Joint Committee on Draft Communications Bill Report


(i) The scope of the licensed sector

284. The main aims of Part 3 of the draft Bill are to reform the arrangements for licensing broadcasters under the Broadcasting Acts of 1990 and 1996 and to create a new framework for the regulation of those licensed broadcasters. There are to be three tiers of regulation: "tier one" regulatory obligations, relating particularly but not exclusively to programme standards, apply to all licensed broadcasters; "tier two" establishes the quantifiable elements of regulation to which all public service television broadcasters are subject; "tier three" relates to qualitative regulation of public service television broadcasters.

285. A key determinant of the impact and effectiveness of "tier one" regulation will be the scope of the licensed sector to which such regulation applies. Changes in technology, and in particular the use of different networks for the transmission of similar content characterised as convergence, pose problems in defining the licensed sector.

286. The Government's policy since the Communications White Paper has been that Internet content should be excluded from the licensed sector. There are seen to be several reasons for such an approach: first, the Internet is subject to the general law, based on the principle that what is illegal off-line is illegal on-line; second, the Internet has evolved with a tradition of self-regulation in the absence of spectrum scarcity; third, Internet content is generally "pulled" by the user, rather than "pushed" by the provider; fourth, Internet provision is inherently international in character and therefore not readily susceptible to enforceable national regulation in a free society.[543]

287. The draft Bill seeks to deliver this policy by a new definition of what is termed a "television licensable content service" in Clauses 154 and 155 and a comparable definition of a "radio licensable content service" in Clauses 170 and 171.[544] These definitions are structured around a broad formulation encompassing the broadcasting of any service by satellite or the distribution of any service by means of an electronic communications network. The term "service" is also broadly defined to include television or radio programmes, and, in the case of television, electronic programme guides and "relevant ancillary services", a term including services which relate to the promotion or listing of television programmes. The sweeping effect of this definition is then mitigated by a series of exclusions, the most important of which are as follows:

  • a two-way service, essentially defined as one in which the user has a transmission capacity not solely related to the content service;[545]
  • a service for use within a single set of premises;[546]
  • a service provided solely for business use, such as by bookmakers or stockbrokers;[547]
  • a service that is not "available for reception by the general public" because it meets three conditions, namely that it is subject to a selection procedure by users of that content, is only conveyed in response to such selection and that the process of selection is not confined to choosing to receive material "available for broadcasting or distribution simultaneously, or virtually so".[548]

288. Patricia Hewitt told us that she thought these definitions succeeded in excluding Internet content, including web-casting.[549] Tessa Jowell gave a contemporary example to illustrate this view: she told us that a live web-cast of Big Brother on the Internet would not be licensable content; transmission on E4 would be licensable content subject to "tier one" regulation; edited programmes on Channel 4 would be subject to public service television broadcasting obligations.[550] As will become apparent when we consider the evidence we received on this matter later, this contention of the Ministers is open to question. To use the example given by Tessa Jowell, the status of Channel 4 and E4 transmissions is clear, but the exclusion of a web-cast of Big Brother from the scope of the licensable sector as proposed to be defined in Clauses 154, 155 and Clause 238 is far less clear and, in fact, a matter of some uncertainty.

289. As an additional safeguard, the Government proposes to take a power, under Clauses 156 and 172, to amend by secondary legislation subject to affirmative resolution procedure the definitions described. Patricia Hewitt saw this power as important as a means of ensuring that the definition could adapt to reflect changes in technology.[551] In exercising this power, the Secretary of State will be enjoined to have regard to factors relating to public expectations, filtering and other technological developments and cost implications. The ITC viewed Clause 156 as "one of the few places in the Bill where it is unequivocally good sense to have an order-making power".[552]

290. In the Policy document accompanying the draft Bill the Government has served notice that it is already minded to exercise the power under Clause 156. The definition as it stands, in the Government's view, excludes video-on-demand services. The Government has stated that it wishes to receive industry-wide assurance by this autumn that providers of video-on-demand services will put in place and maintain adequate means of protecting children, incorporating a binding code. In the absence of such an assurance, ideally in the form of self-regulation that would achieve accreditation, the Government might use the power under Clause 156 to extend licensing requirements to video-on-demand services.[553]

291. While there was a broad welcome for the Government's commitment in principle to exclude Internet content from licensing, there was considerable discussion as to whether the draft Bill in its present form would deliver that commitment in practice. It was argued that, under the proposed definitions, web-casting and web pages providing TV listings might be covered.[554] In particular, it was suggested that the conditions to be met for exclusion from the definition of availability to the general public in Clause 238 might not have the effect of excluding a web-cast.[555]

292. Concern was also expressed about the power to amend definitions to be granted by Clause 156. It was argued that there was no justification for licensing video-on-demand services, which are fundamentally no different from a viewer's decision to rent a video in a store.[556] It was suggested that any amended definition designed to encompass video-on-demand might also encompass web-based services.[557] There were calls for a requirement to be placed on the Secretary of State to consult widely before exercising the power to amend, to ensure that any change did not have unforeseen consequences.[558]

