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3 Dec 2002 : Column 795—continued

John Robertson (Glasgow, Anniesland): Does the hon. Gentleman agree that the reins must be loosened, if only to ensure that broadband is promoted throughout the country and that we move into the new technology more quickly and cheaply?

Mr. Whittingdale: I strongly agree about the importance of broadband and I shall come to it after I have dealt with Ofcom's competition role, which is equally important.

Concern has been expressed that Ofcom may not have the necessary resources and expertise to take over the function of competition regulation, which in some cases is now exercised by the OFT. That, I hope, is another issue that we shall consider.

Some have suggested that in addition to a separate content and consumer board there should be an economic board, in recognition of the importance of the competition responsibilities that Ofcom will have. I understand that the Government have rejected that idea, on the grounds that the economic function will be fundamental to everything that Ofcom does; but there remains a concern that businesses, whether they be suppliers or users of communications services, will lack a guaranteed mechanism to ensure that their voice is properly heard.

Mr. David Drew (Stroud): Would the hon. Gentleman care to comment on one of the problems that have been brought to my attention? The growth of access radio is to be commended, but many small commercial stations rely entirely on advertising revenue. If access radio tries to tap into that source of funds, many stations may be driven out of business.

Mr. Whittingdale: In principle I, like the Government, support the idea of access radio, but the hon. Gentleman raises a legitimate concern that has been expressed to me by one of my local Essex commercial stations, which is doing an extremely good job. It is entitled to be worried that competitors may be established and enjoy unfair advantages over it. That is another issue that we shall need to consider.

The Bill includes a number of safeguards to ensure that Ofcom's regulation will indeed be light touch, but we believe that they need to be strengthened in some places. In particular, it needs to be made explicit that Ofcom must operate in line with the principles that have been set out by the Better Regulation Task Force. There may also be a case for establishing a mechanism by which the House can scrutinise the activities of Ofcom and go beyond the excellent job that I have no doubt the Select Committee on Culture, Media and Sport will do under the chairmanship of the right hon. Member for Manchester, Gorton (Mr. Kaufman).

Mr. Redwood: Although I am sure that the Secretary of State is quite sincere when she says that she wants us to have the most successful media and telecommunications industry in the world, is my hon. Friend worried, as I am, that her right hon. Friend the

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Chancellor of the Exchequer is busily demolishing the telecommunications industry with massive tax impositions, which have left it cruelly short of cash to finance the very expansion that Labour Members want? Is that not a great paradox? Do not we need to get the Chancellor out of the way if we are to have any hope of success?

Mr. Whittingdale: It is undoubtedly a paradox and, sadly, not just telecommunications businesses are struggling under the enormous burden of increased taxation under this Government.

Ofcom will take over the telecommunications responsibilities of Oftel, the first utility regulator to be established. It is disappointing that less progress has been made in achieving a competitive market in telecommunications than in some other markets, such as energy. Sometimes it has seemed as though Oftel has spent more time intervening in those parts of the market where strong competition already exists than in those where it does not. In particular, it is arguable that we now have an aggressively competitive market in mobile telephony with four, soon to become five, operators.

Those operators already have significant debts following the 3G—third generation—auction and face the challenge of financing and installing the infrastructure necessary for them to make a return on their investment. The Better Regulation Task Force suggested that mobile telephony might now be sufficiently competitive that it can be regulated by competition law alone, yet Oftel has decided to extended price caps and continues to seek to regulate specific tariffs.

John Robertson: Will the hon. Gentleman give way?

Mr. Whittingdale: I hope that the hon. Gentleman will forgive me for not giving way. I am very conscious of the number of hon. Members who wish to speak.

Oftel has continued to regulate mobile telephony, but it has been less successful in creating a competitive market in fixed-line telecommunications, in which BT remains the dominant supplier. The most recent attempt to open up the market was supposed to involve local loop unbundling, but the difficulties encountered by companies seeking to negotiate with BT led a number to abandon the attempt altogether, and the number of local loops that have been unbundled remains pitifully small. I believe that, out of about 28 million local loops, well under 1,000 have been unbundled.

A balance must be struck between promoting competition in the short term and encouraging investment in infrastructure development in the longer term. In all such debates, the vital importance of increasing access to broadband must be a priority, and Britain is lagging far behind in that respect. Although the number of households with broadband access has now passed 1 million, we are still way behind our competitors.

BT's latest price cuts have undoubtedly encouraged demand, as has its huge advertising campaign, although it must be said that the campaign has merely rubbed salt into the wound of the third of the population who

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cannot access ADSL—advanced digital subscriber line—or cable broadband services. In rural areas, less than 5 per cent. of people have access to those services.

Mr. Simon Thomas (Ceredigion): I very much agree with the hon. Gentleman's comments on rural areas. Many parts of Wales beyond the M4 do not have access to broadband services—indeed, many parts of Scotland and England do not enjoy access to broadband—so does he accept that, in that regard at least, we are very reliant on the BT network? It has been the only provider of services in rural areas. Surely it would be better to build on that network in co-operation with Ofcom, perhaps by putting a duty on Ofcom to ensure access to broadband services, rather than leaving that to the market, which is not delivering.

Mr. Whittingdale: The hon. Gentleman is right to say that it seems that BT is the only player in the game in terms of extending services. According to BT, people in rural areas may have to wait between 10 and 20 years before they are given access to such services, which is unacceptable. We will have to consider that issue because there is a real danger that this country will have a two-tier economy and that, once again, rural Britain will be disadvantaged. Ofcom will have to address that issue.

Mr. Bryant: BT says that competition law prevents it from rolling out broadband services not just to rural areas but to many semi-rural areas and that it is unable to subsidise the roll-out to individual exchanges. Does the hon. Gentleman believe BT?

Mr. Whittingdale: I am tempted to say, XThey would, wouldn't they?" I would want to look at rather more independent evidence than that provided by BT. Nevertheless, I accept that there may be a conflict between the short-term objective of promoting competition and the long-term objective of achieving investment in broadband services, and we will need to consider that issue.

I suspect that the Bill's provisions on radio spectrum pricing will not receive as much attention as its other parts. We support the modernisation of spectrum management through the introduction of spectrum trading because it is likely to lead to more efficient allocation, but the proposed introduction of recognised spectrum access has raised concerns that it is in effect a tax on satellite services. Those who are affected argue that it is unfair, that it is unduly restrictive and that it may deter the switch to digital. We also wish to scrutinise those important issues, and I hope that we will have the results of the Trade and Industry Committee's inquiry on that issue before we do so.

Let me now turn to the area about which I expect there to be most debate, not least because nothing interests the media more than themselves. In the past 10 years, the range and choice of media in this country have been transformed. The old argument that spectrum scarcity limits the number of outlets is no longer applicable, so the case for the Government taking an active role in controlling who owns and what appears on television and radio has become more and more

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unsustainable. I therefore unreservedly welcome the measures to liberalise the rules that restrict the ownership and regulation of our media companies.

There has already been extensive debate about the Government's decision to do away with the current prohibition on non-European companies acquiring British media companies. Although I would much prefer a similarly liberal regime to exist in countries such as America, that in itself is no reason for us to maintain a restrictive regime in this country. The suggestion that we have nothing to learn from America about television programming is no longer credible. Today, many of the most innovative and stimulating television programmes are American-made; nor can it be argued that the British commercial television sector is so well run that it must be protected from overseas management. I therefore congratulate the Government on their decision to stand firm and to resist the protectionists on Lord Puttnam's committee.

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