House of Commons - Explanatory Note
Communications Bill - continued          House of Commons

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Clause 172: "Relevant amount of gross revenue" for the purposes of s. 171

367.     The relevant amount of gross revenue for the purpose of clause 171is to be calculated in accordance with this clause and rules to be made by the Secretary of State.

Clause 173: Proceedings for an offence relating to apparatus use

368.     This clause amends sections 11 and 12 of the Wireless Telegraphy Act 1949 in order to bring the mechanism for appeal against decisions of OFCOM about apparatus which causes or may cause undue interference (currently taken by the Secretary of State) into line with the new provisions for appeal in Chapter 3 of Part 2 of this Bill.

369.     The current arrangements for appeal to a tribunal established under section 9 of the 1949 Act, which is repealed by Schedule 19, have very rarely, if ever, been used.

Clause 174: Modification of penalties for certain wireless telegraphy offences

370.     Subsections (1) and (2) amend section 14(1) of the Wireless Telegraphy Act 1949. They alter the penalties and mode of trial for offences under sections 1 and 1A of the 1949 Act committed after the commencement of this clause consisting of unlicensed transmission other than for broadcasting, or possession of apparatus for such transmission: these offences become triable summarily only, and the maximum penalties are now six months imprisonment and/or a fine not exceeding level 5 on the standard scale (currently £5,000). Subsection (3) amends section 79(1) of the Telecommunications Act 1984 so that, where authorised by warrant, apparatus and other property suspected of being used in connection with an offence under section 1A of the 1949 Act consisting of possessing apparatus for unauthorised transmission (whether broadcasting or not) may be seized and detained.

As mentioned above, section 1(1) of the 1949 Act makes it an offence for any person to establish or use any station for wireless telegraphy or to install or use any apparatus for wireless telegraphy, otherwise than under and in accordance with a licence granted by the Secretary of State. Section 1A makes it an offence to possess or have control over any equipment with intent to use it in contravention of section 1 or knowing, or having reasonable cause to believe, that another person will so use it. The mode of trial and penalties for broadcasting offences are not affected by the Bill.

Clause 175: Fixed penalties for certain wireless telegraphy offences

371.     This clause gives effect to Schedule 6to the Bill that introduces a fixed penalty regime for summary offences under the Wireless Telegraphy Act 1949.

372.     Schedule 6 allows OFCOM to send a "fixed penalty notice" to any person they believe has committed any summary offence under the 1949 Act. This notice must give particulars about the alleged offence, and will offer the alleged offender the opportunity to discharge any liability to conviction for the offence by payment of a fixed penalty (such an amount may be prescribed in relation to that offence by regulations made by the Secretary of State, but must not be more than 25 per cent of the maximum fine on summary conviction) within at least one month. No proceedings may be brought for the alleged offence during this period, unless the alleged offender asks to be tried in accordance with the provisions of the notice. If the penalty is paid within the period specified in the notice, no further proceedings for that offence can be brought against the notified person.

Clause 176: Power of arrest

373.     This clause applies the summary arrest powers contained in Schedule 1A to the Police and Criminal Evidence Act 1984 (which is being inserted by the Police Reform Act 2002) to offences under section 14(1) of the Wireless Telegraphy Act 1949. Section 14(1) provides that certain offences under the 1949 Act are triable either summarily or on indictment ("triable either way"). It also amends the equivalent provision in the Police and Criminal Evidence (Northern Ireland) Order 1989.

Clause 177: Forfeiture etc. of restricted apparatus

374.     This clause gives effect to Schedule 7, which replaces sections 80 and 81 of the Telecommunications Act 1984.

375.     Schedule 7 sets out the procedures which apply to the seizure and forfeiture of apparatus the custody or control of which is restricted under an order made under section 7 of the Wireless Telegraphy Act 1967. OFCOM are to notify each owner of such apparatus about its seizure and the grounds for that seizure. The principal change from the previous regime will be that restricted apparatus that has been seized will be deemed to be forfeited unless any person claiming that the apparatus is not liable to forfeiture gives notice of his claim in writing to OFCOM within one month of the date of the notice of seizure. In such cases OFCOM may take the matter to court and must decide as soon as reasonably practicable after receipt of the claim either to do so or to return the apparatus to its owners.

