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Schedule 13: Financial penalties under the Broadcasting Acts
835. Part 1 of this Schedule amends the provisions in the Broadcasting Act 1990 as regards financial penalties.
836. Penalties may be imposed on the revocation of a Channel 3 or the Channel 5 licence, or a licence to provide the public teletext service. At the moment, under section 18 of the Broadcasting Act 1990, the maximum penalty is 7 per cent of the qualifying revenue for the licensee's last complete accounting period falling within the licence period, or where the licence is revoked before the licensee has begun to provide the relevant service or before the end of the licensee's first complete accounting period falling within the licence period, 7 per cent of what OFCOM estimate would have been the qualifying revenue of the licensee for his fist complete accounting period falling within the period for which the licence would have been in force. Paragraph 2 provides that the maximum penalty will now be whichever is the greater of £500,000 or of the amount calculated under section 18 of the Broadcasting Act 1990.
837. Under section 41 of the Broadcasting Act 1990, penalties may be imposed on the holder of a Channel 3 licence or the Channel 4 or Channel 5 licences, if he fails to comply with licence conditions or OFCOM's directions. The distinction between a first and a subsequent offence is removed and the maximum penalty is now fixed to 5 per cent of the licensee's qualifying revenue for his last complete accounting period falling within the licence period in both cases (instead of 3 per cent for a first offence, and 5 per cent for any subsequent breaches). In cases where a penalty is imposed before the first such accounting period has ended, the penalty is to be 5 per cent of what OFCOM estimate would have been the licensee's qualifying revenue for that period.
838. Under 42B (for restricted services), and under section 55 (for additional services) of the Broadcasting Act 1990, penalties may be imposed on a restricted services licensee or on an additional service licensee if he fails to comply with licence conditions or OFCOM's directions. The maximum penalties are raised to whichever is the greater of £250,000 (instead of £50,000) or 5 per cent of the licensee's qualifying revenue for his last complete accounting period falling within the licence period, or where a penalty is imposed before the end of the first such accounting period, 5 per cent of what OFCOM estimate would have been the licensee's qualifying revenue for that period. Also, the distinction between a first and a subsequent offence is removed.
839. Under section 101 of the Broadcasting Act 1990, penalties may be imposed on the revocation of a national sound broadcasting licence. These provisions are amended to provide that the maximum penalty is whichever is the greater of £250,000 or of the amount that would have been calculated under section 101 (7 per cent of f the qualifying revenue for the licensee's last complete accounting period falling within the licence period, or of what OFCOM estimates would have been the qualifying revenue of the licensee for his first complete accounting period falling within the period for which the licence would have been in force, where the penalty is imposed before the first such accounting period has ended.
840. Under section 110 of the Broadcasting Act 1990, penalties may be imposed on a national sound broadcasting licensee, and under section 102, on a digital additional service licensee, if he fails to comply with licence conditions or OFCOM's directions, and under. The existing provisions are amended to provide that the maximum penalty is whichever is the greater of £250,000 or 5 per cent of the qualifying revenue for the licensee's last complete accounting period falling within the licence period, or of what OFCOM estimates would have been the qualifying revenue of the licensee for his first complete accounting period falling within the period for which the licence would have been in force, where the penalty is imposed before the first such accounting period has ended. There is no more distinction between a first and a subsequent offence.
841. Part 2 of this Schedule amends the provisions of the Broadcasting Act 1996 as regards financial penalties.
842. Under section 11 of the Broadcasting Act 1996, penalties may be imposed on the revocation of a television multiplex licence, and under section 53(5) on the revocation of a radio multiplex licence. The existing provisions are amended to provide that the maximum penalty payable is whichever is the greater of £500,000 (instead of £50,000) and 7 per cent of what OFCOM estimates would have been the multiplex revenue of the licensee falling within his first accounting period for which the licence would have been in force, or where such a licence is revoked before the licensee has begun to provide the relevant service or before the end of the licensee's first complete accounting period falling within the licence period, 7 per cent of the multiplex revenue for his last complete accounting period falling within the licence period.
