Digital Economy Bill [HL] - continued          House of Commons

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Topic 4: Channel 4 Television Corporation

Background

105.     C4C’s existing primary functions currently relate only to the Channel 4 television channel. Taking into account the growth of digital media, the Bill introduces provisions that extend the functions of C4C in relation to media content. The Bill achieves this by introducing new C4C functions via a new section 198A of the Communications Act 2003 (“the 2003 Act”).

Clause 22: Functions of C4C in relation to media content

106.     This clause will require C4C to participate in the making of a broad range of high-quality content that appeals to the tastes and interests of a culturally diverse society, and broadcast or distribute such content on a range of different delivery platforms. This content must include news and current affairs, content for older children and young adults and feature films. C4C will also be required to participate in the making of high quality films. To “participate” in this way includes investing in or otherwise procuring content. For the avoidance of doubt, these new duties on C4C to make content do not disapply the condition in Channel 4’s regulatory regime, referred to in section 295 of the 2003 Act, requiring C4C not to be involved, except to such extent as OFCOM may allow, in the making of programmes to be broadcast on Channel 4.

107.     The clause also makes provision as to the wider aims C4C must pursue in performing their duties, drawing on the core public purposes that C4C identified in their March 2008 report Next on 4 4. C4C must support new talent and innovation, support and stimulate well-informed debate (including by providing access to information and views from around the world), promote alternative views and perspectives and help to inspire change in people’s lives.


108.     The clause also requires C4C, in the performance of their duties, to have regard to the desirability of:

  • Working with cultural organisations;

  • Encouraging innovation in methods of content delivery; and

  • Promoting access to and awareness of services provided in digital form.

Clause 23: Monitoring and enforcing C4C’s media content duties

109.     This clause contains provision for monitoring and enforcing the delivery of C4C’s new functions, through new sections 198B, 198C and 198D of the 2003 Act. This complements, and is in part modelled on, the existing accountability framework for the delivery of the public service remit of the Channel 4 licensed public service television channel, under section 266 of the 2003 Act.

110.     New section 198B requires C4C to prepare, every year, a statement of media content policy, setting out how C4C propose to discharge their functions in the coming year. The statement must also report on their performance against the proposals contained in the previous year’s statement.

111.     In preparing this statement, C4C will be obliged to have regard to guidance issued by OFCOM and also to consult OFCOM. It will be open to C4C to produce the statement of media content policy either as a separate document or as part of a single document in combination with the statement of programme policy which it is required to provide in relation to the Channel 4 service.

112.     OFCOM will be required to keep their guidance under review and revise it as they think fit.

113.     New section 198C gives OFCOM a new obligation to review and report on the performance of C4C’s new duties, which may well include the making and broadcasting of programmes on television, at the same time as their reviews of the fulfilment of the public service remit under section 264 of the 2003 Act.

114.     New section 198D introduces enforcement powers for OFCOM in relation to the fulfilment by C4C of their new functions. It creates a new power of direction for OFCOM in the event that C4C fail to perform their new duties under new section 198A or to prepare or publish a statement of media content policy. The new section gives OFCOM the power to direct C4C to revise their latest statement of media content policy, to take such steps to remedy the failure as OFCOM may prescribe in the direction, or both. OFCOM must include in any direction a reasonable timetable for complying with it and state the factors OFCOM will take into account in determining whether or not a failure has been remedied. OFCOM must consult C4C before issuing such a direction. By virtue of sections 41(1) and (6) of the Broadcasting Act 1990, OFCOM have the power to impose a financial penalty on C4C for a failure to comply with a direction given by OFCOM under section 198D.

115.     This clause introduces, by means of a new section 271A of the 2003 Act, an additional power for OFCOM exercisable in the event that C4C fail to comply with a direction relating to a failure to perform one or more duties under section 198A. OFCOM must be satisfied that C4C are still failing to perform the relevant duty or duties and, if OFCOM are satisfied that it is reasonable and proportionate to the seriousness of the failure, they have the power to vary the licence under which the Channel 4 television service is licensed. OFCOM may vary the licence by making or adding such conditions to the licence as they consider appropriate to remedy C4C’s failure to perform the relevant new duties under section 198A. If, subsequently, OFCOM conclude that any of the new conditions are no longer required, they may vary the licence again, from such time as they determine. OFCOM must consult C4C before exercising the power to make or add conditions to the Channel 4 licence.

Topic 5: Independent television services

Background

116.     In the Digital Britain: Final Report, the government accepted OFCOM’s analysis that the value of the existing commercially-owned public service broadcasting Channel 3 licences will decline further between now and the completion of digital switchover and that the regulatory obligations attached to the licences will therefore require further review over the period. Clauses 24 to 30 make amendments to provisions contained in the Broadcasting Act 1990 (“the 1990 Act”) and the Communications Act 2003 (“the 2003 Act”) in order to introduce additional flexibility into the licence processes for the commercially funded public service television broadcasters.

