UK Telecom Law Could Bankrupt Small Businesses, Group ChargesLONDON - The UK Federation of Small Businesses charged last month that the high cost of compliance with Britain's new telecommunications law threatened small firms with bankruptcy.
The law was adopted to comply with the EU's telecom directive. It called for establishment of a telephone preference service that lets consumers register their names in a national opt-out database.
Oftel, Britain's telecom regulator, awarded a license to run the TPS to the British Direct Marketing Association after a competitive tender. Although TPS is mandatory, the government declined to fund the effort.
"It is our view that people should be protected from unwanted phone calls, and that this should be funded by direct marketing companies," an Oftel spokeswoman said.
The UKDMA pays to put consumers on the database. It costs about $2.50 to register each individual "and to do all the other things we have to do," said Colin Lloyd, the DMA's CEO.
"Clearly, nobody knows at this stage how many consumers will register, but the file is already in excess of 400,000 and the numbers have gone up a lot as a result of all the publicity the new law has received since it went into effect on May 1," he said.
"So the only way of defraying these costs is through license fees to users. We charge companies that wish to take the file varying amounts dependent on their needs and size."
Steven Alambritis, the head of the Federation's parliamentary affairs, called the UKDMA charges "grossly over the top."
He added that "for a number of small businesses, if they are taken to court and forced to pay a fine of up to 5,000 pounds ($8,000), that's enough to put them into trouble and even into bankruptcy."
Lloyd noted that charges for small companies are in the 200-pound ($360) range and go up to 7,500 pounds "for the very largest telemarketers."
Moreover, he said, pricing policy was set by the Secretary of State for Trade and Industry, "the right honorable" Steven Byers "based on the information we gave him." In fact, the UKDMA had wanted to charge small firms 350 to 400 pounds for use of the file, but Byers insisted on the lower number.
"Mr. Alambritis is quite correct in that if there is a transgression of the law, the company is subject to a fine of 5,000 pounds," Lloyd said, "but that sum was set by the government and not by us. If a company goes bankrupt for breaking the law, that can't be the responsibility of the DMA."
Charges, the Oftel spokeswoman said, "are cost-based and the DMA isn't making an excessive profit." Charges are reviewed every three months," Lloyd said, and "if we make too much income the price comes down."
He also pointed out that outbound telemarketing calls cost 2.50 pounds in the UK "so that the industry will save substantial sums from not making calls to consumers who don't want to receive them."