Following consultation with industry, PhonepayPlus reduced its proposed 2009/10 budget to 0.0% on 2008/9. This was subsequently presented to, and approved by, the Ofcom Board. 

As a result, PhonepayPlus has announced that its levy for 2009/10 will be 0.48%. The levy applies to all outpayments payable by network operators to service providers in respect of revenue generated by premium rate services, and is calculated as a proportion of every outpayment to ensure that PhonepayPlus continues to receive adequate funding to carry out its activities, as required by Section 121 Communications Act 2003. 

Although an increase, this levy reflects the levels that were in place from 2000 to 2006. The levy rate has only reduced to below 0.45% in the last two years.

We are keen to minimise changes in the levy year on year but to do this will require stakeholder support for us to build higher reserves in times of market growth to be utilised when the market declines. Support for this proposition when we have tested it with stakeholders has, however, been limited.The levy has been set following extensive consultation with the industry and other stakeholders with regard to the Business Plan & Budget to be allocated to PhonepayPlus for its operations. 

However, the size of the levy is determined by a range of factors beyond just the PhonepayPlus annual budget. A declining market is also an important contributing factor as is the income we receive from fines, administrative charges and bank interest. Arrangements as to the payment, adjustment and auditing of the levy are set out in Annex 1 to the PhonepayPlus Code of Practice.

MARKET TRENDS
As part of our business cycle, we asked network operators for data on their actual outpayments for the first three quarters of 2008/9. In previous years, the timing of the consultation on our budget has only enabled analysis of a half year’s data.The information received suggests the market has reduced in size by 6% for these first three quarters, compared with 10% for the year 2007/08 , and will continue to remain flat or in decline as a consequence of global, European and UK economic forces. We have therefore based the levy on a full year decline of 8% in 2008/09.

We recognise however that there is considerable macro-economic uncertainty in the UK market and we will therefore keep this levy under review during 2009/10.
PhonepayPlus will shortly publish its full statement following its consultation on the 2009/10 Business Plan & Budget.