Clause 24: Determination of Channel 3 licence areas

117.     Section 14(2) of the 1990 Act requires OFCOM to structure the Channel 3 licence map on a regional basis. However, section 14(7) of the 1990 Act provides a caveat preventing OFCOM from constructing a licence area from either the whole of England or the whole of Scotland.

118.     This clause repeals section 14(7) of the 1990 Act to remove that restriction. At the same time, it inserts new section 14(7A), which provides that there must always be at least one licence area wholly contained within Scotland. Section 287 of the 2003 Act will still allow OFCOM to insert conditions in a licence to require the holder of a nationwide licence to provide regional programmes.

119.     The clause also inserts a new section 216A in the 2003 Act, allowing OFCOM to renew Channel 3 licences for a larger or smaller area than the area to which they relate before renewal. However, this power can only be exercised with the consent of the existing licence holders for the areas concerned.

120.     As a consequence of new section 216A, the clause amends section 216 to give OFCOM the power not to renew a licence if the area to which it relates is or will be covered entirely by another Channel 3 licence or licences which OFCOM have renewed or propose to renew.

Clause 25: Initial expiry date for Channel 3 and 5 and public teletext licences

121.     Section 224(2) of the 2003 Act provides the Secretary of State with the power, by order, to postpone the initial expiry date of licences to provide Channel 3 services, the licence to provide Channel 5, and the licence to provide the public teletext service. This clause amends section 224(2) to provide that different initial expiry dates may be set for those three different types of licence.

122.     Section 224(3) of the 2003 Act currently prevents the Secretary of State from exercising the power to postpone the initial expiry date if digital switchover is set to occur before 1 July 2013. The clause repeals section 224(3) and therefore gives the Secretary of State more flexibility to extend the duration of licences where appropriate.

Clause 27: Report by OFCOM on public teletext service

123.     Section 218(1) of the 2003 Act currently places a duty on OFCOM to do all they can to secure the provision of a national teletext service.

124.     Clause 27 inserts a new section 218A into the 2003 Act that places a duty on OFCOM to prepare a report on the viability of the public teletext service. The clause stipulates the assessments that OFCOM must include in the report. OFCOM must submit this report to the Secretary of State, and prepare and submit further reports when asked to do so by the Secretary of State. OFCOM must publish each report as soon as practicable after submitting it to the Secretary of State.

Clause 28: Power to remove OFCOM’s duty to secure provision of public teletext service

125.     Clause 28 will remove OFCOM’s duty to do all that they can to licence someone to provide the public teletext service and replace it with a power to do so.

126.     This change will come into force on a day appointed by the Secretary of State by means of a statutory instrument, which must be approved by Parliament before it can take effect. The Secretary of State may only make this order if he is satisfied that it would be in the public interest, and that either condition A or B stipulated in clause 28 has been met. Condition A is that the Secretary of State has laid before Parliament a report prepared by OFCOM under section 218A of the 2003 Act (inserted by clause 27) on the viability of continuing the provision of the public teletext service. Condition B is that OFCOM, after inviting applications for the licence to provide the public teletext service, receives no applications by the closing date or considers that it could not award the licence to any of the applicants.

Clause 29: Appointed providers of regional or local news

127.     This clause inserts a new section 287A in the 2003 Act which confers a new function on OFCOM of appointing and funding providers of regional or local news (or both). New section 287A(2) provides that OFCOM cannot appoint local authorities or political bodies. This restriction is imposed with a view to maintaining the impartiality of the news service.

128.     New section 287A(3) gives OFCOM the power to include any conditions they think appropriate in the regulatory regime for a regional Channel 3 service, in order to secure that the service includes news programmes provided by the person appointed to provide news for all or part of that regional Channel 3 service area.

129.     The new section allows OFCOM to set criteria and conditions for the provision of this type of news service in return for funding.

130.     OFCOM are required to publish the criteria that they intend to use when appointing a news provider and must consult the Secretary of State before so doing. Before inviting applications for appointment, OFCOM must consult the provider of the Channel 3 service and have regard to any representations made by the provider.

131.     The new section requires OFCOM to specify certain things in the appointment, including the term of the appointment and the area for which the provider is appointed. It must include conditions about the quality, form and character of the news provided and conditions to secure the impartiality and accuracy of the news provided. OFCOM may attach other conditions to the appointment and may revoke an appointment at any time. In practice, revocation would take place where OFCOM considered a material breach of the appointment had occurred, and reasonable notice would be given to all parties affected.

