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SETTING UP A PREMIUM RATE TELEPHONE SERVICE

What you must do before you can start operating a service!
The premium rate industry is regulated by Phonepayplus and all participants are required to run their services in compliance with the Phonepayplus Codes of Practice which must be read to ensure that your services do not breach the Code. There are a number of services which are banned all together. Others which require prior approval from Phonepayplus. So to avoid wasting your time, check the Code of Conduct, before you start your service. Recorded message services need to comply with the latest Code of Practice. The Code has three general sections and then sections applying to particular categories of services such as competitions and virtual chat.

Live services must also comply with the ‘Live Code of Practice’. Phonepayplus Guideline No. 3 should be read to find out if the service requires prior permission from Phonepayplus to operate. If the service does not require prior permission it can be set up and run immediately provided it complies with the Codes of Practice.

Which services need Phonepayplus prior permission before they can operate?
The majority of premium rate services do not require permission from Phonepayplus before they can operate. However, under paragraph 2.3.1 of the Code some types of service need to be assessed by the Committee and given permission beforehand. At present, permission is given for each particular service, rather than to individual service providers or network operators.

The following types of service require prior permission from Phonepayplus before operation:
* all live entertainment services,
* virtual chat services charged at £1.00 per minute,
* all services (other than fax services) with a visual element - such as computer bulletin-board services,
* consumer credit services - such as credit brokerage and debt counselling services.

If the service requires prior permission, the appropriate guideline for the type of service to be run should be read. Then an application form needs to be completed and returned to Phonepayplus. If the service is given permission, a certificate will be issued enabling the service provider to run the service. The Secretariat can be contacted by phone or e-mail to give advice on the Code or how to apply for prior permission.

Telephone: 020 7240 5511
Fax: 020 7379 4611
Email: secretariat@Phonepayplus.org.uk

HOW TO BECOME AN INFORMATION PROVIDER
Having decided that you have a service which will attract callers in sufficient numbers, you must then decide how you are going to deliver that service to the callers. As an Information Provider (I.P.) you can deliver your services in one of the following ways:

1. Establish Your Own Premium Rate Telephone Centre
2. Use a Premium Rate Telephone Service Bureau

We will examine each of these options in detail. Your final choice will depend both on the capital resources and the time you have available.

[1] ESTABLISH YOUR OWN PREMIUM RATE TELEPHONE CENTRE
The first question to ask is, “Should I use a service bureau or should I buy my own equipment and contract directly with the telephone company?” As a general rule, unless you have substantial capital, you are better off using a service bureau, since the overall cost of equipment and other start up expenses can be in excess of £50,000.

To establish an premium rate centre, with a 30 line system, your costs include:

1. installation of Premium rate lines and annual rental, £1,000.
2. purchase premium rate computer; £10,000
3. salary trained operators to programme the equipment; £30,000 per annum
4. pay the Phonepayplus bonds for Live Services. £20,000

N.B. - the above does not include the salaries of staff for your live services and administration. Nor your all important advertising budget.

COST OF INSTALLING THE PREMIUM LINES
To create a viable Premium Rate Centre, you must install a minimum of 30 lines. Installation charges are currently £26 per line, with a quarterly rental of twenty five pounds. Both installation and rental charges must be pre-paid.

USING SIMPLE MESSAGE PLAYBACK MACHINES
At a very simple level you can avoid purchasing expensive premium rate computers and use simple message playback machines. This is done by purchasing software and an internal card which can be loaded on a standard PC computer. very similar in operation to a telephone answering machine. A 10 line machine can be obtained for under £2,000.

COSTLY INTERACTIVE TELEPHONE COMPUTERS
Having installed your telephone lines you must then install a premium rate telephone computer to handle the calls. A reliable thirty line computer, including installation, costs in excess of £100,000. The companies supplying these computers all insist on prepayment for their equipment. HOwever, the advantage of these more expensive computer systems is they ahve the ability to do many advanced functions:

• record phone calls
• divert calls
• play greeting messages
• capture messages
• change messages remotely
• provide accurate up to the minute call reports

There are certain types of live service (eg. chat and psychic) which must have all calls recorded - so it if you wish to set up your own premium rate telephone centre, then you will need to spend big money on the purchase of equipment.

SKILLED STAFF
To programme and monitor your premium rate computer, you must employ a programmer. People with the necessary skills do not come cheap. You will be lucky to find a competent programmer for less than £45,000 a year.

INSTALLATION DELAY
Should you decide to create your own centre your next problem is line installation. In the short term, this takes time. All the big phone companies (eg. british telecom) who will supply you with the phone lines, have a lengthy installation period. Currently they are quoting four to eight months.

