some of which appear to be at the expense of their partners or perhaps it’s because their Fraud Department is operating in a rogue fashion and the more money they retain for T-Mobile UK the greater their personal bonuses”. “If T-Mobile considers that I or my company has conducted any fraudulent activity then I would encourage them to contact the Police as I am adamant that there is nothing wrong with this revenue and that there’s no reason why it shouldn’t be released. Revenue from Orange, O2, Vodafone, Three, Virgin and Vodafone has been paid without a single problem, simply because there is nothing wrong with the traffic. All I am requesting is that T-Mobile show fraudulent use, prove they have suffered bad debts, show that they’ve received consumer complaints in relation to our services or payout to Tanla Solutions (UK) so that it can be forwarded onto us”. 

After much effort BT seems to have finally backed down from it’s proposed increase of the Premium Rate Bad Debt charge proposed increase from around 3% to an enormous 9.7%, if it had come into force in April this year it would have had catastrophic consequences for many premium rate providers especially re-sellers who depend on the few pence margin on each minute/call to survive.

BT proposed that it needed to take a cut 9.7% out of every premium rate call (numbers starting 090) to combat the amount of bad debt it was receiving with customers making the calls and then not paying for the 09x phone calls. Almost every network operator in the country challenged the increase and even after BT announced in December 2009 that it was coming into force in the last two weeks BT has forwarded a further letter to telcos informing them that the change will NOT come into place as intially planned.

The effect would have had a knock on effect for consumers who may have found that their most popular premium rate services X Factor, Strictly Come Dancing voting services may have increased the cost to call the voting lines to make up for the reduced revenue that providers would receive. The rate would have meant that on a £1.50/min service the networks would receive an 8p reduction in the rate they received and with many providers relying on a few pence margin to make their promotions worth while it would have caused a huge impact on the Premium Rate Market that has gone from £2bn a year to £800m a year in just 2-3yrs.

It is beleived that BT Wholesale will be back with a “Revised” bad debt rate although for the time being networks can breath a sigh of relief that Ofcom shot down BT’s 6.7% increase.

Ofcom today published proposals to extend the NTS retail uplift and PRS bad debt surcharge wholesale charge controls for Number Translation Services and Premium Rate Phone Services. Their websites writes…

1.1 NTS Retail Uplift and the associated PRS Bad Debt Surcharge are wholesale charge elements of BT’s charges for Number Translation Services (‘NTS’) call origination. NTS calls are calls to 08 numbers ^(-1-) and 09 numbers (09 numbers are also known as Premium Rate Services (‘PRS’)). These numbers provide individuals and organisations with a combination of call routing services and a mechanism to charge callers small sums. This allows them to provide a wide range of services to callers, including sales lines, customer service/enquiries, information and entertainment services.

1.2 We require BT to originate and to retail NTS calls on behalf of other communications providers (‘CPs’). Through the existing controls we allow BT, when it originates NTS calls, to retain an amount to cover its costs including an element of its own retailing costs. These specific retailing costs are referred to as the NTS Retail Uplift. For the higher priced PRS calls we allow BT to retain a percentage of revenue to recover the higher level of bad debt encountered on these calls via the PRS Bad Debt Surcharge.

1.3 In our recent market review consultation “Review of the Fixed Narrowband Services Wholesale Markets” published on 19 March 2009 ^(-2-) (the ’2009 Wholesale Market Review’), the key findings and proposals relevant to this consultation are that:

1. there is a market for wholesale call origination on a fixed narrowband network in the UK, excluding the Hull Area ^(-3-);
2. BT has Significant Market Power (‘SMP’) in this identified market ^(-4-);
3. BT should continue to be subject to the NTS remedy to address its SMP in this market. We therefore proposed to revoke the existing SMP services condition, SMP condition AA11(the ‘NTS Condition’) and re-apply it in its current form, which includes the maximum retention allowed by BT for the PRS Bad Debt Surcharge ^(-5-);
4. we also proposed that, it is necessary to have a charge control applied to the NTS Retail Uplift charges, with the specific details of the charge control to be addressed in a separate consultation to allow CPs providing NTS services to make effective use of the NTS call origination remedy BT is obliged to provide.

1.4 In this consultation therefore we consider the details of the NTS Retail Uplift charge control remedy flowing from the market analysis in the 2009 Wholesale Market Review. We are seeking views on the form and the level of these charge controls which we propose should take effect on 1 October 2009 and apply for a period of 4 years. We are also seeking views on the methodology used to calculate the charges. In addition we are seeking views on a proposed increase in the Premium Service Bad Debt Surcharge.

PHONEPAYPLUS MOBILE REVIEW - ONE YEAR ON

Premium Rate Regulator PhonepayPlus, the phone-paid services regulator, today announces that complaint figures concerning mobile services are down by half one year on from the introduction of new rules that came about following its 2008 Mobile Review. The new regulation was introduced in response to a worrying rise in consumer complaints regarding premium rate mobile services which, on average, account for some 90% of all calls to PhonepayPlus’ Contact Centre.

PhonepayPlus is releasing these figures at the industry launch of its Annual Report in London today, where it will also announce that its Chairman, Sir Alistair Graham, has accepted an invitation to stay in post for a further three years.

PhonepayPlus’ complaint figures show that:

• Total complaints regarding Premium Rate mobile services are down 57% from June 2008 compared to May 2009 (2,125 vs 919)
• Consumer complaints regarding mobile subscription services have almost halved since the introduction of the new rules (1,207 vs 651)
• Consumer complaints about unsolicited text messages are down by 85% from the first half of 2008/9 compared to the second half (1,538 vs 230)

Commenting, PhonepayPlus Chief Executive, Paul Whiteing, said: “These results show that we are heading in the right direction and sorting the good from the bad in mobile services. It is early days, and we are still analysing the various impacts on our complaint numbers, but these are an encouraging set of results that appear to demonstrate the effectiveness of the new rules, as supported by responsible providers in the sector. 

He continued: “However we are not complacent and remain vigilant for any new opportunistic activity that may result in consumer harm. This risk is especially acute since, with a country in the midst of recession, we expect the PRS industry to be attractive to unscrupulous operators looking for ways to make a fast profit. We remain committed to being proactive in preventing non-compliant services from making it to market.”

Mobile Review: the rules

PhonepayPlus’ Mobile Review set out new rules for the mobile phone-paid services sector. It stated that services could not be advertised as free unless they were free from any associated charges; set new rules around trading of third party marketing lists; and introduced a prior permissions scheme for Premium SMS subscription services costing upwards of £4.50 in any given week. The Review also reinforced PhonepayPlus’ zero tolerance of any failure of the ‘STOP’ command for opting out of receiving unwanted contact by text message.

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