Transcript Slide 1

PhonepayPlus Forum
20 November 2014
Supporting innovation with proportionate regulation
Welcome
Peter Hinchliffe
Deputy Chairman, PhonepayPlus
General regulatory update
Joanne Prowse, Acting Chief Executive
Renewed commitments
• Collaborative partnership working with industry
• Flexible regulation which keeps pace with market
developments
• Proportionate, transparent and fair regulation
Collaborative Working
• Preventing problems is key to long term consumer protection
• Best way to achieve this is to work in partnership with industry
• Industry behaviour and co-operation is key in market compliance
Collaborative Working
• Early Warning System
• Industry led affiliate marketing best practice
• Engagement and consultations
• Joint working groups
• 121 programme with providers
• ILP, other fora
Flexibility
• Regulation must support growth and innovation without
undermining consumer protection
• Regulation to keep pace with changes – provide consistent
consumer protection and level playing field for providers
• Achieved through:
– Co-ordination between regulators
– Pilots
– Code Review
Proportionality
• Apply rules sensibly and reasonably
• Take robust enforcement action where required to protect
consumers
• Use informal and other approaches where proportionate to do so
• Ensure processes are transparent, independent, fair,
proportionate, consistent and targetted
Three Year Strategic Plan
Clear plan for how PhonepayPlus will respond to significant
market change.
Vision
Anyone can use premium rate services with absolute confidence
in a healthy and innovative market. Within our remit and
expertise, we seek a more consistent approach to regulating
micropayments that are like PRS.
Three Year Strategic Plan
Our mission is to achieve our vision and be a world-class regulator
by:
• Putting the consumer at the heart of everything we do through
providing effective regulation, information and assistance.
• Understanding the market in which we operate and how it is evolving,
so that we can take early, proportionate and targeted action where
needed to prevent consumer harm.
• Working with providers to build a healthy market with high standards of
compliance.
• Having a Code of Practice that is cutting edge in protecting consumers
while also supporting innovation in a fast-changing digital landscape.
• Applying our Code in a way that is impartial, fair, transparent, effective
and proportionate.
• Working with government, other regulators, industry, consumer bodies
and international partners on matters within our remit and expertise.
Three Year Strategic Plan
Forward looking – understand the market and work with industry
at an early stage
Credible and trusted – independent, impartial, proportionate,
transparent, accessible and consistent in all that we do
Reasonable and intelligent – sound judgement and act on basis
of evidence, are of commercial and technical environments
Focused on delivery – effective and accountable, manage
resources efficiently
Prompt, open and transparent – prompt action to resolve
issues, transparent around processes and reasoning behind
decisions
Three Year Strategic Plan
• To continue to drive up compliance levels and trust in the
market
• To identify and prevent emerging risks to consumers
• To help consumers to use premium rate services with
confidence
• To ensure that regulatory frameworks keep pace with market
changes
• To deliver effective and efficient regulation
Market conditions
• Market remains in decline:
– 14% decrease year on year
– Value £600m
– Q2 cumulative 4.5% decrease
• Shifting consumer consumption
• Market challenges:
– PSDii
Market conditions
• PSDi exemption from registration as payment services
providers
• PSDii being renegotiated in Brussels
• Potential for ‘telecom’s exemption’ to be narrowed
• Risk of MNOs deciding not longer commercially viable to offer
wide range of PRS
• Engagement/work with the Treasury ongoing
Market conditions
• Growth in operator billing
• Deloitte’s analysis:
– Base case (c. £150m by 2019) – maintaining current share of digital
content market
– Low case (c. £70m by 2019) – operator billing loses market share
– High case (c. £ 500m by 2019) – high conversion rates and revenues
• Higher rate PRS
Complaints and enforcement
Complaints and enforcement
• On average 2,650 enquiries and complaints per month
• Of which, 40% enquiries and 60% complaints
• 55% of the complaints are either closed or monitored for trends
