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Premium Rate Billing

Premium Rate Billing

August 22, 2006
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" IPRS is not designed to sell a month’s membership. Rather, it should be used to offer a ‘sneak peek’ into your members area for a limited amount of time. "

The abbreviation IPRS stands for “International Premium Rate Services” – a technology born in Hong Kong way back in 1994 when a small group of entrepreneurial Brits approached the then incumbent Hong Kong Telecom with a simple but brilliant idea: If they sent the phone company (telephony) traffic, then they would expect a proportion of the so-called and often secretive “settlement rate” used by global phone carriers to pay for international telephone calls amongst themselves.

Hong Kong Telecom agreed, and thus a new multi-million dollar business was born. Initially, so-called audio text equipment, effectively large answering machines, would churn out pre-recorded erotic stories to callers in countries many time zones away, who had responded to a titillating ad in a newspaper or magazine inviting them to find out why the depicted “Horny Helen” was feeling that way.

Live phone sex was a natural and inevitable progression and it was only a question of time before other phone carriers wanted their share of the global phone erotica pie. Indeed Codetel, the carrier for the Dominican Republic, agreed to set up large call centers on the outskirts of Santa Domingo, in which girls from all corners of the globe were flown to talk dirty to their lonely menfolk back home.

Arguably one of the first forms of e-commerce, IPRS flourished not least since the countries in which such services were offered either did not have a domestic premium rate market or, as was the case with Germany, IPRS was used as a way of circumventing the more stringent rules and regulations governing local premium rate (1-900) services.

In the late nineties, as more and more countries began phasing in their own local domestic premium rate services that allowed phone sex, IPRS inevitably began to suffer a decline as a result. The payouts on offer relative to what the caller paid were more attractive; after all, the revenue only had to be shared with one phone company, not two.

Furthermore, the explosion of supply bandwidth for international telephony in recent years has put the payout rates under pressure. Simply put, making international phone calls has never been so cheap and technologies such as VoiP will only add to that downward pressure.

However, thanks to the internet, IPRS is experiencing something of a renaissance. International numbers are being used as a billing mechanism for surfers to gain access to web content for limited amounts of time. In the new, globalised, flat 24/7 ‘always on’ world in which we live, an international call has to terminate somewhere, so it only makes sense to send that call to a carrier with whom one has a revenue share agreement in place.

This way, web content owners can start making money from literally everywhere, including the ‘sleeping giants’ of Brazil, Russia, India and China with a combined population of some 2.7bn. Most of these people do not have a credit card. One thing they all have though is access to a phone or cell.

It could be argued that the term International Premium Rate is somewhat misleading. Remember, the surfer is making a regular IDD (International Direct Dial) call in order to gain access to your site. And since this probably represents a small fraction of the overall calls he makes, he will pay his phone bill in full – after all, the telephone remains an essential utility to most people – which is why the incidence of chargebacks in conjunction with IPRS remains negligible.

Yes, the payouts are low. But bear in mind, IPRS is not designed to sell a month’s membership. Rather, it should be used to offer a ‘sneak peek’ into your members area for a limited amount of time. And since typically these surfers have no other way of paying you, if you have compelling content, the chances are they will keep coming back for more.

Thanks to IPRS, you can therefore start making money on a global scale from surfers that were visiting your sites anyway – a new revenue stream designed to squeeze every last cent from your international traffic.


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