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3 Dec 2002 : Column 853—continued

9.45 pm

The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms): Early in the new year, the first third-generation mobile services will become available in the UK. Users will be able, at any time, to download the latest television news bulletin and watch it on their mobile handset. Will that be a case of broadcasting or telecommunications? My hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) quoted another example of the traditional distinctions and boundaries between the different domains becoming increasingly hard to maintain. Higher capabilities of mobiles, rapid take-up of broadband, growing use of wireless for fixed communications and the spread of digital television are all blurring the old distinctions. Bringing the regulators together is, therefore, clearly the right action. I welcome the support for that change that has been expressed on both sides of the House, and outside the House, too.

Brian White: Technology is undoubtedly converging. The uses to which people put that technology, however, are not necessarily converging. Will my hon. Friend address that point?

Mr. Timms: My hon. Friend makes a valid point. What is important, however, is that those who make the judgments about how these matters should be regulated will be in one place rather than in different institutions. Increasingly, more than one of those regulators has had to get involved in a particular case. Ofcom will be the place where these decisions are made, which is clearly a big improvement.

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David Taylor (North-West Leicestershire): The Minister referred to the blurred domain boundaries and Ofcom's role. Does he accept that the clause covering Ofcom's duty to ensure reasonable regional coverage is not strong enough in areas such as mine, which is close to the west midlands and east midlands regional boundaries? Because of topographical features, we are not able to receive east midlands television, for instance, in any form. The people of Ashby, Coalville and Whitwick want to hear about their own communities, and not about Aldridge, Cannock and Walsall, wonderful though those communities are.

Mr. Timms: I am sure that my hon. Friend's constituents will be pleased by what he says on their behalf.

The recent Booz Allen Hamilton benchmarking study rated the UK as the second-best environment for electronic commerce among all the major economies after the United States. That is a good position for us, but we want to do better. A world-leading regulatory regime is an important step in that direction. We are seeing rapid development in the UK. As well as the imminent launch of third-generation mobile services, broadband connections passed the 1 million mark two months ago. They are available to about two thirds of households around the country, and that number is increasing by about 30,000 every week. The penetration of digital television is higher in the UK than anywhere else in the world. We are addressing the challenge of broadband content, as well as network infrastructure, including music, as my hon. Friend the Member for Cumbernauld and Kilsyth (Rosemary McKenna) pointed out. We are looking at encouraging new content and new applications through the research and development tax credit, business support schemes and embedding broadband in the modernisation of public services.

The Bill requires Ofcom, in performing its duties, to have regard both to the promotion of competition and the encouragement of investment and innovation. In developing the new networks, competition is key. There is sharp competition in the broadband market between services based on telephony and on cable television networks, with cable television having the larger share at the moment, and strong retail competition between BT and the large number of other service providers reselling its wholesale ADSL product.

Michael Fabricant: Will the Minister give way?

Mr. Timms: Not at the moment.

The hon. Member for South Cambridgeshire (Mr. Lansley) was right to emphasise the fact that we need more competition to deliver the innovation in technology and marketing that alone can drive the extra functionality and the wider availability of the services that people demand into every part of the UK. Ofcom will need to ensure that new entrants and innovative players have a fair chance to offer their products and services so as to boost the competitiveness of the UK economy. Our communications infrastructure has long been one of the strengths underpinning our success in inward investment.

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Sir Robert Smith: I am just a bit concerned. The Minister said that competition would drive these services into every part of the UK. Does he really believe that rural areas and the further-flung parts of the UK will receive these services as a result of competition? Will there have to be another route?

Mr. Timms: The hon. Gentleman should consider the example of mobile phones. Exactly the same concerns about the provision of services in rural areas were raised. The competition between the service providers led to innovation in marketing and technology that drove the services into those areas. It is also the case that public services in all parts of the country will demand broadband. My right hon. Friend the Prime Minister made the commitment the week before last that, by 2006, every school in the country will have broadband. Once the school in an area has broadband, it is possible for the service to be provided to other users as well. However, we need new investment as well as competition.

