LEVY ANNOUNCEMENT 1 APRIL 2011-31 MARCH 2012

As a result, PhonepayPlus has announced that its adjusted levy for 2011/12 will be 0.35%. This adjusted levy applies to all outpayments payable by Network operators to service providers in respect of revenue generated by premium rate services. The PhonepayPlus levy is calculated as a proportion of every outpayment to ensure that PhonepayPlus continues to receive adequate funding to carry out its activities, as required by Section 121 of the Communications Act 2003. The core budget does not include the costs of implementing the new industry Registration Scheme, as this is funded separately through registration fees.

The graph below shows the non-adjusted levy requirement for the last few years. This non-adjusted rate would be the levy PhonepayPlus would need to raise if it did not receive any other income (such as fines, administration charges or bank interest). Owing to the significant fall in PhonepayPlus’ budget for 2011/12 and a relatively stable market, the non-adjusted levy has fallen from 0.67% in 2010/11 to 0.61% for the coming year.

The adjusted rate is the amount PhonepayPlus is required to levy once the costs of regulation are offset by other income. As this amount is subject to great variation, the actual rate levied can appear to change dramatically from year to year. Further information on how the PhonepayPlus levy is calculated can be found in our consultation document on our Business Plan & Budget.

Despite the non-adjusted levy falling this year, the amount we need to collect from industry through the adjusted levy is slightly up on last year’s rate of 0.21%; we alerted the industry to the likelihood that the levy would rise in our statement last year. In 2010/11, PhonepayPlus returned a significant cash surplus to the industry derived from an exceptional level of fines in 2009/10, meaning the levy was heavily discounted. When setting the levy last year, we discussed with our Industry Liaison Panel (ILP) whether it would be better to return this surplus over a number of years, in effect smoothing the levy, or to discount heavily in 2010/11 on the understanding that the levy would likely increase in 2011/12. The ILP consensus was to return the money to industry in one year, which is why the levy has increased this year despite the significant fall in PhonepayPlus’ budget.

Arrangements as to the payment, adjustment and auditing of the levy are set out in Annex 1 to the PhonepayPlus Code of Practice.

PhonepayPlus will shortly publish its full statement following its consultation on the 2011/12 Business Plan & Budget.