843. Penalties may be imposed under section 17, on a television multiplex licensee; under section 23, on a digital television programme licensee; under section 27, on a digital additional services licensee; under section 59 on a radio multiplex licensee; under section 62 on a digital sound programme licensee and under section 66 on a digital additional sound services licensee, if he fails to comply with licence conditions or OFCOM's directions. The maximum penalties are raised to the greater of £250,000(from £50,000) or 5 per cent of the licensee's multiplex revenue for his last complete accounting period falling within the licence period. In cases where a penalty is imposed before the end of the first such accounting period, the second figure is to be 5 per cent of what OFCOM estimate would have been the licensee's multiplex revenue for that period.
844. Paragraph 9 gives the Secretary of State the power to amend, by order, the size of any of the penalties that may be imposed under those provisions of the Broadcasting Act 1990 that are set out in sub-paragraph (2).
845. These new provisions will only apply in relation to failures taking place after the commencement of this paragraph.
Schedule 14: Media ownership rules
846. This Schedule establishes new rules on the ownership of television services and radio multiplex services, and outlines the scope for the Secretary of State to impose new rules by order on the ownership of analogue and digital radio services. These provisions are described in more detail in the notes to clause 337.
Schedule 15: Amendments of Broadcasting Acts
847. This Schedule amends the 1990 and 1996 Acts. Many of the amendments are simply to update those Acts in line with the Bill, for example, to change references to the Independent Television Commission and the Radio Authority into references to OFCOM, or to add references to the Bill where relevant to the application or interpretation of those Acts. Other amendments include
(a) additional powers for OFCOM to obtain information under sections 5(2) and 88(2) of the 1990 Act (see paragraphs 3 and 36) and sections 5(2) and 44(2) of the 1996 Act (see paragraphs 79 and 104) in connection with ownership restrictions in relation to television and radio broadcasting licences;
(b) changes to make sections 15 to 17A of the 1990 Act (which concern the award of Channel 3 and Channel 5 licences) reflect, in particular, the self-regulation of the delivery of public service remits by those channels (see paragraphs 7 to 10);
(c) amendments in section 89 (see paragraph 37), which disqualifies a person from holding certain radio licences if he or she has been convicted of certain broadcasting offences in the previous five years, and also provides that a licence holder must do all that he or she can to ensure that a person convicted of any such offence is not concerned in the operation of a wireless telegraphy station broadcasting the service. The list of offences is amended, and subsection (3) is amended to provide that a licence holder must also do all he or she can to ensure that a disqualified person is not concerned in the provision of the service or of programmes for inclusion in the service (and section 60 of the 1996 Act is amended to extend most of section 89 to digital sound programme licences - see paragraph 119). These amendments do not apply to offences committed before the amendments come in to effect;
(d) to provide that no more than one member of the Welsh Authority may be a person who is a member or an employee of OFCOM (see paragraph 72);
(e) amendments to provisions relating to "multiplex revenue" (see paragraphs 87 and 88) to take account of amendments elsewhere in the Bill (see clause 236 in particular) for the carriage of digital sound programme services on television multiplexes, and because broadcasting services (e.g. digital sound and digital television programme services) might in future be carried on general multiplex services (within the meaning given in clause 348(1));
(f) to bring the definition of "digital additional services" (section 24) into line with concepts in the Bill (e.g. "available for reception by members of the public") and to allow for such services to be carried on general multiplex services (see paragraph 93);
(g) to bring Part 5, which concerns the Broadcasting Standards Commission, into line with the Bill (see paragraphs 132 to 137), in consequence of the repeal of provisions about standards complaints and the transfer of the Commission's functions as respects fairness and privacy to OFCOM (see also clause 315).
Schedule 16: Further amendments in connection with newspaper mergers
848. This Schedule sets out further amendments in connection with newspaper mergers.
Schedule 17: Minor and Consequential Amendments
849. Schedule 17 sets out minor amendments to other legislation and amendments to other legislation that are consequential upon the Bill. Paragraph 1 of the Schedule sets out the definitions that apply for the purposes of any Act or instrument amended by the Schedule.