Section 7 of the Wireless Telegraphy Act 1967 provides for the Secretary of State to make orders restricting certain actions in relation to specified apparatus for the purpose of preventing or reducing the risk of interference. Restricted apparatus may be seized either under warrant under section 15 of the Wireless Telegraphy Act 1949 or in accordance with a power in section 79(3) of the Telecommunications Act 1984 to seize any apparatus or thing used in connection with offences specified in section 79(1) of that Act.

Clause 178: Modification of definition of "undue interference"

376.     This clause modifies the definition of "undue interference" in section 19(5) of the Wireless Telegraphy Act 1949 in implementation of condition 3 of Part B of the Annex to the Authorisation Directive, which refers to "harmful interference" as defined in Article 2(2)(b) of that Directive, and also in implementation of Article 7(2) of Directive 1999/5/EC on radio equipment and telecommunications terminal equipment, which refers to "harmful interference" as defined (in the same terms) in Article 2(i) of that Directive. The new definition provides that interference with wireless telegraphy will not be regarded as "undue interference" unless it is also harmful. "Harmful" interference means that the interference creates dangers or risks of dangers in relation to any radio service used for navigation or for any other purpose connected with safety, or that it degrades, obstructs or repeatedly interrupts lawful radio transmissions.

Clause 179: Modification of definition of "wireless telegraphy"

377.     This clause gives the Secretary of State the power (exercisable by order, subject to the affirmative resolution procedure in both Houses of Parliament) to modify the definition of "wireless telegraphy" in section 19(1) of the Wireless Telegraphy Act 1949 so as to vary the upper frequency limit (currently 3,000 Giga-Hertz) of the electromagnetic spectrum to which the Wireless Telegraphy Acts apply. Although current technology does not permit the use for radiocommunications of frequencies anywhere near that limit, as technology progresses it may be necessary to raise the ceiling.

Chapter 3: Disputes and Appeals

378.     The dispute provisions in the Bill reflect the requirements of Articles 20 and 21 of the Framework Directive. Article 20 enables disputes under the Framework Directive and the other Communications Directives between persons providing electronic communications networks and electronic communications services in the same jurisdiction to be referred to OFCOM by either party. Article 21 of the Framework Directive stipulates the procedures to be followed when cross-border disputes arise. Clauses 180 to 185 implement these provisions of the Directives accordingly.

379.     The appeals mechanisms in the Bill have been devised to meet the specific requirements of Article 4 of the Framework Directive. Article 4 of the Framework Directive, in effect, requires that any person who is affected by a decision of OFCOM or the Secretary of State which relates to networks or services or rights of use of spectrum must have the right of appeal on the merits against that decision to an appeal body that is independent of the parties involved. The Bill therefore sets out a mechanism for appeal on the merits to the Competition Appeal Tribunal (CAT) against any decision (with specified exceptions) taken by OFCOM under Part 2 of the Bill or the Wireless Telegraphy Acts 1949 or 1998, against certain specified decisions of the Secretary of State and against directions, approvals and consents pursuant to conditions under clause 41. Once the CAT has reached its decision it must remit the decision under appeal to OFCOM, the Secretary of State or the person responsible for the direction, approval or consent as appropriate, with such directions, if any, as it considers necessary.

Clause 180: Reference of disputes to OFCOM

380.     This clause enables parties to certain disputes relating to network access or dealing with obligations under Part 2 of the Act and other legislation relating to radio spectrum management to be referred by a party to OFCOM. The types of disputes that may be referred are: (i) network access disputes between different communications providers, between communications providers and persons making associated facilities available or between different persons making associated facilities available; (ii) disputes concerning the access-related conditions set under clause 70(1) between communications providers or persons making associated facilities available and persons to whom that clause applies or between different persons to whom that clause applies; (iii) disputes between different communications providers dealing with obligations under Part 2 of the Act (other than disputes about obligations imposed by SMP apparatus conditions, the persistent misuse of networks or services, restrictions in leases and licences or offences relating to networks and services) or under other legislation relating to radio spectrum management.

381.     Under subsection (4), OFCOM may stipulate the manner in which a reference may be made by a party to the dispute. Any requirements imposed by OFCOM must be published in a notice. This clause implements Article 20(1) of the Framework Directive.

382.     Paragraph 17 of Schedule 18 (transitional provisions) provides that any dispute referred to the Director General of Telecommunications under regulation 6 of the Telecommunications (Interconnection) Regulations 1997 but not resolved before the revocation of those Regulations under the Bill will be determined in accordance with Chapter 3 of Part 2 of the Bill. Any direction given under regulation 6 before the Telecommunications (Interconnection) Regulations 1997 are revoked will be enforceable under paragraph 9 of Schedule 18.