293. There are various ways in which the concerns of the Internet sector about an essentially unintended inclusion of Internet content within the scope of licensing might be met. One, suggested by Microsoft, would be a broadening of the definition of excluded two-way services.[559] A second approach would be to provide an explicit exclusion for Internet content.[560] A third option, which attracted much support from Internet service providers, would be to insert an exclusion mirroring the exemption from legal liability for intermediary service providers under Articles 12 to 14 of the E-commerce Directive. This gives service providers immunity from legal liability in respect of transmission, caching and hosting where the providers do not originate or modify the content, adhere to self-regulatory best practice and are unaware of any illegal activity.[561]

294. Each of these approaches carries potential drawbacks. Attempts to broaden the exclusions give rise to questions about whether they also exclude non-Internet services that might be intended to be subject to licensing requirements. A definition of Internet content injects technological specificity into the provisions and potentially poses a great many drafting problems itself.[562] The analogy between legal liability and licensing is imprecise, since it is not proposed that the content provider (who has legal liability) be subject to licensing requirements.

295. We have considered two further options in addition to those suggested by witnesses from the Internet sector. We canvass these options in the knowledge that the difficulties in distinguishing between Internet provision and what is now thought of as broadcasting will increase in future.

296. One option would be to move from an essentially compulsory system of licensing to one that is permissive. Under the terms of section 13 of the Broadcasting Act 1990, as proposed to be amended by Clause 157, all television licensable content services would be subject to a requirement to obtain a licence. OFCOM could be granted a power to designate certain categories of licensable content service as exempt from the need for licensing; in other words, the licensed sector would be a sub-set of the licensable sector. This would essentially pass the problem of determining the practical boundaries of licensing down the line from primary legislation to OFCOM, ensuring that the broad terms of an Act would not create a requirement for licensing where it was not desirable or practical.

297. Another option would be to draw a clearer distinction between services that are "pushed" by the broadcaster and those that are "pulled" by the user and exclude all of the latter from licensing. The draft Bill certainly moves in this direction, but does not go as far as some advocate.[563] As more and more services move to being pulled services, the scope of the licensed sector would diminish over time until it withered away.[564] The focus then would lie on regulating content itself, rather than content provision services.[565] One way of achieving this would be to remove the third condition to be met under Clause 238 in order for a service not to be deemed available for reception by the general public: in other words, provided that the service was conveyed only in response to selection, it would be excluded regardless of whether or not conveyance in response to such selection was simultaneous.

298. The Government has faced genuine problems in defining the scope of the licensable sector, problems for which we do not claim to have found definitive and satisfactory answers. We are concerned at the Government's statement that it is already minded to use its power to amend the key definitions to bring video-on-demand within the scope of the licensed sector if satisfactory arrangements for self-regulation are not made by autumn 2002.[566] If this is indeed the timetable, there would seem no logical reason not to include any provision for video-on-demand in the initial definition in primary legislation, allowing both Houses to give full consideration to the rationale and consequences during passage of that legislation. If the Government does decide that it is appropriate to include video-on-demand services within the scope of the licensed sector, we recommend that it propose to do so by means of provision in the final Bill subject to full parliamentary scrutiny, rather than by means of subsequent secondary legislation.

299. More generally, we support the powers for the Secretary of State to amend the definitions of licensable content services by means of secondary legislation subject to affirmative resolution procedure as an important means of "future-proofing", but remain to be convinced the Government should not go further at this stage. In particular, we recommend that the Government consider, and in its reply to this Report respond to, the cases for removing the condition in Clause 238(5) and for granting OFCOM discretion in choosing whether to license all services falling within the definition of licensable content services.

543   HC (2000-01) 161-I, paras 112-116; Policy, paras 3.2.2, 8.1 and; Ev 101, paras 10.4.2-10.4.3; Memorandum submitted by Children's Charity for Internet Safety; QQ 198, 338, 379, 965. Back

544   Q 55. Back

545   Clauses 155(3) and (4) and 171(2) and (3). Back

546   Clauses 155(5) and (6) and 171(4) and (5). Back

547   Clauses 155(7) to (10) and 171(6) to (9); EN, para 279. Back

548   Clause 238. Back

549   Q 1007. Back

550   QQ 1007-1009. Back

551   Q 1006. Back

552   Ev 1-8. Back

553   Policy, paras Back

554   Ev 102, para 10.6.2. Back

555   Ev 110. Back

556   Ev 557, paras 9-10; Q 376. Back

557   Q 354. Back

558   Ev 101, para 10.6.5; Ev 119; QQ 366-368. Back

559   Appendix 108. Back

560   Q 376. Back

561   Ev 102, para 10.7.1; Ev 88; Ev 136, Ev 119; Q 365; Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the internal market, Articles 12 to 14. Back

562   Ev 136; Ev 145, para 9. Back

563   Ev 67; Q 379. Back

564   QQ 381, 402. Back

565   Q 197. Back

566   Policy, para Back

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