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4 Mar 2003 : Column 732—continued
3.45 pm
Other broadcasters have raised similar concerns. The Commercial Radio Association has asked what impact the provision will have on the three-year ownership review process by which the Government have placed such great store. What if a merger were to reduce plurality—that is, the number of different providers of radio and television services—but improve the quantity, quality or range of programme content? The inclusion of the new duty may encourage Ofcom to value plurality for its own sake and to temper the priority that it previously would have given to the availability throughout the UK of a wide range of television and radio services which, taken as a whole, are of high quality and calculated to appeal to a variety of tastes and interests, irrespective of the number of different providers.
Similar questions apply to other scenarios. A purchase by a channel 3 owner or Channel 5, as permitted under the Government's liberalisation and subject of course to competition law scrutiny, would further reduce plurality, as would mergers or purchases involving other providers such as Disney, Viacom or BSkyB. In all instances, even if concerns under competition law were satisfied, the new duty will mean that residual doubts and uncertainties remain. It could give Ofcom the power to veto an acquisition by adding another layer of regulation to an area in which the Government have decided to introduce a more liberal regime. That appears to be taking away with one hand what they have given with the other.
Thirdly, I turn to the new duty to secure the availability of a wide range of electronic communication services—another addition. It would be helpful if the Government could explain why they have seen fit, again at this late stage, to introduce that concept into this part of the Bill. Electronic communication services are one important element in a wide range of matters that Ofcom must deal with, but it is unclear why those services have been singled out for particular attention. To anticipate the kind of intervention that my hon. Friend the Member for Surrey Heath might have made had he not left the Chamber, where did that idea come from? I do not remember discussing it in Committee. It comes as a surprise to us that the Government have made these serious changes, which fundamentally alter the architecture of Ofcom's powers. The explanation in the Minster's letter fails to acknowledge the far-reaching nature of the amendments.
I want briefly to mention two or three other Government amendments. Amendment No. 217 deals with Ofcom's annual report, enabling Ofcom to explain how it has resolved any conflicts between its duties. We discussed that extensively in Committee, and the amendment is welcome.
Amendments Nos. 219 and 220 address matters that we raised in Committee. Amendment No. 219 deals with the problem that we identified concerning wording of the Bill that gold-plates some elements of the directive.
Amendment No. 221 is one that I proposed in Committee to help to ensure that there is a real opportunity for self-regulation in advertising. I warmly welcome the fact that the Minister has on consideration accepted that amendment and proposes to include it in the Bill.
Mr. Allan: I am grateful to the hon. Member for South Suffolk (Mr. Yeo) for giving us the opportunity to discuss broadband. This is the best chance that we have had to deal specifically with Ofcom's role in relation to broadband. I want to pick up on some of the comments made by the hon. Member for South-East Cambridgeshire (Mr. Paice) and the right hon. Member for North-West Hampshire (Sir George Young), who conveniently covered all points of the compass between them, and the hon. Member for Ceredigion (Mr. Thomas). They raised important points about the way in which broadband is being rolled out.
There is broad agreement on the general thrust of the new clause. However, I add a note of caution about the way in which the market mechanism and the regulation mechanism will work. The experience to date has been that the biggest advance in broadband roll-out occurred with BT's significant price drop on the wholesale cost of broadband services. That was in some doubt. Regulation rightly sets out that BT has a duty not to be involved in loss leading or to use its telephone customers to cross-subsidise its broadband customers. We could have a public policy objective of getting cheaper broadband services and a regulatory framework that dictates that the regulator must prevent that from happening. We have to be aware of the limits of the regulatory framework when it is applied in such a mechanistic way to determine what aspects of a service come from which pot.
The hon. Member for South Suffolk made some good suggestions and was right to mention the transparency of costs. It is important that we understand the cost issues on which Ofcom will make the rulings that were carried out by Oftel. The hon. Gentleman suggested that BT should publish advance plans on its roll-out scheme for enabling ADSL exchanges. It would help to have a public debate on those instead of micro-decisions in individual areas.