Clause 181: Action by OFCOM on dispute reference

383.     If a dispute is referred to OFCOM by a party under clause 180, OFCOM must handle the dispute unless they believe that there are alternative means, which would promptly and satisfactorily resolve the dispute consistently with the European Community obligations in clause 4. Where OFCOM conclude that it is appropriate for the referred dispute to be resolved by alternative means, they must inform the parties to the dispute of their decision as soon as practicable. However, if the dispute is not resolved by the alternative means within 4 months, under subsection (6) either party to the dispute may refer it back to OFCOM. Clause 181 implements Article 20(2) of the Framework Directive.

Clause 182: Legal proceedings about referred disputes

384.     Subject to subsection (8) of clause 185 (determinations bind the parties) and the terms of any agreement, a reference of a dispute under clause 180or a reference of a dispute back to OFCOM under subsection (6) of clause 181is without prejudice to the rights of the person referring the dispute, the other parties to the dispute, OFCOM or any other person to bring or continue any legal proceedings dealing with the dispute. Any reference or reference back also does not prevent OFCOM from taking enforcement action in relation to the subject matter of the dispute. OFCOM, however, must comply with any court order requiring OFCOM to stay their handling of a dispute for the period of time specified by the court (which may be indefinite). The period of time specified by the court shall not be counted towards the 4 months that OFCOM has to resolve a dispute under clause 183. Clause 182 implements Article 20(5) of the Framework Directive.

Clause 183: Procedure for resolving disputes

385.     This clause requires OFCOM to consider and determine any dispute referred under clause 180 that they decide to handle or any dispute referred back to them under subsection (6) of clause 181. Unless there are exceptional circumstances or it is reasonably practicable for OFCOM to make a determination in a shorter period of time, OFCOM must determine a dispute within 4 months of the date on which OFCOM determines it is appropriate for them to handle the dispute or on which a dispute is referred back to them. OFCOM must send a copy of their determination and the reasons for their decision to each party to the dispute. Subject to commercial confidentiality, OFCOM must also publish its determination. Clause 183 implements Article 20(1) and (4) of the Framework Directive.

Clause 184: Disputes involving other member States

386.     This clause requires OFCOM to consult with the regulatory authorities of other member States prior to handling, considering or making a determination of a dispute referred to them under clause 180 or referred back to them under subsection (6) of clause 181if the dispute relates partly to anything done by means of an electronic communications network falling with the jurisdiction of those authorities.

*Under subsection (2), a dispute falls within the jurisdiction of other regulatory authorities when it relates to the activities that are carried out by a party to the dispute in more than one member state or by different parties in different member States and the other regulatory authorities are the authorities for those activities in the other member State or one of the other member States.

387.     Where a dispute involves other regulatory authorities, subsection (5) imposes a duty on OFCOM to agree with them, so far as practicable, the steps to be taken in relation to the dispute. Subsection (6) requires OFCOM to resolve the dispute within such period of time as may be agreed with the other regulatory authorities.

388.     This clause implements Article 21(2) of the Framework Directive.

Clause 185: Resolution of referred disputes

389.     When determining the resolution of a dispute under Chapter 3 of Part 2 of the Bill, OFCOM may:

  • issue a declaration setting out the rights and obligations of each party to the dispute;

  • direct the fixing of terms or conditions of transactions between the parties to a dispute (except where the dispute relates to radio spectrum management legislation);

  • impose enforceable obligations requiring the parties to enter into a transactions on terms or conditions set by OFCOM (except where the dispute relates to radio spectrum management legislation);

  • direct a party to the dispute to making payments to adjust under- or overpayment (except where the dispute relates to radio spectrum management legislation);

  • require a party to make payments in respect of costs and expenses incurred by another party;

  • require a party to make payments in respect of costs and expenses incurred by OFCOM, where the dispute relates to radio spectrum management legislation or where is appears that a party abused his right of reference under Chapter 3;

  • take account of any decisions made by others and ratify any such decisions, where a dispute has been referred back under subsection (6) of clause 181.