• 45% of complaints move to enforcement tracks
• 31% of cases dealt with formally, 69% informally
Consumer Journey Workshops
• Consistency and accuracy of number checkers
• Consumer education on PRS
• Clearer information on bills
• Complaint handling guidance
• Data sharing between the value chain
Review of the Code
Further develop and improve some aspects of the Code:
• Spending caps and pricing due to NGCS Review
• Future proofing
– Complaint handling
– Vulnerability
– Registration exemption
• Improvements to polluter pays principle
– Refund targeting
– Compliance audits
• Technical amendments to Parts 3, 4 and 5
– Definition of a Track 2 commencement
– Access to review and oral hearings
– IAB appeals awards for costs
• New approach to Prior Permissions
Review of the Code
• Extensive consultation with all stakeholders
• Responses to consultation generally supportive but some
contentious issues
– Access to reviews and oral hearings
– Vulnerability
– Earlier notification of Track 2
• Detailed analysis of responses and Board consideration of
recommendations
• Final Code Statement to be published in January 2015; final
approved Code June 2015
• Consultation on selected Guidance revisions and special
condition regimes Q1 2015
• 26 June 2015 - deadline for implementation of the new regime
Key messages: summary
• Collaborative partnership working with industry
• Flexible regulation which keeps pace with market developments
• Proportionate, transparent and fair regulatory enforcement
Working together towards a
healthy market and optimised
compliance
Question and answers
with Joanne Prowse, Mark Collins and Hugh Griffiths
Chair: Peter Hinchliffe
Voice charging and the
Non-Geographic Call Services
Huw Saunders, Director of Network Infrastructure, Ofcom
Mark Collins, Head of Regulatory Development, PhonepayPlus
Justin Hornby, Senior Regulatory Manager, Vodafone UK
Chair: Hugh Griffiths, Board member, PhonepayPlus
Non-Geographic Call Service policy
change implementation
Huw Saunders, Director, Network Infrastructure
20th November 2014
The proposed system
Numbering – simplifying non-geographic numbers
• In December 2013 we published our Simplifying non-geographic numbers final
statement outlining the following:
− 080 (Freephone) and 116 number ranges should be free to caller from all
telephones, fixed and mobile; and
− the 084, 087, 09 and 118 to have a standardised ‘unbundled’ tariff
structure
• The 18 month implementation period started then with a current planned golive at the end of Jun 2015
• Implementation includes
– Working with industry so it agrees a set of service charge price points
– TCPs engaging with service providers to agree the service charge for their
numbers and inform them of the requirement to publish the service charge
where they advertise the phone number
– Launching a communications campaign for consumers in Jan 2015
− Working with other regulators to ensure their guidance is aligned
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Implementing the new regime:
Publish Legal Instruments
Dec 13
Collaborative
Planning
May – Dec 13
Co-ordinate
Delivery
Activities
Jan 14 – June
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Communicate Changes
Oct 14 - June
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What is changing?
Freephone
• 0800 / 0808 (Freephone) and 116 numbers will become free to caller from all
telephones, fixed and mobile.
The ‘unbundled tariff’
• The 084, 087, 09 and 118 ranges will have a new ‘unbundled tariff’ structure, in which the
cost is divided into:
- an access charge set by the caller’s phone company
- a service charge going to the company providing the service (e.g. the bank /
horoscope line etc.)
These changes will come into effect in summer 2015
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More consistent consumer information
General enquiries: 08457 12 34 56
New applications: 0800 78 91 23
Calls to 0800 numbers are usually free
of charge from a landline.
Calls from other providers and mobiles
may vary and could cost up to 40p Per
minute.
General enquiries: 08457 30 20 10
Calls to 0845 numbers are typically
charged between 1p and 11.5p per
minute depending on the time of day for
landline customers. They are included
free of charge in certain BT Call
packages.
Calls to 0845 numbers will cost 1ppm
plus your phone company access
charge.
New applications: 0800 30 20 10
Calls to 0800 numbers are free
Calls From mobile providers will vary.
