Network returns guidance

1. Legal requirement

1.1. The PSA Code of Practice (the Code) sets out the requirements of network operators with regards to network returns as follows:
section 5.3.4 defines “network operator” i.e. those organisations that are required to submit network returns
sections 5.3.1 and 5.3.2 defines “Premium rate service” (PRS) and “Controlled Premium rate service” (CPRS) i.e. the services that are in remit
Annex one – General Funding Arrangements sets out the obligations of Network operators with regards to the calculation and processing of the levy due to PSA and includes definitions of “revenue” and “outpayments”.

1.2. Network operators should be clear that network returns are a formal direction under 4.2 of Annex 1 to the Code and funding information needs to be provided. 

2. Reporting process

2.1. Network operators are required to complete network returns by reporting:
revenues received for each defined type of CPRS
outpayments made for each defined type of CPRS.

2.2. We require network returns to be provided on a quarterly basis, with each return being due by the following dates each year:
Q1 – three weeks after quarter end on 30th June
Q2 – three weeks after quarter end on 30th September
Q3 – three weeks after quarter end on 31st December
Q4 – four weeks after quarter/year end on 31st March.

2.3. Network operators should note:
network returns may be submitted on behalf of the Network operator by an appointed responsible person
network returns for Q1 to Q3 may be estimated if necessary, and can be amended in subsequent network returns
the network return for Q4 must be accurate and auditable, and must be signed off by a senior person with responsibility for regulatory compliance within the network operator (in the format of a separate email to PSA)
the PSA has the power to instruct an external audit of the actual figures provided by network operators if there is evidenced concern about those figures.

3. Network returns core information

3.1. All network return figures should be exclusive of VAT.

3.2. Outpayment figures should be reported as consumer revenues less only the contracted revenue share due to the Network operator. Any other commercial deductions made on the same outpayment transaction should be excluded e.g. opt-in charges, commissions, bad debt recovery.

Where the Network operator is also the provider of the service in question (“own service”), then only costs that are directly relevant to call termination may be deducted from revenues to arrive at an outpayments figure. Network operators should not deduct the cost of providing the service.
 
3.3. There are three different types of mobile services to be reported:
operator billing
PSMS
voice shortcodes.

The only Network operators for these services are the four mobile network operators (MNOs), i.e. EE, O2, Vodafone and Three, plus any mobile virtual network operators (MVNOs) who act as “thick” MVNOs (e.g. Virgin) and whose revenues and outpayments are not reported by the MNO whose infrastructure they use.

All CPRS revenues (and subsequent outpayments) relating to all other MVNOs should be included in the network returns of the relevant MNO.

All charitable donations should be extracted and reported separately. Where there is a 100% pass-through of the service charge in relation to charitable donations, the PSA levy will not apply to these outpayments.

3.4. There are four different types of fixed line services to be reported:
09 numbers
087 numbers
118 numbers (i.e. directory enquiries)
Information, Connection and/or Signposting Services (ICSS) on any other number range involving revenue share (currently 084 in addition to 09 and 087).

4. Network returns by type of service

4.1. Operator billing

Operator billing provides a payment mechanism to consumers whereby the cost of, or charge for a product or service is applied directly to their mobile account or deducted from their pre-paid credit. 
Operator billing is in remit for the following services:
chatline services (irrespective of cost)
internet dialler software operated (irrespective of cost)
sexual entertainment service (irrespective of cost)
all other services charged for at a cost of more than 10 pence inclusive of VAT.

Examples of operator billed services include but are not limited to: app store downloads and in-app purchases; music streaming and gaming.

Operator billing includes the Payforit payment mechanism.

Operator billing does not include ‘Own Portal’ transactions, currently defined by Ofcom as: 
“Mobile portal content services are digital content services that can be purchased by the Mobile Communication Partner’s (MCP) customer through ‘browse and click’, where the MCP carries out all retail activities regarding the content itself, including the promotion, delivery, billing and customer care and where the transaction is charged to the MCP’s customer’s bill or pay as you go credit.”
As such, content accessed, delivered and charged through a MNO’s own portal is not considered a CPRS. 

4.2. Premium Short Message Service (PSMS)

PSMS provides a payment mechanism to charge for mobile third-party off-portal services accessed through Mobile Originating (MO) messages and Mobile Terminating (MT) messages.