850. The majority of these amendments involve changes to terms contained in other legislation that is used in relation to the current telecommunications licensing regime that is to be replaced by the Communications Bill, to ensure, as far as possible, that the current term is replaced with an equivalent term for the purposes of the new regulatory regime. A number of these amendments are of a similar nature and include, for example, amendments to legislation such as the Opencast Coal Act 1958 and the Regional Development Agencies Act 1998 to replace references to the telecommunications code and telecommunications apparatus with references to the electronic communications code and electronic communications apparatus. The amendments also include amendments to disclosure of information provisions in various legislation (for example, the Greater London Authority Act 1999 and the Water Industry Act 1991), to provide an exemption from the general restriction on the disclosure of information in respect of OFCOM and the Communications Bill.
851. In addition, this Schedule sets out a number of minor and consequential amendments to the enactments relating to radio spectrum management. These include, the amendment of section 1D of the Wireless Telegraphy Act 1949 is dealt with in more detail in the notes to clause 165 and amendments requiring the Secretary of State's approval for orders and regulations made by OFCOM. For example, paragraphs 9(3) and 11(4) amend those sections of the Wireless Telegraphy Act 1949 which provide for regulations as to wireless telegraphy and regulations as to radiation of electro-magnetic energy, in order to require the Secretary of State's approval of any such regulations that are made by OFCOM. Similarly, paragraph 39(5) requires the approval of the Secretary of State for the making by OFCOM of any order under section 7 of the Wireless Telegraphy Act 1967, which places restrictions on dealing in, and custody of, certain apparatus. Paragraph 75 requires the approval of the Secretary of State for the making by OFCOM of any order under section 85 or 86 of the Telecommunications Act 1984 about information to be marked on or to accompany wireless telegraphy apparatus or to be given in advertisements for such apparatus.
852. Schedule 17 also contains minor and consequential amendments with respect to broadcasting. These mainly reflect the changes to the regulatory structure so as to replace references to the existing regulators with references to OFCOM.
853. The Welsh Development Agency Act 1975, section 19(1), which relates to the Agency and the Media, is amended so that references to "the appropriate authority" are replaced by a reference to OFCOM, and at subsection (11), the references to the Independent Television Commission and the Radio Authority are replaced by a reference to OFCOM. Similarly, references to the Independent Television Commission and the Radio Authority in section 92 and 93 of the Representation of the People Act 1983, which relate to broadcasting from outside the United Kingdom and broadcasting of local items during election periods are replaced by references to OFCOM.
854. The Cinemas Act 1985 contains provisions, including a licensing regime, concerning premises which are used for "film exhibitions". The definition of "film exhibition" at section 21(1) is amended so that a film exhibition means any exhibition of moving pictures other than an exhibition of items included in a programme service within the meaning of Part 3 of the Communications Bill that is being simultaneously received (or virtually so) by the exhibitor. The effect of the amendment is to ensure that cinemas which exhibit films transmitted to them via cable or satellite from a central source will not require licensing under the Communications Bill; however films exhibited in such a way will continue to be covered by the licensing provisions of the 1985 Act.
855. Various amendments have been made to the Copyright, Designs and Patents Act 1988 so as to bring these in line with the regulatory changes made under the Communications Bill. In particular, these ensure that copyright is not infringed by the use by OFCOM in connection with the performance of their functions of material provided to them; or of any existing material which is transferred to them by a scheme made under section 26 of the Communications Bill.
856. In section 33 of the Value Added Tax Act 1994, which relates to refunds of VAT in certain cases, the reference to the Channel 3 nominated news provider is replaced by a reference to the Channel 3 appointed news provider, to reflect changes made by the Bill.
857. The Transport Act 2000 Schedule 9 which contains disclosure of information provisions has been amended so as to substitute OFCOM for the Independent Television Commission and so as to add the Broadcasting Act 1996 and the Communications Bill to the list of specified enactments covered by those disclosure provisions.
858. The provisions relating to party political broadcasts and referendum campaign broadcasts contained in section 11 and Schedule 12 para 4(6) to the Political Parties, Election and Referendums Act 2000 have been amended so as to remove the references in that section to Sianel Pedwar Cymru. The effect is now that those provisions provide that the BBC shall have regard to the Electoral Commission's views when determining its policy with respect to party political broadcasts and referendum campaign broadcasts. The corresponding duty with respect to the Welsh Authority is now contained in Schedule 12.