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What is the impact?
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•
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•
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Affects every consumer of non-geographic calls
Requires action by every OCP and TCP in UK
Impacts all Service Providers – large and small
Require changes to co-regulated services
CPs and SPs will have to change business processes and
billing systems in order to be ready for go-live
• Some may have to have altered commercial arrangements
• We recognise that the required changes will take time, be
complex and may require significant investment
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What should range holders have done?
What
• Select service charges for each of their
number range blocks in discussion with
service providers and direct
interconnect (BT and any others)
• Return spreadsheets sent to them by
Ofcom with service charges for each of
their number blocks / communicate
decisions to direct interconnect
• Ensure all their service providers know
their service charge and obligations to
publish their service charge where their
number is advertised.
• Let Ofcom know the last step has been
completed.
When
• Now
• Now
• 28th November
• 28th November
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Currently……..
• In order to implement the unbundled tariff, CPs must set Service Charges against each
revenue share non–geographic number block allocated to them. The SCMS sets out the
Service Charges which range holders have proposed to apply to those number blocks
allocated to them once the unbundled tariff goes-live in summer 2015. More information
about the unbundled tariff can be found on the UK Calling website
http://www.ukcalling.info/
• SCMS = SERVICE CHARGE MASTER SHEET available from
http://www.ofcom.org.uk/static/numbering/index.htm
• Most TCPs have selected SCs from a common list of 75 price points that was the output
of a 3rd party arbitration process undertaken by ICC – SPs should have confidence that
these will be available from all major OCPs
• 5 DQ price points will also be made available before new system go-live
• Further 20 price points to be agreed and made available in the 12 months post launch
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Number
84xxxx
84xxxx
84xxxx
84xxxx
84xxxx
84xxxx
84xxxx
PPM
PPC
PPM+PPC (from start of the PPM+PPC (after
call)
60 seconds)
1ppm
1ppm
4ppm
4ppm
6ppm
6ppm
6ppm
87xxxx
87xxxx
87xxxx
87xxxx
87xxxx
87xxxx
87xxxx
10ppm
12ppm
91xxxxx
91xxxxx
91xxxxx
91xxxxx
91xxxxx
91xxxxx
91xxxxx
91xxxxx
91xxxxx
91xxxxx
91xxxxx
35ppm
36ppm
360ppm
10ppc
10ppc
10ppc
10ppc
10ppc
150ppc
200ppc
400ppc
600ppc
5+5
150+150
70+70
40+40
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FAQs
Are there rules about Service Charges? How do I determine what I should use?
There are basic rules:
• we have caps on ranges (7p for 084, 13p for 087, 360ppm for 09 / or 600ppc inc VAT
• No Cap for 118
• There are four basic structures (only one to be set for each allocated block):
• PPM
• PPC
• PPC + PPM from connection (total in first minute can’t exceed the relevant PPM cap)
• PPC + PPM after 60 seconds
• In addition: no time of day variation; charges have to be in whole pence,
• Price points are a matter for a range holder to set having considered SP needs and OCP billing
points
• Need to be communicated to Ofcom and advertised by SPs as VAT inclusive
However, as there are technical limits billing platforms of originators we are only require them to
offer a minimum of 80 in the first year with a minimum of 100 in subsequent years.
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FAQs
What role do originators play?
Originators need to set the price points in their billing systems
Originators have to respond to demand and allow a fair representation of services to be
able to have a suitable price point.
The industry sponsored an arbitrator (ICC) to look at this question and they proposed
80 price points for the first year (we wrote to all range holders to invite them to
participate in this process). See http://www.icc-uk.com/NGCS-Price-Points.php .
Originators do not have to offer the arbitrator’s 80 but this is a good basis for any
discussion with them. If you choose a price point that it not offered by an originators
then your range will not be able to be accessed by that originator.
