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Digital Economy Bill

Written evidence submitted by the Internet Service Providers’ Association (DEB 27)

 

About ISPA

 

1. The Internet Services Providers’ Association is the trade association for the Internet industry in the UK. ISPA has over 200 members from across the sector, including a large number of access provider ISPs from small to large, content platforms, hosting providers, and other providers of internet services. Our membership consists of ISPs rolling out and operating networks on a national and local scale utilising a variety of technologies, to those that resell wholesale services or a combination of both. As such, our members are likely to be directly affected by a number of the measures in the Bill.

Introduction

 

2. The UK’s digital economy is a crucial sector and it is an area where we are a world leader; it is a key driver of growth, underpins many aspects of our economy and represents a higher proportion of GDP than other comparable economies. It is important that the sector is given proper billing within Government and Parliament, through a planned and strategic approach. The UK currently has good infrastructure, a strong consumer protection regime, and widespread use of digital services. However, we cannot stand still and so continual investment is required to ensure the UK remains a leading digital nation. For this to happen, the right conditions need to be in place, and whilst in general, ISPA broadly welcomes the Bill and its measures, we would ask that the Committee to carefully consider the impact of the provisions in the Bill, and the effect these may have on the market.

3. This briefing paper sets out our views and concerns on the following areas:

· Age verification

· Changes to judicial review policies

· Universal Service Obligation

· Information gathering powers

· Automatic compensation

4. If you would like any further information or to discuss any of issues listed, please contact Andrew Kernahan or Muirinn O’Neill.

Age Verification

 

5. ISPA is supportive of measures that boost internet safety. Whilst there are questions relating to how the law will work in practice, we welcome the Bill’s provisions to require pornography providers to introduce age verification tools and impose sanctions on the ancillary services linked to non-compliant websites. Our members have long been committed to child online safety, with the UK widely regarded as a world-leader on internet safety. For example, the Internet industry founded and established the Internet Watch Foundation and established Internet Matters, to offer families advice and tools on to keep children safe online. A number of our members have also rolled out family friendly filters which cover more than 90% of consumers across the UK. These filters allow parents and carers to control access to content online across multiple devices. The UK leads the way in terms of child safety online and this has been achieved without legislation.

6. We noted, however, that during the Second Reading many MPs pushed for blocking as a solution. We do not view blocking as an effective tool. This is backed up by Ofcom research that found blocking websites was ineffective, as it could be easily circumvented, carried adverse risks, and could ultimately have an impact on privacy and freedom of expression, and thus we would stress that blocking may not be the holistic solution to this issue that some envisage.

7. Whilst we recognise the concerns raised by MPs, we would ask that the provisions in the Bill are given a chance and trialled and then judged on their merits, and that Government is given the chance to produce guidance which may address some of these concerns, rather than jumping into web blocking.

Ofcom Judicial Review Powers

 

8. ISPA want the fairest and most straightforward system for ISPs and Ofcom to resolve disputes. However, our members have expressed concerns about this new provision, as it may discourage investment and limit their access to justice. We would highlight that for many of our smaller members, a move to a judicial review standard may be onerous as they have limited legal expertise to challenge decisions and cannot afford to pay high legal costs. Whilst smaller, innovative ISPs may know an Ofcom decision is wrong, we are concerned that they are highly likely to be dis-incentivised from challenging decisions if they are faced with having to frame their appeal by reference to judicial review yardsticks. We want as level a playing field as possible and feel that this provision will unfairly disadvantage our smaller members, who will no longer have the same ability to challenge decisions as some of our larger members.

9. Our members have also expressed concerns about the quality of the decisions made under judicial review. We would highlight that a judicial review standard means that even if a decision that is clearly wrong it would be allowed to stand unless it was "so unreasonable no rational regulator could support it". This is an exceptionally tough standard to meet, and could likely mean that poor decisions are allowed to stand, which we believe will put investment incentives at risk. We would argue that the current merits based appeal system, that allows ISPs to ask a Tribunal to look at whether Ofcom made the right decision, is the better option as this puts an incentive on to Ofcom to make consistent, robust and predictable decisions, which have thus far allowed the UK broadband market to flourish.