390.     These powers to resolve a dispute do not prevent OFCOM from separately exercising their powers to (i) set, modify or revoke general conditions, specific conditions dealing with universal service, access, privileged suppliers or SMP, wireless telegraphy licences or grants of recognised spectrum access; or (ii) make, vary or revoke any regulations under section 1 or 3 of the Wireless Telegraphy Act 1949.

391.     Any determination made by OFCOM is binding on the parties to the dispute; however, they may appeal against the determination in accordance with clause 187.

Clause 186: OFCOM's power to require information in connection with dispute

392.     This clause gives OFCOM powers to require parties to disputes and other persons to provide them with information that enables OFCOM to:

  • decide whether they should handle a dispute;

  • determine whether they need to consult the regulatory authorities of other member States; and

  • consider and determine a dispute.

393.     Information requested by OFCOM must be provided within the period specified by OFCOM. Requests for information under this clause may be enforced by OFCOM using the procedure set out in clauses 134to 140.

Clause 187: Appeals against decisions by OFCOM, the Secretary of State etc.

394.     This clause provides for appeal to the Competition Appeal Tribunal (CAT) against decisions (with specified exceptions) made by OFCOM under Part 2 of the Bill and the Wireless Telegraphy Acts 1949 and 1998 and against decisions made further to a condition of entitlement set under clause 41. The specified exceptions are set out in Schedule 8 and are either decisions that do not have immediate effect on a person, but are of a legislative or quasi-legislative nature that require a further act or decision to be given effect, or decisions on matters which fall outside the scope of the Communications Directives. For example, a decision taken by OFCOM relating to the making or revision of a statement of policy on information gathering under clause 141 would not have immediate effect on any person. It would only be where OFCOM exercised their powers under clause 131 to require the provision of information, in accordance with that statement, that there would be a decision that would actually have effect on any person. Decisions under clause 170 (special procedure for contraventions by multiplex licence holders) fall outside the scope of the Directives.

*For the purposes of this clause, a decision includes OFCOM's exercise of any power and their failure to grant an application or to exercise any power following a request.

395.     Clause 187 also applies to specific decisions of the Secretary of State given under clause 5 (directions in respect of Part 2 functions) or clause 151 (directions with respect to radio spectrum) (in both cases, otherwise than decisions specified by Schedule 8), under clause 105 (restrictions and conditions subject to which the electronic communications code applies) or under clause 128 (suspension or restriction of a communication provider's entitlement).

396.     The right of appeal extends to any person affected by a decision to which this clause applies. Subsections (3) to (6) provide that an appeal can be made only by sending a notice of appeal to the CAT, and prescribe the contents of the notice. This clause and clauses 188 to 191 implement Article 4 and 11(3) of the Framework Directive and Article 10(7) of the Authorisation Directive.

Clause 188: Reference of price control matters to the Competition Commission

397.     If an appeal under clause 187(2) raises a price control matter specified in the rules of the CAT, the matter must be referred to the Competition Commission for determination in accordance with the rules and directions of the CAT and (subject to that) using such procedure as Competition Commission consider appropriate.

    *A price control matter as defined in subsection (10) relates to the imposition of any form of price control by an SMP services condition set under clause 83(9) or 87.

398.      The Competition Commission must notify the CAT of a determination concerning a price control matter and the CAT must follow the determination of the Competition Commission unless it would be set aside under the principles of judicial review.

Clause 189: Composition of Competition Commission for price control references

399.     This clause requires the Secretary of State to appoint not less than three members of the Competition Commission for the purposes of references of price control matters to them under clause 188. The chairman of the Competition Commission must also select at least one, but no more than three, of the members appointed by the Secretary of State to be members of a group selected to perform the Commission's functions under clause 188.

Clause 190: Decisions of the Tribunal

400.     The CAT is to decide an appeal on the merits, and then decide the appropriate action to be taken by the maker of the decision that is being appealed. Where an appeal is made under clause 105 (restrictions and conditions subject to which the electronic communications code applies), the CAT must decide the appeal in accordance with the principles of good administration. The CAT's decision should be communicated to the original decision-maker along with directions regarding the implementation of the CAT's decision. However, the CAT cannot require the original decision-maker to take any action that he would not otherwise have the power to take.

Clause 191: Appeals from the Tribunal

401.     A decision of the CAT may be appealed on a point of law, with the permission of the CAT or the appellate court, to the Court of Appeal or, in Scotland, to the Court of Session. Such an appeal maybe brought by a party to the original CAT proceedings, or by any third party who has sufficient interest in the decision.