We have issued guidance to help OCPs
http://stakeholders.acmpub.intra.ofcom.local/binaries/consultations/simplifying-nongeo-no/statement/guidance.pdf
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FAQs
What happens if TCPs don’t meet the timetable?
To ensure that their range will be connected by originators they need to communicate their choices
to their direct interconnect in good time. Provision of the information to us also ensures that
companies using ported numbers can see what SC has been selected for that range.
Any delay in notification increases the risk that their selection will not be built on billing platforms in
time. While we are proposing a generous amount of time there is a significant degree of
coordination required and finalisation of new systems so we consider early notification is in
everyone’s interest.
Is the SC the same as the termination rate? What happens to the existing tariff?
The SC effectively replaces the existing termination rates. What’s more while the old termination
rates was subject to alteration from time to time in accordance with a regulated formula that BT had
to adhere to, this is no longer the case – the SC will stay fixed.
Do I then receive all the SC now – I used to have a variation in payments depending on
transit arrangements?
Such variations will still occur – the TCP will receive the SC but there will still be charges for transit
arrangements which will impact on how much they receive net.
Payments to hosted SPs and any other parties in the supply chain need to
come from the SC.
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How will the change be communicated?
Communications around the changes must be
clear, consistent and coherent
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Joined up thinking with industry
stakeholders
Ofcom led national campaign including
press and radio advertising
Standalone website
Public relations and editorial
opportunities
Consumer awareness is critical to success!
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For more information
•
Visit www.ukcalling.info
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Website contents
• The website is split between consumer focussed information and the
information and guidance which can be used by Service Providers
• Basic information about the changes explaining how they will be
implemented and the timeline.
• A “consumer friendly” guide – this will be the same copy as a proposed
CP leaflet
• F.A.Q.s – Simple Q and As for consumers
• Service Provider overview – Material for TCPs and SPs
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Non-Geographic Call Services and
the PhonepayPlus Code
Mark Collins, Head of Regulatory Development, PhonepayPlus
NGCS Changes
Ofcom published NGCS statement in December 2013, which
introduced:
• New, unbundled tariff structure for premium rate ranges
• Increased caps for ppm and drop charges on 09 range
Meant PhonepayPlus had to:
• Audit current Code definitions, and pricing expectations in
Guidance
• Review spending caps contained within Code and prior
permission
• Consider potential risks and opportunities from higher ppm and
drop charge caps
Audit current Code
• Checked current Code definitions and rules - generally still
applicable in NGCS sense
• Guidance on pricing needs to reflect separation of network and
access charges – currently working with Ofcom on suitable
forms of wording
• Code already consulted – final version to be submitted to EC in
January 2015
• Guidance to be consulted in January 2015
Spending caps
• All existing caps to be consolidated into one Code
provision, and amounts set outside Code
• Independent research – concluded that caps still
necessary and welcomed by consumers
• Clear case for some caps to shift upwards – consumer
demand; competition from credit cards; appropriate
innovation
• Live and SES caps raised to £45, with reminder at £15
and re-opt in at £30
HRPRS consideration
• Higher caps give scope for innovation –
– greater potential for “instant” IVR-based purchase using drop
charges;
– higher caps allow greater competition with credit card as payment
option
• But also bring risks –
– Increased propensity for misleading promotions, missed call
scams, and undue delay
– Potential for rise in bill shock, especially from unauthorised use
• Considering special conditions for higher rate services
– Free pricing announcements before pricing commences
– Higher bonds
– Longer outpayment withholds
– Call recording and age verification requirements as for live
services
• Consultation in January 2015 – discussions ongoing
PSD II
• PSD II being re-negotiated in Brussels – potential for current
exemption to be narrowed
• Working with industry and HM Treasury to ensure:
– Voice services are exempted with other PRS, with no ambiguity
– Any caps within the exemption do not negate the increased caps which
Ofcom and PhonepayPlus will be introducing
– Discussions with EC ongoing
NGCS: an
operator’s view
20th November 2014
Justin Hornby – Senior Regulatory
Manager
NGCS: it’s all about the implementation
What does this mean for Vodafone?