132.     Other conditions that OFCOM may set include those relating to the distribution and sharing of the content produced. Specifically, the content may need to be provided to the national news provider on Channel 3 and may also be provided to other parties in a range of formats. Conditions may be set that encourage the provider to support or promote wider benefits to society in connection with the provision of news. For example, this might include commitments to media skills and training. OFCOM must consult the Secretary of State before setting conditions in connection with the appointment of, or the making of payments to, news providers.

Clause 30: Broadcasting of programmes in Gaelic

133.     This clause repeals section 184 of the 1990 Act, which contains requirements for certain Channel 3 licensees in Scotland (currently STV) to show Gaelic language programmes.

134.     The repeal of section 184 will be commenced by order. A fixed date for commencement has not been set because, at present, not all viewers are able to access Gaelic language television other than through STV. However, it is anticipated that, post switchover, more Gaelic television will be available to more viewers on other platforms. The effect of that development might be that it would no longer be necessary to impose Gaelic language broadcasting requirements on Channel 3 licence holders (although they may choose to broadcast in Gaelic).

Topic 6: Independent radio services

Background

135.     The Bill provides for the regulatory framework necessary to facilitate the delivery of a digital switchover of radio services to Digital Audio Broadcasting (DAB), referred to in the Digital Britain: Final Report as a “Digital Radio Upgrade”. In particular, the provisions give powers to the Secretary of State to nominate a date for digital switchover and ensure that OFCOM have sufficient powers to provide for an orderly changeover on that date, particularly powers to:

  • Terminate relevant analogue licences by the nominated date for digital switchover without the licence holders’ consent, subject to a minimum notice period of 2 years;

  • Renew national and local analogue radio licences for up to a further 7 years so long as licence holders also provide content in a digital service via a multiplex 5;


  • Allow approved local licences to be renewed by the nomination of a national DAB service, providing that the analogue and digital services share at least 80% of their content; and

  • Allow for variation of the frequency or coverage area of a multiplex licence, with the aim of improving the coverage of DAB.

136.     The Bill reduces regulatory burdens by enabling local stations to share premises and administrative costs within an area approved by OFCOM.

Clause 31: Digital switchover

137.     Clause 31 allows the Secretary of State to give notice to OFCOM of a date by which digital switchover must occur for services specified in the notice. In making a decision to nominate a switchover date, the Secretary of State must take account of any reports by the BBC and OFCOM about the future of analogue broadcasting.

138.     The date for digital switchover is the date after which it will no longer be appropriate for the service in question to be broadcast in analogue form.

139.     The Secretary of State may nominate different switchover dates for different types of radio services and may withdraw a nomination of a switchover date.

140.     After a switchover date has been set, OFCOM are required to vary the licence periods of all licences for the services specified by the Secretary of State so that they end on or before that date. However, OFCOM cannot shorten the duration of a licence so that it would end less than 2 years from the date on which OFCOM give notice of the variation, unless the licence-holder consents.

141.     OFCOM may not vary a licence period so that it ends after the switchover date.

Clause 32: Renewal of national radio licences

142.     Clause 32 allows the further renewal of national analogue licences for a period of up to seven years. All of these licences have already been granted a renewal of 12 years under the powers in section 103A of the Broadcasting Act 1990 (“the 1990 Act”).

143.     The procedure to be adopted for licence renewals under the new section 103B of the 1990 Act is that set out in subsections (2) to (9), (11) and (12) of section 103A of that Act. However, within these subsections, the provisions which refer to a situation where a digital service is not yet on-air do not apply. This is because an applicant for a renewal under section 103B will already be providing a national digital simulcast service under the conditions of the previous renewal.

144.     OFCOM must include a condition in renewed licences requiring licence holders to do all they can to provide a digital simulcast of their radio service throughout the renewal period.

145.     An application for renewal must be made no later than three months before the relevant date, as defined in the existing section 103A(11) of the 1990 Act. Normally, OFCOM must determine the relevant date at least one year in advance. Clause 32(3) allows OFCOM to set a relevant date of less than one year after the date of determination where they consider that the relevant date falls no more than 15 months after the day on which clause 32 comes into force. However, OFCOM must determine the relevant date as soon as practicable following commencement of clause 32.

Clause 33: Renewal and variation of local radio licences

146.     Clause 33 allows OFCOM to renew a local analogue licence for a period of up to seven years, provided it has already been renewed under section 104A of the 1990 Act or is granted on or after the date on which clause 33 comes into force.

147.     The procedure to be adopted for licence renewals under the new section 104AA is that set out in subsections (3) to (12), (13) and (14) of section 104A of the 1990 Act.

148.     Under current renewal conditions, the applicant for renewal of a local licence must nominate a local digital sound programme service and a local DAB multiplex. Sections 104AA and 104AB make provision for holders of local licences to make a “national nomination”, that is, to nominate a national digital sound programme service and a national DAB multiplex. The power to make a national nomination is restricted to licences which are defined as an “approved licence”. It will be for OFCOM to determine, following consultation, whether a particular licence is approved for this purpose. The consultation requirement may be satisfied by OFCOM publishing a document before clause 33 comes into force.