Schedule 18: Transitional Provisions
859. The relevant paragraphs of this schedule have been described in connection with the applicable clauses. In addition, paragraph 3 applies to agreements that would cease to have effect or are capable of being terminated, if a party to the agreement, ceased to hold a relevant licence and provides that such agreements are not to cease to have effect or be capable of being terminated, as a result of the abolition of licences by the Bill.
860. Paragraphs 50 to 52 of this Schedule set out the transitional arrangements that will apply on commencement of the provisions of Chapter 2 of Part 5 of this Bill.
861. Paragraph 50 provides that the new provisions introduced in this Chapter will not apply to any transfer of a newspaper or of newspaper assets that has already taken place as at the commencement date of these provisions. In addition, any transfer for which an application for consent has been made, but not determined, at the date of commencement will continue to be considered under the special newspaper merger provisions in the FTA 1973.
862. If, however, an application is made that falls within section 59(2) FTA 1973 because it is "expressed to depend" on the Secretary of State exercising a discretion in that Act not to refer the transaction to the Competition Commission, then the effect of paragraph 50(2) of this Schedule is that only that "expressed to depend" application will fall within the transitional saving of the FTA 1973 provisions. If the Secretary of State's consent is not given without a reference, but the parties then decide to pursue the merger after the provisions of Chapter 2 of Part 5 of the Bill take effect, it will then be treated as a merger under the EA 2002, as amended by these provisions.
863. Paragraph 52 sets out provisions applying to conditional consents that have been given under the FTA 1973. On implementation of the provisions of Chapter 2 of Part 5 of this Bill existing consents will be unaffected and will continue in effect as consents given under the FTA 1973. However, where these consents have conditions attached to them, such that the party concerned is subject to ongoing obligations, paragraph 52 provides that the Secretary of State may accept undertakings in lieu of the conditions on the consent. Acceptance of an undertaking will be at the Secretary of State's discretion but, if accepted, any such undertaking would then be treated as equivalent to an undertaking given to the Secretary of State in a public interest case under the EA 2002 (see paragraph 9 of Schedule 7 EA 2002). Such undertakings could relate to competition and/or to general public interest obligations and so in deciding whether to accept such undertakings the Secretary of State can, in particular, consult with the OFT and/or OFCOM.
Schedule 19: Repeals
864. This Schedule sets out those provisions in other enactments that will be repealed as a consequence of the Bill.
FINANCIAL EFFECTS OF THE BILL
865. The Government does not envisage that significant public expenditure implications will arise from this Bill. As was described in more detail in the Explanatory Notes that accompanied the Office of Communications Act 2002, the current cost of regulating the communications sector is in the region of £118 million. It is not anticipated that the cost of regulating the new regime will be significantly different. Currently, the costs of the existing regulators are covered by administrative fees for licences, and other charges levied on the industry. The new regulator will be funded in a very similar way.
866. OFCOM have no power to charge fees before they are fully operational, so the 2002 Act enables the Secretary of State to pay grant in aid to OFCOM, or to make an advance. The Government has stated that the latter is expected to provide most, if not all, of the funding required until OFCOM are able to charge fees to the sector. It is intended that subsequent repayment of any advance would be met out of the powers that OFCOM have to charge fees to the sector under the Bill. The initial planning costs of establishing OFCOM met from public funds have so far amounted to £2.6 million.
867. Further to these initial planning costs, with the OFCOM Board now in place, there will be implementation costs covering such areas as detailed organisation design, premises, recruitment and IT system design, which might also include pension transfer costs, severance, early retirement, and payments for forfeiture of existing leases. These transition costs will be met by a repayable loan made to OFCOM by the Secretary of State. The Board of OFCOM will take key decisions on major operational issues, including organisational design, human resources, location and work processes. Ultimately, the costs will depend on what is needed effectively to discharge the functions that Parliament gives OFCOM.
868. The existing regulators will incur some additional expenditure in preparing for the transition to OFCOM, but these are expected to be modest, and will be almost entirely financed by their existing powers to charge fees to the sector.