• Just under £5 million project
• Enormous resource hungry project at a time of enormous projects – 4G,
CWW, roaming, quad play.
• Billing system development: origination, termination, interconnect, fixed,
mobile, retail and wholesale.
• IT development
• Customer Communication and Education
• Contract re-negotiation
• Internal Communication and Education
• Migration planning
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20 July 2015
NGCS: cost benefit
But it’s all worth it, right?
• Increased consumer price transparency
• Clearer TV, radio and print messaging
• Revenue certainty for Terminating Network Operators and Level 1 and 2
providers
• Retail 0800 revenue reductions offset by increased volumes
• Higher Rate PRS introduction
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20 July 2015
Not exactly….
Consumer Rights Directive
• From June 2014 service providers
required to use ‘Basic Rate’, 01, 02, 03,
mobile or free to caller, for post contract
calls.
• Effectively Ofcom’s reforms undermined
by EU and BIS.
• Water under the bridge, but if we do it
again…
• To realise transparency benefits of the
new regime there are a number of
challenges for the NGCS market:
– migration from NGCS to Basic Rate and
acceleration of online servicing
– Transparency leading to a perception of
consumer price inflation?
– Increases outside core telecom prices
– Confusion as not all industries covered by CRD
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20 July 2015
NGCS: innovation?
• Traditional PRS unaffected by CRD, but is a benefit from NGCS
guaranteed?
• PhonepayPlus figures show flat registration numbers and declining
revenues:
– 087, Fixed, Mobile and DQ all in decline. Only Pay For It showing any sign of growth
– Trend unlikely to change post NGCS implementation
• Higher price points allow traders to maintain revenues in a declining market
– Consumers likely to pay more to maintain trader revenues rather than benefit from innovation
• Fraud risk
• Are single drop IVR payments innovative? Larger Charity donations?
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20 July 2015
NGCS: interesting times
History shows regulatory change in
PRS is met by a ‘testing of boundaries’.
• Review PhonepayPlus rules
• Communicate expectations to all
stakeholders
• Highlight parties that have abused
past changes.
• Clear enforcement
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20 July 2015
Thank you
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20 July 2015
Question and answers
Huw Saunders, Director of Network Infrastructure, Ofcom
Mark Collins, Head of Regulatory Development, PhonepayPlus
Justin Hornby, Senior Regulatory Manager, Vodafone UK
Chair: Hugh Griffiths, Board member, PhonepayPlus
Panel session on innovation in
digital services and PRS
Jeremy Stafford-Smith, Product and Compliance Manager, Vodafone UK
Anil Malhotra, CMO and Founder, Bango
Rory Maguire, Managing Director, AIME
Eric Feltin, COO, Safari Mobile
Chair: Hugh Griffiths, Board member, PhonepayPlus
PhonepayPlus Forum
Innovation in Digital
Services and PRS
Rory Maguire
Leadership in Interactive Media & Micropayments
About AIME
• Leading UK Trade Association representing Companies involved in
the Interactive Media, Entertainment and micropayment industries
• TV, Radio, Smartphones, Mobile Networks, Fixed Line and
Payment Companies
• Members (70+) deliver products and services to Consumers or
support the businesses that deliver
• AIME supports the interests of Members and fosters industry
growth
• Collaboration, Addressing common issues, creating common
opportunities
• Members use varying forms of micropayment technologies to
monetise content, predominantly premium rate
AIME Sponsor Members
Evolving micropayments
• Premium rate competitors have evolved
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More consumer online time
More devices connected to internet
More digital payment mechanisms and currencies
Reduced consumer propensity to pay
More global & dominant stores
Cash replacement in physical environments
PRS ideal for innovation
• Premium rate supports innovation
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100% population coverage
No banking requirement
No age discrimination
No pre-paid vouchers
No PINs / Passwords / Set-up / gazilllion key strokes
• Well established payment mechanic
• Spontaneous consumption for small ticket value items
• Supported by data and voice comms but not always
part of it
Innovation
• Think product first, market second, payment
mechanic last
• Innovation driven around Consumer uptake;
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Convenience
Entertainment
Usefulness
Appropriateness
Positioning and Location
• Payments is tail end of consumer purchase journey
• Convenient, functional, neccesary
Supporting innovation
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Stable operating environment
Surety of Business risk
Simple to follow rule sets UK and EU
Proportionate consumer support
Commercially attractive business model
Technology neutral regulatory environment
Consistency across platforms and networks
• No bad PR
How do we get there?
