Proposed code of practice would force Irish firms out of business, court told

A body representing Irish companies providing premium services to mobile phone will be immediately forced out of business and their market taken over by foreign firms if a new code of practice for the industry is introduced, the High Court has heard.

Phone Paid services Association Ltd (PPSA) which represents more than 50 providers of Premium Rates Services, such as text based competitions, charity donation services, peer-to-peer chat services, ring tone and video clips, has brought a legal action aimed at preventing Comreg's new code of practise for the industry from coming into force on June 5 next.

The Commission for Communications Regulation (Comreg), which regulates the sector opposes the action brought on behalf of the PPSA and two other Irish registered PRS providers Modeva Interactive and Zamano Plc.

Comreg claims that the new code of practice is required in order to protect consumers and improve confidence in the sector.

The court heard that Comreg has received thousands of complaints relating to premium rate services from the public, and that the sector needs to be regulated.

Ultimately the code will be to the benefit of the industry, it claims. The State has applied to the court to be joined as a notice party to the proceedings.

Today, barrister Diarmuid Rossa Phelan SC for PPSA, Modeva and Zamano said the new regulations would radically transform the regulatory landscape.

The new code would significantly increase their costs and customer acquisition rates. Counsel said these additional costs would make their business unviable and result in their immediate closure.

Counsel said the new code will have serious consequences for those who breach it. Previously the sector was regulated under a code introduced in 2008, which was similar to codes in other EU state. The new regulation is more severe those in operation in other jurisdictions, it was claimed.

The new code would only apply to Irish-based PRS providers and not to those located in other EC countries. The effect of the code would result in the Irish providers being eliminated and their business being taken over by foreign-based competitors, which counsel said amount to as discrimination.

Counsel also told the court that due to the costs involved the companies would not be able to upgrade their technology in time to meet the June 5 deadline.

The companies were only given eight weeks to implement the changes, counsel said, whereas the firms believe they needed at least eight months to carry out the upgrade.

In their action PPSA Modeva and Zamano are seeking various orders including one staying Comreg's decision, made on April 5 last to introduce the new code of practice.

They want the code, or in the alternative certain sections of the code re-assessed.

They are also seeking declarations from the court that the code of practise is breaches their right to earn a livelihood unreasonable, disproportionate, and is incompatible with EU law prohibition discrimination on the grounds of nationality.

The are further seeking a declaration that the decision and the code of practice for PRS providers is ultra vires or outside the powers of to the 2010 Communications Regulation (Premium Rate Services and Electronic Communications Infrastructure) Act.

Lawyers for Comreg denied all of the plaintiffs claims. They further reject the argument that the code is ill thought-out, and said that the draft proposals of the code were made available to PRS providers in July 2011.

The case, before Mr Justice Kevin Cross, continues tomorrow.