Premium Rated Services

There is little awareness among South African consumers as to how premium rate content services actually work despite the fact that many frequently download information, images, ringtones, music, games, video clips and wallpapers to their cellphones in response to an advertising campaign. As the mobile content industry is relatively new, and these services are often used by children, education is critical to avoid unscrupulous business practices.

Understanding the Flow of Mobile Content and Money

When a consumer purchases mobile content after sending an SMS to a premium rated short code, there is a difference in how that content is delivered to the cellphone and how the billing works for that mobile content. Each of these is illustrated in the boxes below.

The flow of money

Cellphone user >>> Service Provider (e.g. Nashua, Autopage, Vodacom Service Provider, MTN Service Provider, Cell C Service Provider) >>> Mobile Network Operator >>> Wireless Application Service Provider >>> Content Provider.

The flow of mobile content

Content Provider >>> Wireless Application Service Provider >>> Mobile Network Operator (Vodacom, MTN, Cell C) >>> cellphone user.

The Service Provider knows who is billing you but is not involved in the delivery of the content at all. Note that the Wireless Application Service Provider Association (WASPA) is not involved in the delivery of any content nor is it involved in billing anyone. In dealing with consumer complaints about mobile billing for content services, WASPA has to rely on the Service Provider or Mobile Network Operator to identify the Wireless Application Service Provider and Content Provider.

Once-Off Mobile Content vs Subscription Services

Confusion between once-off mobile content downloads and subscription services results in consumers inadvertently signing up for a subscription service. They receive ongoing mobile content and are billed continuously as opposed to once-off as with a premium rate SMS. Most people do not know how to stop a subscription service or know what recourse is available to them to lodge complaints against a subscription service.

Subscription services are long term mobile content services where a consumer is billed at regular intervals on an ongoing basis. Popular subscription services are cartoons, pop culture gossip, weather updates, religious messages, motivational messages, tips for weight loss, adult content, horoscopes, and daily news feeds and the latest rugby or cricket scores.

Subscription services offer consumers the benefit of receiving requested mobile content on a daily, weekly or ongoing basis. Consumers are not required to re-confirm the repeated billing of the service as they have agreed to the service on subscription. This billing option ensures that a consumer will pay less for content in comparison to downloading single purchases over a fixed period of time. For example, a single weather alert costs R2.00 per download. Over a month this would have cost R60.00 for a download per day, and the cost would increase if more than one request for content was made per day. A monthly subscription service for the same content is charged at R20.00 per month.

The uptake of mobile content subscription services in the market has occurred on the back of the success of premium rate SMS. Both once-off premium rate SMS and subscription services involve sending an SMS with a keyword (e.g. AB123) to a shortcode (e.g. 35010). Due to the similar nature of the subscription service and a once-off premium rate SMS, consumers are confusing subscription services with once-off premium rate SMS billing for mobile content, even when adverts clearly state the word subscription. As a result, many consumers are unaware that they have purchased a subscription service.

Consumer Concerns about Subscription Services

The inadvertent downloading of mobile content via subscription services exposes consumers to unexpected data charges. These data charges are in addition to the initial premium rate SMS cost. The most widely publicised instance of consumer complaints against the promotion of a subscription service was a few years ago in the United Kingdom. MBlox and Jamba's Crazy Frog ringtone campaign came under fire as consumers complained to the industry regulator that the advertising for the service was confusing and unclear as to the costs of the service. Most of these consumers indicated that they were under the impression that there was a once-off payment for the ringtone. They were not aware that the purchase was in fact a subscription to ongoing mobile content services. The UK regulator ruled that MBlox, as the service provider, was liable for a fine and was required to reimburse complainants.

Consumers must be able to easily identify the cost and billing implications of a service before selecting mobile content downloads. In many cases, consumers realise they are subscribed to a service only after receiving content on several occasions. Some services, however, do not even involve the receiving of content; for example, when a mobile club is joined. Mobile clubs offer consumers access to a community of mobile users and content services although consumers do not necessarily need to interact with this club. Consumers with a contract should monitor their cellphone usage via itemised billing and identify whether they are charged for any subscription services. Pre-paid consumers should call their network provider and ask them to check their billing records to find out if they are being billed for any subscription services.

Advice to parents

Check your and your child's cellphone bill regularly and your child must know how to monitor their cellphone bills. A reputable Service Provider will list all premium charges separately on the cellphone bill and also indicate the Wireless Application Service Provider (WASP) involved. The contact details of all WASPs who are WASPA members are listed on www.waspa.org.za. You can also:

  • Set a reasonable mobile spending limit for your child. If your child is using a phone linked to your phone contract, request your Service Provider to place a spending cap on the phone.
  • Parents must ensure that their children are aware of all the charges related to premium rated mobile content services BEFORE making a purchase.
  • Children must be able to spot "subscription" services.
  • Children must know how to terminate any subscription service.
  • Misleading advertising for subscription and premium rate services or problems with unsubscribing from these services must be reported to WASPA.
  • Children must know how to block any mobile subscription service to terminate content billing. Refer to our STOP ALL SUBSCRIPTIONS section