Michael Fabricant: Before the Minister starts believing his own propaganda, will he accept that the penetration of broadband in the UK is far less than in other parts of Europe, let alone the United States? Does he also realise that what he calls broadband—512 kilobytes per second—is far lower than the general definition of broadband, which is 1.5 megabytes? Basically, the Government have a lot further to go.

Mr. Timms: It is the case that the UK made a slow start with broadband but it is equally the case that we are catching up very rapidly. Some 30,000 new connections are made each week, and the rate of growth is significantly faster than elsewhere in Europe. We can look forward with a good deal of confidence to having the extensive as well as highly competitive broadband market in the UK that we most certainly need.

Mr. Robathan: I live only one and a half hours' drive from London. Lutterworth is a large town, but we cannot get broadband there or almost anywhere in my constituency.

Mr. Timms: The hon. Gentleman will be pleased to know that BT announced at the e-summit a couple of weeks ago that it would achieve 80 per cent. availability of broadband right across the country by 2005. He also needs to take account of the potential for wireless to deliver broadband services, particularly in rural areas. That will be another element of competition that holds out much promise for driving these services into areas where they are not available at the moment. It is important that we do that.

We need new investment. Players in the capital market need now to reassess their caution about the technology sector, particularly in the UK where economic stability provides such a strong foundation. Technological change is creating a vast array of new commercially attractive opportunities. We need investment on a substantial scale to come forward for those opportunities to be realised.

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The Bill will help to make that easier. For example, it will enable Ofcom to designate people other than network operators, such as a local authority, to hold the powers necessary for infrastructure construction so helping to facilitate infrastructure sharing and to reduce the cost of rolling out new networks. Members may well be interested in clause 144, which restates the power for a local authority to provide a public network as originally set out in the Telegraph Act 1899. That may have new relevance in the digital era.

Let me comment on several of the major points that have been raised in the debate. I very much welcome the broad agreement across the House on some of the key issues, including some of those that have been hotly debated over the past year or so. Questions were raised about ITV news. When 59 per cent. of people consider television to be their most trustworthy source of information, it is vital that, as the main competitor to BBC news, ITV news should be impartial, and as my hon. Friend the Member for Falkirk, West (Mr. Joyce) pointed out, independent and of high quality. As my hon. Friend the Member for Wythenshawe and Sale, East (Paul Goggins) said, it should deal with international, as well as national, matters. That is why we are retaining the current nominated news provider system for ITV as a guarantor of quality and independence.

A number of hon. Members, including the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), said that we need to go further. The Bill raises the ownership limit from 20 to 40 per cent. to help to make strategic decision making and investment easier. We will be able to change the system in the future, without further legislation, if the market can provide an adequate range of high-quality easily accessible television news services without those requirements.

The BBC's relationship with Ofcom has been a prominent theme. It was mentioned by my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith), who welcomed the Bill in its current form. The BBC will be regulated by Ofcom for tier 1 and tier 2 obligations. We have agreed, after careful consideration of the recommendation by the Joint Committee, that Ofcom should have the power to fine the BBC for breaches of those obligations. Tier 3, for which the governors will be responsible, requires the BBC to publish an annual statement of programme policy, to report on its performance on that policy and to consider relevant Ofcom guidance. We aim to ensure that the BBC maintains its independence. We want a regulatory regime that recognises its distinctive character through the charter, the agreement and its relationship with Parliament, while bringing it within the overall regulatory structure. I believe that our proposals will have that effect.

Effective reflection of the interests of all parts of the UK is important. That idea featured prominently in the remarks of my hon. Friend the Member for Aberdeen, South (Miss Begg) and the hon. Member for Ceredigion (Mr. Thomas) among others. We have included provisions to ensure that the interests of nations and regions are represented on Ofcom. The board needs to remain small enough to react quickly to fast-changing circumstances. Adding members on the basis that they

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are from different nations and regions would jeopardise that, as the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) said.

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