Portfolio Committee on Trade and IndustryPortfolio Committee on Trade and Industry

3 September 20083 September 2008

Lessons In SA Mobile Self RegulationLessons In SA Mobile Self Regulation

Leon PerlmanLeon PerlmanChairman, WASPA

leon@waspa.org.za

Mike SilberMike SilberRegulatory Advisor, WASPA

mike@waspa.org.za

www.waspa.org.za

��Wireless Application Service Providers Association

� Represents ‘Wireless Application Service Providers’• WASPs provide novel mobile services

• Compulsory membership

�� Formed 26 August 2004• Worldwide recognition for its work

• WASPA modus implemented in other countries

� Self Regulatory• Consumer protection using enforced Code Of Conduct

• Power to close services, Check QoS, provide immediate refunds etc

� Industry promotion

WASPA Broad OverviewWASPA Broad Overview

BackgroundBackground

SA & African Mobile StatsSA & African Mobile Stats

� +/- 32million mobile users

• Biggest in Africa

� +/- 84%+ prepaid• Vulnerable as no access to billing like post-paid

�High SMS use (>1billion/month)

�Content and digital services delivery

via mobile phone very popular

• Huge growth worldwide

SA Mobile StatsSA Mobile Stats

Evolution: 2002Evolution: 2002-->>

Mobile Convergence

Mobile Services EvolutionMobile Services Evolution

Shopping Radio TV Shopping Radio TV Banking Phone Banking Phone VideoCamVideoCam

GPS Camera IPods

New ‘SmartPhones’

New Services

� Mobile TV

� Interactive TV (eg Voting for Idols)

� Banking via cellphone

� Search Engines

� Payment services etc

� Music Downloads

� Picture Downloads

� Games

� Competitions

� Location Services

� Yellow Pages

� Tracking services

� News alerts

� Financial Info and Alerts

Services WASPs ProvideServices WASPs Provide

M-Commerce(e-commerce+ via mobile)

MM--CommerceCommerce(e-commerce+ via mobile)

� Majority of services still ringtones, competitions

� 170+ WASPs

� Over 1,000 Information Providers (brands etc)

connect to consumers via WASPs acting as aggregators

� Lots of new international IP entrants in 2007/8

SA WASP StatsSA WASP Stats

WASP (aggr)Information Provider Network Subscriber

� Consumers SMS a ‘keyword’ or a number to common

5-digit shortcode to obtain content or to enter a

competition

� Billing once-off or via periodic billing (subscription)

� Uses premium rates for payment

• Greater than standard rate

Keyword

34567To:

Payment For WASP Services Via ShortcodesPayment For WASP Services Via Shortcodes

Money FlowsMoney Flows

WASP Information ProviderNetworkSubscriber

R10R10 = R5 + R1 + R3.50 + 50c

IPR

ExampleExample: Sale of Ringtone for R10: Sale of Ringtone for R10

New ServicesNew Services

Produce New Legal, Produce New Legal,

Consumer &Consumer &

Regulatory ChallengesRegulatory Challenges

� Hard Regulation (National Law)

� Self Regulation (Soft Law)

WASP Regulatory EcosystemsWASP Regulatory Ecosystems

Mobile Regulatory RegimesMobile Regulatory RegimesType State Role Advantages Disadvantages

Pure Self Regulation

(WASPA now)None • Reflexive

• Coordination

• Lobby for acceptance

Co-regulation Cooperative Framework

•State acceptance

•Legislative Advantages

•Carrot+stick

Non-reflexive

State Control Peremptory supervision•State acceptance

• Possible sunset clausesNon-reflexive

USA: Pure Self Regulation

SA: Self-Regulatory (WASPA through ECT Act 2002)

UK: Co-regulatory (PhonePayPlus through Ofcom)

Current Regimes:

General state/hard regulation or rules

may not speedily provide answers to

highly complex technology scenarios.

___________________________

Hence, we submit, there is a cogent

need for flexible self (soft) regulation

via sector-specific agencies.