869. We do not expect any significant effect on public service manpower under this Bill. However, civil service manpower will decrease by some 870 when the Radiocommunications Agency and Oftel are moved into OFCOM, since OFCOM employees will not be classified as civil servants.
SUMMARY OF REGULATORY IMPACT ASSESSMENT
870. There will be some one-off preparatory costs for companies in adjusting to the new regulatory set-up. As with the existing regime, the costs of OFCOM will be met by the industry generally. Businesses will benefit from dealing with one regulator.
871. The provisions dealing with communications networks and services for the most part implement four EC Directives that were agreed in 2002. The Bill imposes specific requirements where the Directives require it and gives OFCOM enabling powers where the Directives allow some discretion to either the national regulatory authority or the Member State.
872. The Act will enable spectrum trading. There will be implementation costs for OFCOM estimated to amount to £4.4 million discounted over a 20-year period. Spectrum trading will enable an alternative and speedier access to spectrum than the current system of licensing and total benefits are estimated to range from a net present value of £142 million over 20 years up to several billions of pounds a year. Transaction costs associated with spectrum trading are expected to be modest and should in any case should be less than the benefits since parties will choose to trade only if it is mutually beneficial to do so.
873. The provisions on broadcasting regulation aim to help ensure access to modern technologies while protecting consumers and the quality of public service broadcasting. Extending the provision of subtitling, signing and audio description to cable and satellite services will result in a cost to the industry. Those with sensory impairments will benefit from increased access to broadcasting services as a result and broadcasters should benefit from increased audiences.
874. The Act will simplify and relax the current system of media ownership rules. Where there are costs to business, these will be minimal. Both businesses and the public will benefit. The Act will also replace the special merger regime for newspapers with one that is less burdensome. There will be cost savings for business and for DTI.
875. A copy of the overarching Regulatory Impact Assessment can be obtained from the DTI and DCMS Communications Bill website at http://communicationsbill.gov.uk.
876. Copies can also be obtained from Julie Braithwaite, Communications Bill Team, Department of Trade and Industry, G06, 4 Abbey Orchard Street, London SW1P 2HT (Tel: 020 7215 1193, e-mail Julie.Braithwaite@dti.gsi.gov.uk).
COMPATABILITY WITH EUROPEAN CONVENTION ON HUMAN RIGHTS
877. The following are the principal human rights issues arising in relation to the Bill. Subject to the Secretary of State's inability to make a compatibility statement in relation to clause 309, the Government believe that the provisions in question comply with the Convention rights. References to "the JCHR" are to the Joint Committee on Human Rights who reported on the draft Communications Bill in their Nineteenth Report of Session 2001 - 02 (HL Paper No.149, HC 1102).
Suspension of entitlement to provide networks, services and associated facilities
878. Regarding clauses 38, 96, 97, 136 and 137, the JCHR were concerned (see paragraph 9 of their Report) about the absence of procedural safeguards for the rights of network and service providers before a suspension or restriction is imposed for failure to pay administrative charges, although they accepted that it might be appropriate to relax the stringency of these requirements in cases of exceptional urgency. The Government consider that the published draft Bill was compatible with the ECHR, but accept that, as a matter of good practice, OFCOM should be required to notify a person of their intention to suspend or restrict a person's entitlement and give that person an opportunity to make representations before doing so, unless the case is urgent; the Bill now provides accordingly. Similar provision is now made in respect of suspension of the application of the Electronic Communications Code under clause 109(4).
879. Clause 60 implements Article 31 of the Universal Service Directive, which permits Member States to impose reasonable "must-carry" obligations whose effect would be to require the carriage of certain broadcasting services on a network (e.g. a cable or satellite broadcasting system in the UK). Such general conditions could therefore engage rights under Article 1 of the First Protocol, which guarantees the right to the peaceful enjoyment of possessions. The Government consider that the public interest in the widespread accessibility of high quality public service broadcasting is sufficient to justify under the ECHR the power under clause 60 to impose must-carry obligations. In particular, the Bill allows for a corresponding obligation on the provider of a must-carry channel to offer it to the carrier (see clause 264) and power exists for the Secretary of State to make provision as to the terms on which services are carried, including payments by one side (broadcaster or carrier) to the other.
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|Prepared: 20 November 2002