Clause 192: Interpretation of Chapter 3

402.     This clause provides for the interpretation of defined terms used in Chapter 3.


Chapter 1: The BBC, C4C, the Welsh Authority and the Gaelic Media Service

Clause 193: Functions of OFCOM in relation to the BBC

403.     OFCOM shall regulate the BBC's services to the extent that there is specific provision for OFCOM to do so in any agreement between the BBC and the Secretary of State; and in the provisions of this Bill and of Part 5 of the Broadcasting Act 1996 (that is, in relation to unfairness and unwarranted infringement of privacy). Where authorised, OFCOM may also act on behalf of the Secretary of State.

404.      Subsection (3) provides that where set out in the Agreement, OFCOM may impose penalties on the BBC for contraventions of the Agreement and provisions of Part 3 of the Bill or Part 5 of the Broadcasting Act 1996 or for any other liability as is determined in accordance with the Agreement. Initially, the maximum penalty that OFCOM may impose will be £250,000, but the Secretary of State will be able to change this figure by order. The BBC must also pay such fees towards the carrying out of OFCOM's functions as may be agreed between the BBC and OFCOM (or in the absence of agreement, is set by the Secretary of State).

405.     The existing Agreement between the Secretary of State and the BBC supplements the Royal Charter in setting out in more detail the provision and content of the BBC's services. The Agreement will be amended to give effect to the new regulatory obligations placed on the BBC and to provide for OFCOM to impose financial penalties in the event of the BBC failing to comply with them. A draft of the proposed amendments to the Agreement will be available in due course.

Clause 194: Functions of C4C

406.     The Channel 4 Corporation is able to engage in activities which appear to them to be appropriate to carry on in association with their primary functions and to be connected (other than merely in financial terms) with activities undertaken by them for the carrying out of those functions. Those functions are securing the continued provision of Channel 4 and the fulfilment of the Corporation's public service remit set out in clause 256, as described in the notes to that clause below. The Channel 4 Corporation may also do such things and enter into such transactions as appear to them incidental or conducive to the carrying out of their statutory functions.

407.     Under subsection (3) the Channel 4 Corporation shall cease to have powers in relation to "qualifying companies" under section 24(5)(b) and (6) of the Broadcasting Act 1990.

408.      Schedule 9 provides a framework for the approval and enforcement of arrangements about the carrying out of the Corporation's activities.

409.     Paragraph 1 requires OFCOM to notify the Channel 4 Corporation that, within a period specified in the notification, the Corporation must submit to OFCOM proposals for arrangements that will apply to the relevant licence period. OFCOM must do this as soon as practicable after the commencement of this Schedule and as soon as practicable in the last twelve months preceding each date on which the Channel 4 licence would expire if not renewed.

410.     Where the Channel 4 Corporation have received a notification, they must submit proposals to OFCOM setting out the arrangements under which they are proposing to secure, so far as reasonably practicable, that all significant risks that their other activities will have an adverse effect on the carrying out of their primary functions (i.e. the provision of Channel 4 and the fulfilment of its public service remit) are identified, evaluated and properly managed. The proposals must include, the arrangements that the Corporation consider appropriate for securing the transparency objectives set out in paragraph 2(4). They may relate in particular to the list of matters specified in paragraph 2(5).

411.     OFCOM must consider the proposed arrangements and approve them, approve them with modifications, or require the Channel 4 Corporation to submit revised proposals. OFCOM may review the arrangements once during each licence period, either as a single review of all of the arrangements or two separate reviews, one relating to the arrangements to secure the fair trading objectives and one relating to other matters. OFCOM must also publish the arrangements.

412.     The Channel 4 Corporation must act in accordance with the approved arrangements. OFCOM has powers to enforce the arrangements and may impose a penalty, which may not exceed 3 per cent of the Corporation's qualifying revenue, if they are contravened.

*Qualifying revenue has the same meaning as in Section 19(2) to (6) and Part 1 of Schedule 7 of the Broadcasting Act 1990 with any necessary modifications.

413.     In carrying out their functions under Schedule 9, OFCOM must have regard to the need to secure, so far as reasonably practicable, that all significant risks that the Channel 4 Corporation's other activities will have an adverse effect on the provision of Channel 4 or its public service remit are identified, evaluated and properly managed.

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Prepared: 20 November 2002