Legal & Practical LacunaeLegal & Practical Lacunae

Soft/Self RegulationSoft/Self Regulation

� Cogent alternative to direct statutory/state

intervention in a nascent, evolving industry

� Provide Ex Ante Rules/Code Of Conduct

� To protect children and other vulnerable

consumers

� Peer-pressure on rogues

� Sanctions imposed, services closed

� Build consumer confidence

‘‘Light TouchLight Touch’’ Self RegulationSelf Regulation

16

Complaints about a specific few

Rules Tightened

Consumer IssuesConsumer Issues

Vast majority of WASPs Act EthicallyVast majority of WASPs Act Ethically

WASPA Code Of Conduct + Ad RulesWASPA Code Of Conduct + Ad Rules

� Code Of Conduct in force from 1 Sep 2005

� Advertising Rules in effect from 1 Jan 2006

� Both ‘integrate’ many national laws

� In some cases, stricter than national laws

� Rules revised constantly as issues arise

� Similar ‘WASP’ issues in other jurisdictions

� WASPA Rules applied in other countries

WASPA Code Of Conduct & Ad RulesWASPA Code Of Conduct & Ad Rules

� Spam

� Adult Services

� Access by Minors to adult content

� Subscription Services

� Display of Pricing

� Display of Terms & Conditions

� Competitions

� Dating Services

� Charity Services

Code Of Conduct ScopeCode Of Conduct Scope

Promotes GoodPromotes Good

Governance & Governance &

Best PracticeBest Practice

� TV:

� Show price in top corner of screen

� Minimum Display times for cost and T&C

� Minimum font sizes & type

� Radio:

� Voice-over must state price

� Indicate T&C

� Print:

� Minimum size for price

� Minimum size/position of T&C

� Billboards:

� Minimum % size for price

� Minimum size/position of T&C

� Plus: Web, Below-The-Line, SMS, MMS

Advertising Rules Advertising Rules –– Media SpecificMedia Specific

Now Media

Specific

Guidelines

s

R3/weekSubscription

This is a subscription service. You will be charged Rx per week until you unsubscribe

plus R4 per content item.

R3/weekSubscription

Eg Vodacom Only. Helpline 0xx-xxx-xxx. Adults only. Java/WAP/GPRS required.

Price must be on screen 100%

of ad time in any top corner

Show ‘subscription’

100% of ad time in price block

Subscription service T&C must be

on screen alone for at least 5 sec

After Subscription info shown,

remaining T&C must be on

screen for at least 5 more seconds

Screen 1

Screen 2

Price and “subscription” text

must remain on-screen while the

T&C’s below change to include

the remaining T&Cs

Price text at 18 points

Use Zurich font

‘Subscription’ text at 12 points

Use Zurich font

Price text at 20 points

Use Zurich font

‘Subscription’ text at 12 points

Use Zurich font

Title Safe BorderTitle Safe Border

Remaining T&C text all at 15 points

Use Zurich font

‘Subscription’ text all at 15 points

Use Zurich font

Price and subs text placed in

box, in contrasting colour to box

� R300 a month max billing on services

� Need consumer’s explicit consent to continue billing

� Services ads cannot be aimed at children

� No TV advertising within children programming on TV

� TV stations also made membership compulsory

� Must provide confirmation via SMS when subscribed to a

service

Latest UpdatesLatest Updates

� Full Time Monitor for compliance with Code

of Conduct/Ad Rules

� More proactive than reactive

� Uses TV & print clipping services

� Range of live SIMs live to check for reminder

messages, spam, QoS, correct billing etc

� May lodge formal complaints against

offenders

WASPA Media Monitor

� Formal process

� Pool of 8 WASPA Adjudicators

� Adjudicator decision appealable (some in part)

� 3-person Appeals Panels

� All are ICT-lawyers

� Fast turnaround from receipt of complete case file (48 hrs)

� Emergency Procedure (3 adjudicators at once, immediate)

� All have powers to:• Order refunds to consumers

• Suspend WASP/IP

• Impose punitive fine

• Withhold revenue

• Shut down services immediately

• Blacklist providers

• Expulsion from WASPA etc

WASPA Adjudicators & Appeals PanelWASPA Adjudicators & Appeals Panel

� Immediate shut-down/blacklisting of rogue services

� Fines of up to R200,000 levied

� More emphasis on closing down rogue services than

on primarily only issuing fines, which they have

invariably built into their business cases.

� Ordered refunds to consumers

� Networks executed on WASPA sanctions

recommendations

� TV stations made WASPA membership compulsory

� Required doubling of adjudicator pool

� Required Media Monitor – preemptive

� Cooperation with ASA & ICASA

ResultsResults

� Over 4,500 complaints/enquires

� Took 1.5 years to get first 1,000 complaints

� Took 3 months to reach third 1,000 complaints

� Hundreds of adjudications

� 85 adjudications took place during 2007

• 114 formal, many informal

� All adjudications & appeals on WASPA web site

• www.waspa.org.za

Complaints Process Stats from 1/9/05

1. Subscription Services

• Issues:

• Did not know I subscribed

• How do I un-subscribe?