It seems that BT has realised that it is better to have 5 million wholesale broadband customers who buy their retail service from the likes of AOL and Freeserve, which have the reach to sell broadband nationally, rather than 500,000 broadband customers who buy both retail and wholesale from BT. Under the old model, BT wanted to maintain the complete value chain by offering retail broadband services. However, there has been a change in leadership and BT is trying to increase its wholesale customers. It has accepted that AOL and Freeserve, as retail customer-facing organisations, may leap over it in terms of numbers, but that is not a problem because BT will make money on the wholesale service.
A specific problem remains, however, with the two products that BT offers: BT Openworld, which is its ISP, and the BT broadband only service, commonly called the bare-wire service. I am sure that all hon. Members have received complaints about the confusion that that causes. There is a genuine consumer issue about BT
selling two products that are both called broadband from BT. One is an ISP-based service that is comparable to a service provided by Demon, Freeserve or AOL; the other is not. We need to tidy that up. There are also concerns about the possibility of cross-promotion by BT. People who choose to take their broadband services from another supplier still have a BT line, and I question the appropriateness of BT making a hard sell for its own retail broadband service via the billing mechanism, for instance. I accept that there are regulations that are intended to prevent that from happening, but the industry still raises concerns about the possibility of cross-selling.The right hon. Member for North-West Hampshire and the hon. Member for South-East Cambridgeshire mentioned the concerns of constituents who live just outside the footprint of the ADSL-enabled exchanges. There was a proposal to roll out broadband primarily by local loop unbundling in which other companies would be responsible for the infrastructure that would deliver the service the last few miles to people's houses. That fell down the list of priorities as the investment climate worsened and the ISPs did not have the cash to deliver the infrastructure. Many of them would now prefer BT to be responsible for all the infrastructure while they concentrate on retail services. However, local loop bypassing, which has a huge potential, is starting to take place, as we have heard, in the village of Bottisham. The hon. Member for South-East Cambridgeshire referred to the village of Milton outside Cambridge and the fact that Cambridge science park is located there. A large broadband pipe goes into the science park, so it is perfectly possible, as the hon. Gentleman started to say, for it to be made available to other people using wireless technologies. There are some great experiments going on. The Minister was at the ISPs' awards ceremony, where West Dorset Internet, a tiny ISP set up by Tim Snape, won an award as a broadband supplier. The company is extremely imaginative, and has come up with solutions using wireless technology to extend reach. In many areas, such solutions will be more attractive than satellite and other proposals.
However, there are questions about regulation that need to be answered. Do we create a climate that encourages or discourages experimentation? If somebody has a broadband connection in their premises, under their contract they are not allowed to extend it outside those premises. We may need new forms of contract that encourage community groups to enter a community broadband contract. They would pay a fair price for the pipe that goes into the community system, but they would be able to do imaginative community outreach work. The hon. Member for Ceredigion talked about the radio spectrum and later, if we have time, we will talk about recognised spectrum access. A key question about such access is whether people will want a wireless local network and whether it will interfere with satellite systems.
There are also questions about the spectrum sale, auctioning and licensing at the end of the spectrum, where people want to roll out local networks. Ofcom could have a significant role in creating the conditions for people to do more wireless networking or preventing them from doing so.
Mr. Mole: Can I just explore with the hon. Gentleman the difficulty associated with his proposal to aggregate
demand at the end of a broadband connection? Such connections are supplied by telecommunications operators based on the nature of expected traffic. It is not expected that users will constantly demand data at the full rate capability of the link. Such traffic will come in bursts. As more users are hooked to the end of a single link, demand is aggregated and traffic becomes continuous, so there are more implications for telecommunications operators' back systems. They can offer product at £29.99 because most of us will demand data, perhaps in large volumes, only for short periods.
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