LIVE SERVICE BONDING
The Live Services are unquestionably some of the most profitable. Should you decide to operate such services you will be required by Phonepayplus to pay a bond of at least five thousand pounds.

To summarise. The main deterrents to establishing your own centre are:

1. Cost of equipment and lines.
2. Hire of expensive computer staff.
3. Delay on installing the lines.
4. High bonding costs.

You should also consider whether it is worth spending thousands of pounds on equipment and staff when you could direct that money to promoting your service and enjoying the resulting income.

[2] USING A PREMIUM RATE TELEPHONE SERVICE BUREAU
If you are new to the Premium Rate business and wish to minimise your risk and capital outlay, the solution is to run your services via an existing Service
Bureau. These companies provide a wide range of facilities to aspiring Information Providers. They provide your link to the telephone network operators (eg. British Telecom, Cable and Wireless etc).

Initially service bureaus developed because the large telephone network companies did not offer the premium rate services required to handle the calls. Today the major reason for service bureau growth is the realisation that many interactive voice processing (also known as IVR) applications require an extremely high level of programming expertise to create the services.

As the owners and operators of extensive telecommunications equipment, they will guide you and provide you with the services which you need to become an Information Provider. They relieve you from the task of maintaining and operating the equipment.

Most bureaus will also provide you with ready-to-run services - such services as Dating, Competitions, Live One-to-One, Psychics and Tarot. These are services which the bureau is already running, ready for you to use. All you are required to do is advertise the service. These ‘Turnkey Services’ are designed for the high volume markets. For most new Information Providers, it is better to learn the business using these proven services rather than starting a new, untested service, that may or may not have a big enough market to make it profitable.

KEY ADVANTAGES TO USING A SERVICE BUREAU

Minimises Start-Up Costs - By using the services of a bureau you avoid the capital cost of installing your own lines or purchasing the premium rate computers necessary to handle the calls.

No Commitment - There is little or no commitment expected. Since service bureau services provide services on a monthly basis, you won’t be stuck with the service longer than you want. If you discover that your service turns out to be a dud, you can walk away with minimal capital loss.

Your First Priority Is Promotion - As a new Information Provider (I.P.) with an untried idea, it is more sensible to test your service with a Service Bureau. You are better advised to concentrate your resources on advertising, rather than commit your limited capital to lines and computer equipment.

More Convenient - A Service Bureau eliminates all the expense, inconvenience, and delay normally encountered when trying to establish your own Premium Rate centre. It has all the necessary lines and equipment you need to get your service operational within a matter of days.

Higher Payouts - Since service bureaus generate millions of minutes of traffic each month, they can negotiate higher percentage payouts from the telephone companies. In turn the bureau can usually offer new Information Providers a higher percentage payout than they could negotiate directly with the the Telecoms.

No Office Required - You can operate from home. The remote update capability of premium rate computers allows an Information Provider (I.P.) to update messages and retrieve information via any touch tone telephone.

Enormous Call Capacity - A Service Bureau will normally have a large line capacity, which removes any restriction on the number of calls that can be received by your service. This is particularly important if you offer a service such as a contest that is promoted on television, which can generate thousands of calls in a very short period of time.

Constant Upgrading of Technology - Leading-edge technology is a tool of the trade for a service bureau, and they are quick to embrace any new software or hardware, ensuring that you have use of the latest technology.

On-site Expertise - An in-house voice-processing system requires a full time programmer to maintain the system and programme new applications. Service bureaus have highly trained technicians and programmers on staff who are familiar with a wide variety of applications. By leaving all the nitty-gritty technical to the experts, an end user can focus on the marketing and providing the service.

Expert Advice - The biggest advantage in using a Bureau is to take advantage of their experience in the Premium Rate business. Most will include initial consultation and programme analysis for new Information Providers (I.P.). Their specialist know how and advice can often determine whether your service succeeds or fails. Bureaus can plan your budget, give advice about advertising and marketing, plus advise on the design of your service and its viability.

Professional Assistance - A Service Bureau can also offer you professional script-writing and recording facilities. This will help you to create a successful service that will have people constantly calling your number. Some bureaus have in-house TV and radio production facilities.

Great For Seasonal Campaigns - If you are looking at running a campaign only run three or four times a year, a service bureau is the
perfect resource.

Great for Testing New Services - Service bureaus are great for testing the effectiveness of new services before investing in a heavy marketing programme.

........ continued - SELECTING A PREMIUM RATE PHONE COMPANY .............