• What’s it costing me?

• Solution: WASPA implements monthly reminder messages � Bans auto-subscriptions

2. SMS Spam

• Issue: Unwanted SMSs

• Solution: WASPA implements ‘recent’ & relevant clauses � STOP command � No active number harvesting

3. Unclear pricing on ads

• Issue: TV Ads unclear, smaller fonts than allowed

• Solution: WASPA agreement with TV stations for Ad declaration & blacklisting of rogues

4. Adult Content

• Issues:

• Cross-selling via SMSing to persons who have bought non-adult content like ringtones

• Access By Minors

• Solution: No cross-selling allowed � No content > topless � No Adult Ads on TV > Programme

5. WASP/IP Contact Details

• Issue: Who do I contact about complaint? Refunds?

• Solution: WASPA implements call-centre � Plans self-help system via USSD

Consumer IssuesConsumer Issues

Requirements:

� Sector-specific rules/code needed

• Technology is VERY complex

• General rules not effective

• Must have teeth/enforcement

� Requires multiple Code of Conduct & Ad Rule revisions

• Allows Rapid Response to evolving technologies/business models

� Revisions adopted coincident with results from:

• WASPA complaints system & adjudicator reports

• Media Monitor observations of trends

• Market research

Change Process:

� WASPA Code of Conduct Sub-Committee deliberates, Mancom OKs changes

� Fast turnaround of revisions to prevent consumer harm

Reflexive Code of Conduct NecessaryReflexive Code of Conduct Necessary

Thoughts:Thoughts:

Consumer Protection Bill &Consumer Protection Bill &

Self RegulationSelf Regulation

� Promotional Competitions– SMS has revolutionised promotional competitions

– Recognise the rogues• 1 millionth SMS wins a Ferrari (R10 an SMS)

• Have dealt with in terms of the Code

– Many consumers and promoters PREFER premium-rated SMS• Standard rate – pre-paid users pay more than (often wealthier) contract users

• PR SMS has same cost irrespective of the wealth of the entrant– Wealthy contract customers don’t get cheaper rates than poorer pre-paid customers

• PR SMS has higher quality of service (equivalent of registered post vs ordinary post)

– Welcome Section 36• Refers to “reasonable costs of posting or otherwise transmitting an entry form or

device”

• No definition – could be debates

• Suggest a practical approach from the UK Gambling Act– Cost of entry limited to cost of standard post

– Can have higher cost PROVIDED also a free entry mechanism

– No discrimination between paid and free entries

– Sub-section 11 provides for an exception based on monetary limits• Could be delay

• Suggest a monetary amount be inserted as an interim until the amount is determined by the Minister and amended from time to time

Specific CommentsSpecific Comments

� Recognition of Codes of Conduct

– Could be delays

� May stifle evolution of Codes of Conduct

– NCC/Ministerial approval for changes in Codes will take

months, while consumer harm may continue unchecked

– Provisions in ECT Act from 2002 still unimplemented

– Technology regulation is VERY complex

� WASPA proposes services exemption (like in ECT

Act) or interim recognition

More Specific CommentsMore Specific Comments

“WASPA is one of the best

examples of self

regulation in the world”

Former ICASA Councillor Zolisa Masiza22 February 2008

Closing ThoughtsClosing Thoughts……

Thank You!Thank You!

Leon PerlmanLeon PerlmanChairman, WASPA

www.waspa.org.za

leon@waspa.org.za

s

This is a subscription service. You will be charged Rx per week until you unsubscribe

plus R4 per content download.

Text must be placed in

in solid white box with visible

black border.

R7.50/week+ R8/SMS

Show white block with

‘Subscription Service’

100% of ad time

Total/Upfront price

must be on

screen 100%

of ad time in top

right hand corner

Title Safe BorderTitle Safe Border

18+

T&C text:Mandatory info16 pointsZurich fontText in black only

with white border

Restrictions 14 Pt ZurichBlack text

Price Text

Total/Upfront price

Text in black colour

20 pt Zurich Font

No pixelating, smudging

or smoothing of text

SUBSCRIPTION SERVICESUBSCRIPTION SERVICE

Network charges extra. Stop 31234. Network charges extra. Stop 31234.

Competition closes 31 Jul 08. Competition closes 31 Jul 08.

Errors billed. XYZ Company. Errors billed. XYZ Company.

Help 082123456 (VAS). xyz.co.zaHelp 082123456 (VAS). xyz.co.za

.