10. Adoption of a new standard will also likely result in significant uncertainty which we believe will jeopardise investment. Our members will face regulatory uncertainty and have to wait for a number of ‘test cases’ to be tried, given that the case law from the past 13 years will no longer apply. We believe that this provision may thus end up having a negative business impact on our members. We would also highlight that an appeal regime which requires that the matter be remitted to the original decision maker for reconsideration, may result in cases taking a longer time to resolve end-to-end than if the Tribunal, having decided the matter, imposed the right decision itself. Our members have expressed concerns that the industry is so fast moving, and these delays will cause a lot of uncertainty and may discourage investment.

11. Consequently, ISPA members would favour removing this proposal from the Bill, and at very least, ensuring that any change retain an explicit reference to consideration of the merits of the case.

Universal Service Obligation

 

12. ISPA supports the principle of broadband universality so that everyone in society can reap the enormous benefits of getting online. We also recognise the importance of addressing the small minority of people unable to access a good, reliable connection. However, we feel that Government need to bring forward a clear plan on what exactly they want to achieve with the USO, as soon as possible, so that industry can then respond to help shape and deliver.

13. We believe that the USO needs to be a balance between cost and specification. We are aware that MPs have suggested that the proposed USO of 10Mbps is not ambitious enough and that there should be more requirements. However, we would highlight that the limits on the USO are economic and not technical, industry could deliver a highly ambitious, world-leading USO but this will come with a much larger price tag. Depending on how the Obligation is funded, this cost will either be shouldered by the tax-payer or, if funded through an industry levy, will be pushed back on to the consumer. Industry would be more than willing to help contribute to the process of striking a balance between technology and cost, but our members need a clear plan in place in order to do so.

Ofcom Increased Information Gathering Powers

 

14. ISPA broadly welcome this provision in the Bill, as the information Ofcom produces empowers consumers and encourages competition within the market. However, the time, effort and level of burden placed on ISPs to produce the information laid out in this provision needs to be proportionate. We do not want a situation in which smaller providers can be faced with a potential heavy and unreasonable burden that may discourage them from going into business or investing further in their networks. We would also highlight that Ofcom should not be able to request information that is commercially sensitive. Whilst our members are happy to reveal information to Ofcom about their networks, revealing their future planned networks will harm the competitive UK broadband market and ultimately may discourage investment.

15. We would thus suggest a provision in the Bill which would allow a provider to challenge the information that they are asked to produce on the grounds that it will be overly onerous or detrimental to their business. We would thus ask for clarification on what 'data not held' and 'generating new data' may entail as within the Bill as it stands Ofcom have been granted unlimited information gathering powers, despite the safeguards mentioned in the Bill.

Automatic compensation

 

16. ISPA is supportive of a strong and fair consumer protection regime that provides for redress when things go wrong. We believe there is already a comprehensive consumer protection framework in place and a high level of competition between providers that underpins this. For example, the mandatory and free-to-the-consumer Alternative Dispute Resolution scheme allows consumers to claim compensation for when things go wrong and voluntary codes give consumers cancellation rights when standards are not met. A more effective approach would be to raise consumer awareness of the significant protections already in place.

17. Our members are concerned that by setting specific minimum standards, providers will end up being forced to compete on a ‘race-to-the bottom’ that acts as an incentive against innovation and higher service quality competition. Ofcom’s own Infrastructure Report suggests that network incidents are not common and that broadband networks are, in general, robust. Furthermore, the internet value chain is a complex one, with wholesale arrangements and a patchwork of interconnected networks throughout the UK.

18. If there is a move to a system of automatic compensation would represent a significant shift and we would thus ask Government to offer a clear picture of how this system will work and take account of the complexity of the internet value chain.

October 2016

 

Prepared 13th October 2016