PSMS is in remit for the following services: 
chatline services (irrespective of cost)
internet dialler software operated (irrespective of cost)
sexual entertainment service (irrespective of cost)
all other services charged for at a cost of more than 10 pence inclusive of VAT.

Examples of PSMS include but are not limited to: radio and tv competitions; charitable donations; and mobile content subscriptions.

4.3. Voice shortcodes 

Voice shortcodes are 5 or 6-digit codes which enable mobile users to access voice services.

Voice shortcodes are in remit for the following services: 
chatline services (irrespective of cost)
sexual entertainment service (irrespective of cost)
all other services charged for at a cost of more than 5.833 pence per minute, or per call, exclusive of VAT.

Some examples of services that are provided via voice shortcodes include but are not limited to: tv voting; live chat and entertainment services; and international call routing services.

4.4. 09 numbers

Voice services can be provided through the use of 09 number ranges.

09 numbers are in remit for the following services: 
chatline services (irrespective of cost)
internet dialler software operated (irrespective of cost)
sexual entertainment service (irrespective of cost)
all other services charged for at a cost of more than 5.833 pence per minute, or per call, exclusive of VAT – except for calls from BT customers, where the cost exceeds 5 pence per minute inclusive of VAT.

Voice services provided via 09 numbers typically cost between 10p per minute and up to £3.60 per minute or £6 per call, inclusive of VAT. 

Some examples of services that are provided via the 09-number range include, but are not limited to: tv voting, live chat and entertainment services, competitions, and international call routing services.

Where the network operator is also the provider of the 09 service in question (“own service”), then only costs that are directly relevant to call termination may be deducted from revenues to arrive at an outpayments figure. Network operators should not deduct the cost of providing the service.

4.5. 087 numbers

Voice services can be provided through the use of 087 number ranges.

087 numbers are in remit for the following services: 
chatline services (irrespective of cost)
internet dialler software operated (irrespective of cost)
sexual entertainment service (irrespective of cost)
all other services charged for at a cost of more than 5.833 pence per minute, or per call, exclusive of VAT – except for calls from BT customers, and where the cost exceeds 5 pence per minute inclusive of VAT.

Voice services provided via 087 numbers are offered at a lower cost when compared to those offered via 09 numbers. 

There is currently an exemption from the requirement to register such services with PSA, and from the requirement for organisations to register with PSA where they only provide services on these ranges (with the exception of services subject to Special Conditions). However, network operators are still required to report all revenues and outpayments within remit.

Some examples of services that are provided via the 087-number range include, but are not limited to: customer services; chat and entertainment-based services and information-based services.

Where the network operator is also the provider of the 087 service in question (“own service”), then only costs that are directly relevant to call termination may be deducted from revenues to arrive at an outpayments figure. Network operators should not deduct the costs they incur in relation to the provision of the service.

4.6. 118 numbers - Directory Enquiry (DQ) services 

Directory enquiry (DQ) services are generally provided through the 118-number range and enable consumers to obtain the telephone number of people or organisations that they wish to contact by providing information such as the name and general location of the relevant individual or organisation. 
118 numbers are in remit for all calls charged for at a cost of more than 5.833 pence per minute, or per call, exclusive of VAT – except for calls from BT customers, and where the cost exceeds 5 pence per minute, inclusive of VAT.

Where the network operator is also the provider of the 118 service in question (“own service”), then only costs that are directly relevant to call termination may be deducted from revenues to arrive at an outpayments figure. Network operators should not deduct the costs they incur in relation to the provision of the service.

4.7. Information, Connection and/or Signposting Services (ICSS) on any other number range involving revenue share (currently 084 in addition to 09 and 087)

ICSS are provided across different number ranges and enable consumers to be connected to other numbers (typically customer services numbers).

In addition to ICSS revenues and outpayments being reported under either 09 or 087 as above, network operators should also report revenues and outpayments in respect of ICSS on other number ranges.

5. Artificially Inflated Traffic (AIT)

Network operators are required to indicate if any of the revenue declared in a network return is subject to AIT. If this is the case, Network operators will be required to complete a separate form.

Any monies previously held under AIT Retention Notices but released during the period in question should be included in the total outpayments declaration for the appropriate type of service.