• Recognising there are unique differences in PRS
– The ease of financial commitment
– Accessibility by minors
– Less “considered” purchasing
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Improve operational stability
Create tech neutral regulatory environment
Improve consumer support and education
Improve commercial competitiveness
Remove elements of business risk
Allow for mistakes by new entrants
Any Questions?
Innovation in
Digital Services and PRS
Eric Feltin
COO, Safari Mobile
Vice Chair, AIME
Drivers for Innovation
• Mobile phones are no longer just phones
• Mobile phones are essential
– Nomophobia – In 2010, 53% of UK population got anxious when
did not have access to mobile or coverage
• BUT Mobile phones are rubbish
– Screen is too small
– Keyboard input is too difficult
– Both are bad for on-the-move use
Improved Data Display
• Bigger screens – but too large for hand
• Projections – e.g. Google Glasses
• Sound (speak to you) – does not require looking
• More interruptions – but timely, relevant
• Presented succinctly at a glance
• Time and place relevant
Improved Data Input
• Could project a full-sized keyboard
– Can’t use on move, Who can touch type?
• Speech recognition
– Privacy issues, social etiquette
• Shorthand gestures (e.g. swipe, pinch)
– Limited, who wants to learn full vocabulary
• Glance recognition (where am I looking)
– Google Glass has “Notification glance”
Consent to Charge
• Glance / blink recognition
• PLUS:
– Security: Facial recognition (who actually bought service)
– Marketing: Pupil dilation = mental effort, interested
– Etc
• BUT: Are we ready for …
– Payforit Single Blink (?)
Robust Verification
• Technology too advanced for SMEs
– Therefore standards
• Standards by Apple, Google, Samsung
• Consent to charge will be beyond dispute
– Or: L2 is Apple, Google, Samsung
– (similar to Payforit – this aspect not merchant’s
responsibility)
Where Does This Lead?
• Apple, Google, Samsung will have
– they certify the consent to charge
– their own wallet
– one stop shop // global // consistent
– no country-by-country regulation
– no carrier-by-carrier Codes of Practice
– no false distinctions (e.g. quasi-physical goods)
Why Use PRS?
• Apple, Google, Samsung have:
– meaningful spend limits (not £30 per day)
– meaningful credit (43.5% of subscribers are pre-pay)
– they a grip over refunds
• Apple will not cancel an App Store purchase
Why Use PRS?
• PRS can be more innovative
– Initiated in many way (MO, call, website)
– Wider range of content (operators, videos, phone
personalisation)
– Interact in many ways (MT, voice, TV, apps)
– Lots of variation
• Theme of Today’s Forum:
Supporting innovation with proportionate regulation
Supporting Innovation
• Embrace new technology / channel partners
• Bring them into the framework (maybe informally)
• Recognise robustness of resulting evidence (and
reputation of who is responsible)
• Take into account
– many complaints have no merit (want a refund)
– many user experience issues were unintentional
One Quick Guess on
Innovation in
Digital Services and PRS
Question and answers
Jeremy Stafford-Smith, Product and Compliance Manager, Vodafone UK
Anil Malhotra, CMO and Founder, Bango
Rory Maguire, Managing Director, AIME
Eric Feltin, COO, Safari Mobile
Chair: Hugh Griffiths, Board member, PhonepayPlus
Thank you