149.     A national nomination must be made in the application for renewal or before OFCOM consider the application, and it may only be made where OFCOM are satisfied that the national digital sound programme service will include at least 80% of the content included in the service provided under the approved licence.

150.     Section 104AB(4) requires that, if a licence holder is to make an application under section 104AC in relation to other approved licences, such licences must be specified in the national nomination.

151.     The new section 104AC relates to a situation where an approved licence which has not yet been renewed under new section 104AA is specified in a national nomination made under new section 104AB(4) in connection with the renewal of another licence. It allows OFCOM to vary the approved licence, at the request of the licence-holder, by replacing the “local digital services condition” with a “national digital services condition”.

152.     A local digital services condition is a condition that OFCOM are currently required to include in renewed licences as a result of section 104A(12) of the 1990 Act, and by which a licence holder is required to do all the licence holder can to ensure that a local digital sound programme service is broadcast on a local radio multiplex service. The purpose of allowing such a condition to be replaced with a national digital services condition is so that holders of approved licences that have not yet been renewed under section 104AA but that wish to provide a digital service on a national multiplex, rather than on a local multiplex, are not, as a result, in breach of their local digital services condition.

153.     Before OFCOM vary a licence under this provision, they must be satisfied that the national digital sound programme service will include at least 80% of the content included in the service provided under the licence that is the subject of an application for variation.

154.     An application for renewal of a licence under section 104AA must be made no later than three months before the relevant date, as defined in the existing section 104A(13)(c) of the 1990 Act. Normally, OFCOM must determine the relevant date at least one year in advance. Clause 33(3) allows OFCOM to set a relevant date of less than one year after the date of determination where they consider that the relevant date falls no more than 15 months after the day on which clause 33 comes into force. However, OFCOM must determine the relevant date as soon as practicable following commencement of clause 33.

Clause 34: Variation of licence period following renewal

155.     This clause adds section 105A to the 1990 Act and allows the Secretary of State to reduce the duration of a licence renewed under section 103B or 104AA. This power only applies where the Secretary of State has not nominated a digital switchover date or has withdrawn a digital switchover date without nominating a further date.

156.     The Secretary of State may give notice to OFCOM of a termination date, specifying the services affected. Different termination dates may be given for different services, but the termination date cannot be before 31 December 2015.

157.     OFCOM are required to reduce the duration of a renewed licence so that it ends on or before the termination date set by the Secretary of State, but OFCOM cannot give less than two years’ notice of termination of the licence, unless the licence-holder consents.

158.     OFCOM cannot vary the licence period under this section so that the licence expires after the termination date set by the Secretary of State.

159.     The Secretary of State must consider, before 31 December 2013, whether to exercise the powers contained in section 105A.

Clause 35: Content and character of local sound broadcasting services

160.     This clause allows OFCOM to amend the conditions of a local licence to allow local programming to be made outside of the licensed area and gives greater discretion to OFCOM to determine the appropriate level of locally-made content.

161.     OFCOM may agree to a departure from the character of a service provided under a local licence if programmes will continue to be made within an area approved by them. OFCOM must consult prior to approving an area or withdrawing their approval. The consultation requirement can be satisfied by OFCOM publishing a document before clause 35 comes into force.

Clause 36: Radio multiplex services: frequency and licensed area

162.     This clause inserts section 54A into the Broadcasting Act 1996 (“the 1996 Act”). It allows OFCOM to vary a national radio multiplex licence by extending the area in which the licensed service is required to be available. It also allows OFCOM to vary the frequency, or extend or reduce the licensed area, of a local radio multiplex licence.

163.     It is up to the holder of a licence to apply to OFCOM for approval of a variation. In so doing, the licence holder must submit a technical plan which indicates the proposed coverage area, the timetable and the technical means for implementing the change. OFCOM must consult on the proposal before granting the application. In the case of an application to vary a local radio multiplex licence, OFCOM may only grant approval if they consider that the variation will not unacceptably narrow the range of local DAB programmes in the area for which the local radio multiplex is provided.

Clause 37: Renewal of radio multiplex licences

164.     Clause 37 contains a power to amend Part 2 of the 1996 Act (and, in particular, section 58) by regulations for the purpose of making further provision about the renewal of radio multiplex licences. In particular, regulations made under this power may make provision about the circumstances in which OFCOM may renew a licence, the period of such renewal, the information that OFCOM may require from an applicant, the requirements that an applicant must meet, the grounds for refusal of an application, payments to be made and further conditions that may be included in a renewed licence.

165.     The power, which is exercisable until 31 December 2015, is subject to the affirmative procedure, requiring approval by both Houses of Parliament.

 
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Prepared: 17 March 2010