WHAT IS PREMIUM RATE?

Amongst the many new telephone services introduced after privatisation were PAY-PER-CALL services - which in the U.K. are known as Premium Rate Services.

These are “incoming only” services. Callers dial an “090 number” and either listen to recorded messages or are connected to live operators. The people who provide these services on the premium rate lines are called “Service Providers”, or SPs.

SPs, when offering services via premium rate are allowed to charge a fee in excess of the standard telephone call charge to cover the cost of operating the service.

When a caller dials a premium rate number they are charged at a higher rate, which can vary from as little as 10p to as much as £1.50 for each minute they use the service.

The telephone company bills callers on behalf of the Service Provider; retaining a percentage of the call charges collected and pay the balance to the Information Provider. Charges for calls made to premium rate numbers appear as part of the customer’s phone bill.

Guaranteed Payment
The great advantage of this business is that the Telephone Company is responsible for billing and collecting the money from the customers who call the SP’s services. The SP provides and promotes the service, and after the end of each month receives payment from the Telecom for his percentage of the revenue generated in the previous month.

In its simplest form, the premium rate service provides a simple, efficient billing mechanism. One which allows the S.P. to sell their service to hundreds, thousands, or even millions of customers, without the need to arrange billing or collect payment. For the S.P., nothing could be easier, no billing, no collections, and best of all no bad debts!

Explosive Growth From Innovative Services
The explosive growth of this industry has been the S.P.’s ability to successfully identify and promote services over the telephone which attract the public. Nevertheless, the S.P. would never have been able to earn sufficient profit from such services had he also been required to bill, and collect, the money from the thousands, or even millions, of people who call his service.

The Premium Rate billing facility provided by the telecoms has made it possible for S.P.s to sell services cost-effectively over the telephone.

Premium Rate Numbers: Terms and Definitions

• Premium Rate Number - A premium pay-per-call prefix set by the telecommunications carrier in conjunction with OFCOM, specifically used for content and programs.
• Activation - Establishment of account, set-up of premium rate lines, which includes installation of daily call tracking and pay ready system.
• AIT - "artificially inflated traffic". This occurs when someone may ring their own premium rate telephone service from their place of work or from a stolen or cloned mobile phone. British Telecom watch for such activity very closely and if it is found AIT has occured, British Telecom have the right to not pay you for revenue generated.
• Call Count - total number of calls received by a premium rate number.
• Call Count Volume - volume in minutes for any given period. (ie: 7 calls per day @ 6 minutes each = 42 minutes X 30 days = 1260 minutes)
• Call Count Revenue - total revenue generated by call count volume.
• Network Operator - An entity which is accredited by one of the major telephone carries (for example, British telecom or Cable and Wireless) to process, program, and sell premium rate numbers. The carrier pays the service bureau for call count revenue, and in turn the service bureau remits payment to the service provider on a monthly basis.
• Phone Pay Plus - This is the regulator of the premium rate industry. They have the pwer to shut down any service that is breach of their rules and also impose a fine. Anyone who operates a premium rate telephone service must fully comply with their rules at all times.
• Programs - the content or material presented on a premium rate service.
• Service Provider - The "owner" of a premium rate service, who is in the business of providing information for business, personal or entertainment purposes.
• Telco - any accredited telecommunications carrier which also bills consumers for premium rate activity.
• Turnkey - Ready for business, with no need to provide equipment, staffing, or other expenses.