July 19, 2004
Ringing in the ears
Mobile phone companies are facing a showdown with the EU over the rules governing the use of e-money. Ken Young reports on a struggle that could cost operators millions, reports The Guardian.
"Buying ringtones and games on mobiles using premium-rate SMS (PSMS) services seems innocent enough. But this booming teenage economy - estimated to be worth £1bn in Europe this year - is fuelling a big debate about the future of money on mobile phones, reports.
"The key issue is that when users buy things that are not directly consumed on the phone - such as tickets and music - they are deemed by the UK's Financial Services Authority as buying with e-money. This makes the operators subject to the rules of the EU's e-money directive".
Steve Proctor, chief executive of aggregator iTagg, expresses the concerns of many. "Overnight the entire ringtone industry could die. I am not convinced the operators are doing enough to stop this."
"It came as something of a surprise that the e-money directive applied to pre-pay," says Susie Lonie, Vodafone's senior product manager for m-commerce. She says Vodafone is looking at a solution where the operator becomes the factoring company - effectively taking the debt of the third parties involved - as is being applied in Germany".
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